The technology media and telecoms (TMT) sector has always kept one eye on the future and its leaders understand the importance of investing in the long term.

Two-thirds of the TMT industry decision-makers we surveyed for our FutureFit research agree that sustainability often means taking a long-term investment view and not going for the cheapest option available today, compared with 54% across all sectors.

But having witnessed a huge spike in demand for its services during the pandemic, the TMT industry is now moving into a period of belt-tightening.

Clients have made their big investments and many are looking to optimise the platforms they already have, says Neil Bellamy, our Head of TMT. “A lot of TMT businesses are worried about an approaching downturn.”

One of the challenges the sector will face in the coming years is reducing its reliance on global supply chains with limited local alternatives. But when it comes to the supply of skills and talent, the case for investing in self-reliance is clear.

The spike in demand for TMT services during the pandemic, when combined with a long-standing shortage of technology skills and a rapid influx of venture capital investment, caused salary demands to spiral. Start-ups could afford to outbid each other for in-demand tech talent and more established businesses have struggled to keep up.

But in the new business environment, TMT companies must take a longer-term view and commit to training their own people, Neil explains.

The fight for talent in the sector is not going away, even though we have seen recruitment freezes and in some case redundancies by some high growth tech firms. The brightest talent will always be in short supply but it’s not sustainable to go on paying ever-increasing salaries, he says ”They are going to have to create their own”

UK data centres business Iomart is doing just this, says CEO Reece Donovan: “Over the years we have been a skills acquirer but now we see ourselves more now as a skills developer.”

This was necessitated by a chronic shortage of tech skills, he adds. “I've met a number of colleagues, from competitors, and it’s clear there's just not enough skill in the UK marketplace for everybody.”

One way in which Iomart has turned itself into a skills developer is by implementing a training platform that matches staff with the latest career development courses based on their role. These courses provide employees with new skills and industry-recognised certification.

The platform helps Iomart not only to develop the capabilities it needs to compete but also hold on to in-demand workers. “Shifting to developing skills is really important because it helps us build skills we can’t find in the marketplace,” says Reece. “But developing our people really helps with retention too.”

• Short-term thinking needs to be replaced by long-term planning.
• Launch a skills programme to train your people.
• Commit to ongoing development for all staff. It boosts skills as well as retention.
• Look at ‘Low Code’ platforms that empower computer novices to programme.

Another cost-effective way to develop and retain talent is to focus on staff wellbeing, explains Ian Spence, Founder and Chairman of technology research business Megabuyte. Providing a caring workplace is not only the decent thing to do, he says, it also makes financial sense.

“You can't underestimate the importance of looking after your people,” says Ian. “If you get it right, you can build a motivated workforce on lower average salaries than if you were buying in talent externally. Those two combined is always the Holy Grail.”

Many UK TMT businesses are putting this into action: 46% plan to introduce employee benefits, such as access to a gym or private health services, in the coming year, slightly higher than the cross-industry average (see chart below). By contrast, only 28% of TMT businesses plan to increase wages this year, compared with 36% across industries.

As in many industries, TMT workers have become used to working remotely. For some, it offers benefits to wellbeing and work-life balance. For TMT industry bosses, the challenge is to balance these benefits with the need to ensure workers are engaged and collaborating effectively.

“A lot of CEOs have been telling me their big challenge is achieving the right balance between flexibility and getting people into the office,” he explains. “They’re not taking a hard-line approach, but they want people in because of the benefits of office working such as collaboration, encouraging creativity, developing young talent and helping with everyone’s wellbeing.”

Our survey suggests the TMT employers will insist on more in-person collaboration in future – 68% plan to introduce mandatory office days in the next three years.

Which of the following measures has your business taken/are you planning to take in order to attract/retain talent within your company over the following timeframes? (% of TMT respondents)

In the meantime, one way to tempt tech-savvy workers back into the office for at least some of the time is to revamp the working space. Nearly eight out of ten TMT businesses expect to refurbish their premises in the next three years, our survey shows, compared with 68% across all industries.

At Iomart, Reece has recently made the decision to move to new offices. The company, which allows staff to split their time between working remotely and in the office, already offers free snacks and drinks and free breakfast on Friday. But the CEO believes the company needs to build a more collaborative environment, which can only be delivered through a new office.

“The function of an office is changing,” he explains. “It's more about communication, collaboration and learning, rather than everyone just sitting at a desk all day. We are planning more meeting rooms as well as smaller collaboration booths and informal places to meet, such as a kitchen that will have tables for people to congregate.”

• Employee benefits such as gym membership can be cost-effective alternatives to salary increases.
• Embrace flexible working but do not shy away from mandatory days where teams are expected to collaborate in the office.
• Redesign office space to boost collaboration by replacing rows of desks with meeting areas.

TMT businesses had to grapple with serious disruption in their supply chains during the pandemic as factories were shut down and global logistics systems came under strain.

While shipping times are now starting to get back to normal for many high-tech components, the experience has prompted many in the sector to rethink their supply lines. Six out of ten say they are making more effort to diversify their supplier base than in the past, for example, and 42% agree that the era of using the cheapest supplier thousands of miles away is over.

Instead, they are prioritising the reliability of their suppliers: 84% say trustworthiness is important when selecting providers , while only 62% say the same of choosing the lowest cost available.

Ian believes that global events will lead UK TMT companies to source key inputs closer to home. “De-globalisation is definitely a trend we're going to see more of in the next few years as a result of the geopolitical issues we've got at the moment, such as Chinese factories being forced to temporarily shut down and sanctions against Russia over the war in Ukraine.”

Shorter shipping routes will also help TMT companies reduce their carbon emissions, he adds.

However, it is not certain that this will reduce their overall costs. “The big quandary, particularly with semiconductors, is if you can find a local supplier, are they going to be more expensive and will that assurance of local supply and carbon emission reductions offset the extra cost?” questions Ian.

Although he believes that local suppliers will spring up to meet this demand, Neil says that – for now at least – UK TMT businesses have limited options. “You can’t buy computers nearby in Europe, they haven’t been made there for years,” he says. “So companies have little choice in suppliers.”

As a result, many TMT providers are warning customers of delivery delays, says Neil. And some are rethinking how they build their products and services. “We are starting to see some companies offer alternative products with shorter lead times,” he says. “We’re also seeing an uptick in companies getting around this by offering refurbished equipment.”

• Choice for some components will be limited, but don’t stop looking for local suppliers.
• Factor in the potential higher cost of a local supplier against short delivery times and lower carbon emissions.
• To be quicker to market, offer customers the choice of another brand of component or refurbished equipment.

While TMT businesses may well feel constrained as they seek to diversifying their supply chains, the route companies must take is clear, Neil says. Businesses looking to survive the approaching downturn and build long-term sustainable growth will prioritise training their people and then treat them well to embed a sense of purpose throughout their organisation.

“A company that is not fit for the future will just carry on paying whatever the market is asking to bring external skills and get hammered on their bottom line,” he says.

“A ‘future fit’ company will instead embrace a strong purpose. They're not just going to build their own talent. They’re going to offer flexible working and make sure their employees stay because they feel engaged through a sense of purpose.”