In depth: Stick or twist: will the tech industry thrive in an independent Scotland?

Introduction

Should Scotland be an independent country? That's the question 8 million Scottish people will be asked in the independence referendum come September 18.

It seems like, with such a highly emotional issue, the thoughts and needs of Scotland's tech industry don't really matter when considering the future of the country's sovereignty. But as technology and innovation are increasingly driving economies around the world, a future union or independent Scotland will have to embrace technology to keep up.

There are two potential paths for the Scottish tech scene. Does Scotland roll the dice, go independent, start from scratch and let the tech industry flourish with competitive tax rates like in Ireland? Or does it stick with the union and enjoy the collective benefit of an already powerful countrywide tech industry?

Most Scottish tech companies I spoke to flat out refused to comment on the question of independence; I suspect because they're aware of the strong emotions this issue can evoke in people. I've seen BBC reports on the subject with small business owners happily talking about their fear of the vote going one way or the other, but I haven't seen a voice from the Scottish tech industry speak so candidly, or even at all.

It's just not the tech industry's style to be that involved in politics, and Scottish tech companies are no different. But they should be, because not only is Scotland a magnet for games companies and programmers, but also because the world economy is rapidly moving towards technological innovation.

Illustrious history

From manufacturing the Sinclair C5 to Rockstar North employing over 200 people and producing Grand Theft Auto, one of the highest grossing games of all time, Scotland has a long and illustrious history when it comes to tech. The tech scene is quickly growing too, with the creative industry in Scotland currently worth £2.8 billion.

IT and IT-related jobs are on the rise too. Scottish jobs site, S1 jobs, explained to me that it saw an increase in IT job listings of 31.3 per cent year-on-year (YOY). A total of 9,397 positions were advertised online across Scotland in May 2014 compared to 7,156 in May 2013.

Interestingly there has also been a sharp spike in listings for security-related jobs. The number of security-related IT jobs has increased by 265 per cent, although Gavin Mochan from S1 jobs admitted that it was coming from a low base. The rise in interest in IT security bodes well for Scotland as in global terms, security is grabbing news headlines and has rapidly risen to the top of company agendas.

The demand for developers, however, remains highest of all, which is understandable since Scotland is famed for its gaming industry. Listings for senior Java developers are up 191 per cent YOY, application specialists are up 153 per cent and senior developers are up 190 per cent. In May 2014 alone, 342 Java developer jobs were advertised on S1 jobs.

Huge growth

Clearly, the Scottish IT and creative industries are experiencing huge growth. It's a good time to be a startup in Scotland. But is this recent success due to steely Scottish determination, or because the country has been given a leg-up from Westminster?

A spokesperson from the Department for Business, Innovation & Skills seemed to answer with an emphatic yes, stating: "The UK Government argues strongly that Scotland's reputation for excellence in manufacturing and research is strengthened through its membership of the UK."

The spokesperson continued: "Scottish technology firms and research institutions benefit from access to secure and stable funding, a shared world-class research infrastructure and skills base, strong intellectual property protection and unfettered access to domestic and international markets. Scottish researchers benefit from a higher than average share of the national funding via the UK Research Councils, underpinned by a UK-wide tax base.

"Scottish companies gain from joint large-scale UK investments including from the Technology Strategy Board's Catapult Centres in Glasgow, and over £100 million being spent in Scotland to deliver high-speed broadband to rural areas.

"Maintaining the Union will also help provide certainty across the UK's large domestic market, encouraging business investment and supporting growth and jobs in Scotland."

Taking credit?

Essentially, the UK government is not only taking credit for Scotland's tech success but also positing that the industry will struggle without it. On the face of it, withdrawing research funding and infrastructure could leave Scotland vulnerable. But Scottish independence isn't about what the country has achieved, but what it could achieve.

I contacted the Scottish government for a rebuttal and it didn't mention anything about the benefits of Westminster funds, but rather the benefits of the future: "With the full powers of independence we can achieve higher levels of growth and job opportunities through a strong external focus on competing in the global economy, promoting areas of comparative advantage to develop a distinctive economy emphasising innovation, technology and manufacturing."

It continued: "We are already taking steps to improve industry and academic links by establishing Innovation Scotland as well as a network of Innovation Centres, where partners from across Scotland are coming together to provide targeted support for business and academic engagement, and to develop solutions to demand-led industry problems."

Clearly, the Scottish government is looking at Ireland and its booming tech industry that has flourished in an environment which is built around small businesses and technology. It's rolling the dice.

This optimism and the prospect of what could potentially be is what seems to excite the companies that did want to go on record. Colin Hewitt, CEO and founder of Scottish startup CodeBase, explained how mimicking Ireland's success is an intelligent thing to do.

Hewitt said: "Personally, I'm comfortable with risks, I don't think an independent Scotland would necessarily hurt the tech scene. It could potentially really help it. I think a lot about Ireland, and how the tech scene is thriving there. I wonder if we'd be able to make things more attractive in terms of working visas for developers, and lower corporation tax.

"Ultimately though, what we need are the universities to continue to raise their game, to create a great environment for startups and encourage a culture of mentoring and knowledge sharing which is starting to happen with initiatives like CodeBase.

"I really believe that Scotland is currently on course for a great startup culture regardless of the vote. We live in a London-centric island when it comes to a lot of things, and it would be great to see more hubs that are holding their own, not just in Scotland, but across the rest of the UK. One thing that I'm sure of is that whatever happens, we need to build strong links with the rest of the UK."

Starting again

Hewitt's last point about London basking in most of the UK government's praise seems particularly poignant, and a view that is shared with just about every tech cluster and company outside of the capital that I've spoken to.

Scotland has a chance to distance itself from the London-centric policies and start from scratch with its own funding schemes, tax rules and regulatory framework. It can create an environment for the tech scene that's based around its current needs, rather than trying to make existing legislation work in its favour.

On the other hand an independent Scotland could see a brain drain, or even stop young British entrepreneurs from moving to another country to start up their business. At this stage all we have is "what ifs" and uncertainty, so Scots will have to look towards their hearts rather than their heads for an answer.

How successful will an independent Scottish tech industry be? It all comes down to how much the Scots like to roll the dice.

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