4 November 2015
VIRGIN MEDIA BUSINESS REVEALS THE UK'S £92 BILLION DIGITAL OPPORTUNITY
Major research report from Oxford Economics and Virgin Media Business finds the economy could receive a £92 billion boost if firms fully develop their digital potential, equivalent to 2.5% of GDP
- In the last year, digital capabilities generated £123 billion in business revenues, equivalent to 3.4% of total GDP
- UK companies expect to add over one million new jobs over the next two years as a direct result of enhancing digital capabilities
Virgin Media Business, the arm of Virgin Media that provides products and services to UK businesses, today releases a major research report that outlines the huge potential of digital technologies to grow the UK’s economy. The report, ‘The UK’s £92 billion Digital Opportunity’, reveals that digital technologies could provide a boost to the economy equivalent to 2.5% of GDP, as well as creating over a million new jobs across all industries over the next two years.
The report was compiled by Oxford Economics, following interviews with senior executives at over 1,000 UK-based companies who together employ 470,000 workers. When examining the impact of digital capabilities on business, UK companies said that they increased their revenues by 4.4% and reduced their costs by 4.3% in the past year. This generated an estimated £123 billion contribution to the UK’s economy, equivalent to 3.4% of GDP.
Looking at the next two years, UK companies are optimistic about the potential of digital to drive growth. While digital is expected to result in some job losses (approximately 300,000 jobs or 2% of the workforce), more than four in ten businesses (44%) expect no jobs at all to become obsolete and across all industries new hires outweigh any losses. Aggregated across the economy, the number of employees companies anticipate hiring as a result of digital investments is 1.1 million, suggesting a net creation of 800,000 jobs. When it comes to growth, if all UK companies could access the best digital capabilities available, the economy could be boosted by a further £92 billion per year, equivalent to 2.5% of GDP.
Opportunities across all industries and regions
Opportunities to realise this potential are spread across all industries. The Digital Opportunity is greatest for professional and tech services firms, who could add £27 billion a year in industry revenues. Lesser but still significant gains are possible for other sectors such as wholesale and retail (£17 billion a year), manufacturing (£9 billion a year), financial services (£9 billion a year) and transportation and storage (£8 billion a year).
The potential gains are also spread geographically throughout the UK, and while the Digital Opportunity is greatest in London (a potential £48.5 billion boost), other regions are catching up. Scottish businesses could increase revenues by 3.6% (£10.7 billion), followed by Wales, the North-West and South-East, who could all see a 3.1% rise.
SMEs have the most to gain
Companies with fewer than 250 employees have the most to gain from investing in digital technologies, with SMEs expecting an additional £56 billion boost if they had access to the best digital capabilities available.
The report finds that SMEs are in a strong position to catch up with larger companies, despite having fewer resources. Building up their capabilities is a priority, with plans to increase employment by 6% over the next two years to make the most of digital opportunities; three times the rate of larger companies.
Digital Leaders show the way
The report defines Digital Leaders as those firms who are prioritising investment in a broad range of digital capabilities: technology infrastructure, digital workforce, digital information, digital strategy and leadership, open and collaborative partnerships and digital customer engagement.
While on average Digital Leaders don’t spend any more money on technology than other firms, they spend it more wisely and achieve better results. These leaders report improved financial performance as a result of digital investments, including a 5.3% improvement in revenues and a 5.5% reduction in costs – figures which are 30% higher than other firms.
The Virgin Media Business fibre broadband network, which offers speeds 12 times faster than the average broadband connection , is currently available to 85% of businesses in the UK, with a £3 billion plan to expand it over the next five years. Combined with Virgin Media Business’s other high performance digital platforms, the company is best placed to help businesses of any size or type to become Digital Leaders.
The full report, 'The UK's £92 billion Digital Opportunity', is available from: virginmediabusiness.co.uk/DigitalOpportunity
Peter Kelly, Managing Director, Virgin Media Business, said: “Digital technologies are transforming the face of business and the wider UK economy, and it’s clear that all UK companies see the huge potential that digital has for growth. However, the incredible pace of change means there is no place to hide, or room to stand still. Any business with ambitions to grow through digital needs to invest in the right technology and skills, while the government and industry have to deliver the infrastructure and support to help them. Over the coming years we’re investing £3 billion to bring the fastest broadband to more businesses of all sizes, to help them seize the chance to become digital leaders.
The significant digital opportunity for businesses of all types and the economy as a whole is one that we can’t ignore. Government will continue working alongside companies like Virgin Media to transform the UK’s digital capabilities and laying the foundations for a thriving, digitally-led future."
John Cridland, CBI Director-General, said: “The Virgin Media Business report reveals a huge digital opportunity for UK businesses. Both the public and private sectors have much to gain from harnessing the benefits of digital technology. The UK is the tech capital of Europe but digital advances never stop, so if we want it to stay ahead we need more young people studying computing to a higher level. Looking into the future, the proposed EU digital single market, if delivered well, would be great news for both business and consumers, reducing barriers to e-commerce across the continent.”
About the research
Oxford Economics surveyed C-level executives in 1,049 UK companies concerning their current digital capabilities and plans for the future. All interviews were carried out during April and May 2015. Oxford Economics aimed for a representative sample across the UK private sector, representing all regions and industries (using Standard Industrial Classifications). The sample represents 470,000 workers and an estimated £180 billion in turnover.
Companies were asked to estimate the difference digital capabilities make to their financial performance, both now and in the event that they had optimal digital capabilities. They were also asked how many staff with digital skills they expected to employ over the next two years and the percentage of jobs in their company they expected to become obsolete.
Oxford Economics aggregated their responses using regional and industry totals and applied modelling assumptions to estimate the impact across the private sector of the economy. It asked a series of questions about digital capabilities, current strength, leadership priorities now and in three years, contribution to improved commercial outcomes, and improved financial performance. By analysing all this data across industries, regions, and other demographic segments, it has compiled a detailed census of UK companies’ digital strengths and areas for improvement.
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