Two-thirds (67%) of South African small businesses struggle to source the right tech talent. But, despite struggling to hire, only 14% planned to upskill their existing team members to help close tech skills gaps.

This is according to research Xero, which found that just about every small business in South Africa has adopted technology they now rely on, with 97% investing in new technologies in 2019.

Adoption of cloud accounting leapt from 13% in 2017 to 61% in 2020, indicating that more than half of small businesses can now manage their finances remotely. Despite this, it is clear that many small businesses don’t have the right skills to support the shift.

Before the lockdown regulations, 61% of small companies planned to allocate a portion of their budget to tech training. However, as many SMEs had to make difficult staffing decisions during the lockdown, much of this money will have been redirected.

Colin Timmis, country manager at Xero South Africa and professional accountant, says: “It’s great to see small businesses embracing digital tools, but investing in technology is only the first step. Many small businesses don’t yet have the skills to match. We need a greater focus from government and technology firms on closing this gap, and helping small businesses develop the right skills to build back faster and stronger from this crisis.

“If you are struggling to hire external talent, focus on upskilling tech champions in your current teams. Even if your budget is modest, look at what skills you currently have in your organisation that can be built on, make use of free online training and ask for help. For example, your accountant will be able to advise on digitising finances and talk to other business owners who’ve implemented new tech recently.”

When asked which skills gaps existed in their team, the biggest gaps that respondents reported were in cloud computing (39%), programming and app development (33%), digital product management (12%), digital project management (10%), and digital design (9%). To try and close the gap, a little more than half (55%) said that they had invested in improving cloud and tech skills over the last year.

Sasha Sanders, founder of Conscious Company, comments: “The concept of a learning or growth mindset – those who want to learn new things are open to more information and enthusiastic about expanding their skills – as opposed to a fixed mindset, is something more and more organisations are talking about. We know that things are changing and will continue to change. We’ve heard that the jobs today’s kids will have in a decade or two don’t exist right now.

“So training and upskilling people – or enabling them to gain broader and deeper expertise – is essential. It’s also critical to retaining people. Employees, especially younger ones, actively seek employers who put a focus on learning and development, so it will be key for attracting new talent too.”

Arthur Goldstuck, technology analyst and founder of World Wide Worx, says: “The research shows quite clearly that all businesses are becoming, to a greater or lesser extent, technology-driven. The cloud is now at the heart of almost every business, which explains why cloud computing skills represent the single biggest skills gap across all SMEs. We’ve already seen more than half of SMEs investing in cloud and tech skills. With the digital revolution that occurred as a result of Covid-19 and remote working, this trend will only accelerate.”

The findings are from Xero’s fourth annual State of Small Business report, conducted in partnership with World Wide Worx and based on responses from 400 small business owners and 200 accountants. The research highlights the areas in which small businesses need support and their progress in digital adoption.

Other key findings from the research include:

* Over half (53%) of businesses found that adopting technology resulted in ‘somewhat big’ or ‘big’ increases to their profitability.

* A third (33%) of small businesses reported that they are finding it hard to keep pace with tech developments, despite good progress.

* More than two in five (41%) businesses indicated that they’re only just keeping up with technology