As we near the end of 2025, it is clear that the labour market and the tech market more specifically have undergone another year of change and evolution. AI and automation growth, evolving working patterns and political-economic shifts made this a turbulent year for the labour market.
At Livingston James, we have seen first-hand the challenges and opportunities shaping the sector from talent shortages in niche skill areas and in demand specialisms (AI, cyber and data analytics), to the growing emphasis on skills and values-driven hiring.
As we approach 2026, consultant Rachel Sim reflects on the biggest influences on the 2025 market and what we expect to see in 2026.
Reflections on Sectors
Public Sector Pressure
Financial pressure on public sector digital services teams remains high as budgets are limited. Key to overcoming this may be closer collaboration between public sector groups, reducing duplication of work and increasing knowledge and resource sharing. Generally, this concept is being met with support, however fine tuning is required to understand how this change will impact each individual body in terms of budgets, employment in local areas and the level of customisation required by different organisations.
The Digital ID scheme is an indication that the requirement for strong technical teams within government and the wider public sector will not slow any time soon.
Private Sector Stabilising and Scaling
In 2025, the UK’s private tech sector continued to scale, with a market valuation reaching $1.2 trillion, making it Europe’s most valuable tech ecosystem. Despite economic pressure, established firms accelerated investment in AI, cybersecurity and cloud infrastructure, while grappling with talent shortages in these high-demand areas. As we move into 2026, we expect to see greater emphasis on workforce upskilling and investment in retention strategies, particularly in competitive sectors such as financial services, health tech and renewable energy.
Start Ups Leading the Way in Tech for Good
Startups and scaleups have shown resilience, driving innovation in AI, fintech and sustainability-focused technologies through the last few years of political and economic uncertainty. While VC investment dipped slightly in 2024, founders adapted by pursuing leaner growth models and alternative funding routes. Looking ahead to 2026, we anticipate a surge in purpose-driven startups, especially those aligned with ESG initiatives and inclusion, a reflection on consumers demands for ethical, sustainable businesses.
Growth Opportunities & Challenges
AI Adoption Accelerates
We can’t reflect on this year without AI being front and centre to our discussions. AI has been one of the main technologies disrupting the sector (and all sectors) this year, and demand for skilled AI professionals has been on the rise. This has taken many forms from CAIOs shaping the strategy to Engineers designing and implementing solutions. However, what we have found most poignant is the growth in roles such as that of the AI Ethicist, AI Policy Specialist and AI Auditor. The demand for this skillset speaks to the higher level of concern, awareness and diligence that clients are applying to these tools. As expected, financial services, fintech and technology firms have been paving the way in AI hiring with smaller and more traditional businesses expected to follow suit in 2026. What may differ is the method in which different businesses employ this skillset with the former group of organisations opting for full time permanent hires, and the latter, more traditional businesses more likely to look at interim or fractional appointments which allow them to test the waters.
Talent Trends
Roles in AI, machine learning, data science and cybersecurity are among the most sought-after. This has resulted in a surge in salary expectations for candidates in this field, with companies having to offer candidates other benefits and incentives to retain top talent or attract high calibre applicants. This contrasts with other roles, where there has been a more modest change in salaries and clients mandating at least partial returns to office as they try to build community, enhance culture and a feeling of belonging / loyalty. Despite a slight shift back to in office working, tech professionals in Scotland are continuing to predominantly work remotely or in hybrid setups. This flexibility is now a standard expectation, especially among younger talent.
Flexible working arrangements have enhanced access to oversees talent which can create opportunities for clients but increases competition for candidates. Broadly speaking, clients are still seeking to appoint local candidates where possible, even for remote roles due to a feeling of their enhanced local, cultural and market knowledge.
Global Expansion
Scottish tech firms are increasingly targeting global markets, especially in Europe and North America, with support from government and private incubators. In 2025, Scotland’s tech sector has shown strong ambition to scale internationally, particularly through initiatives like Techscaler’s global programmes, which have selected 22 high-growth startups to participate in trips to Silicon Valley and Singapore to support their advancement. These ventures span sectors from AI healthcare to climate tech, showcasing Scotland’s innovation on the world stage.
According to the Scottish Technology Industry Survey, internationalisation is a top priority for companies of all sizes, with many leveraging Scotland’s reputation in niche areas like energy tech, digital services and industrial software to enter new markets.
Livingston James recently hosted a NED forum event in partnership with KPMG on the topic of internationalisation. The resounding message from our tech leader panellists was that creating partnerships with those on the ground, or being there yourself, was key to successfully taking your business overseas.
Whilst internationalisation can make an exceptional opportunity for businesses, what must be remembered is that its not a viable option for all and having consolidated your local market first is advised.
Lower Barriers to Entry
Barriers to entry in tech are falling through the emergence of low-code / no-code platforms, AI tools and the rise of vibe-coding.
In 2025, we have seen a shift in how people enter the tech industry and this is likely to accelerate in 2026. Low-code and no-code tools are becoming mainstream, enabling non-technical professionals to build websites and apps and contribute to digital transformation without the need for extensive technical or coding knowledge. With vibe coding allowing users to simply describe what they want to develop and AI builds it, opportunities are becoming far more accessible. This will be a game changer, allowing entrepreneurs with no technical knowledge to innovate technical products and solutions. With the continued talent shortage in technology, this will allow us to widen the net and increase access to minorities/ groups who have been underrepresented and have previously been hindered in pursuing a career in tech. Employers are prioritising skills and experience over formal qualifications.
Upskilling and Market Movement
With increased financial pressure, companies are looking to sustain or shrink headcount and optimise their existing workforce. This will require investment in training programs particularly in cybersecurity and AI. Internal resource is being used to fill skill gaps and development programmes used to retain top talent. This will be something we see a consistent focus on in 2026 as over a quarter of Scottish business expect to decrease headcount next year. This will have an interesting impact on market dynamics as there could be another increase in candidates on the market, giving clients more hiring power.
With a vast number of internal and external factors influencing hiring strategies in 2026, we are likely to see another year of change and transformation for the sector.
To discuss your tech team requirements for 2026, please contact Rachel Sim: [email protected] for a discussion about the market.
