Out of the considerable and accelerated changes that have occurred in recent times, one of the most fundamental and all-encompassing changes is that related to digital change. While a digital shift was brewing prior the pandemic, it rapidly became an enduring must have rather than a could have requirement for businesses across all sectors.
The problem? Such a rapid digital shift has exposed a major flaw in the economy – there are simply not enough technically skilled people to fill the digital skills gap.
Step in Northcoders (AIM: CODE) – completing its IPO last month, it is a direct-to-consumer and direct-to-business software development training company that aims to fill the digital skills gap which counts a number of FTSE 100 heavyweights among its clients.
As part of the ShareBuyers’ Going for Growth feature, we discuss growth plans with Northcoders Chief Executive Officer Chris Hill who highlights why the market is ripe for its offering and how it plans to address the UK’s digital skills gap and beyond.
Firstly, please can you tell us about Northcoders and its core value proposition?
Northcoders is a market leading provider of B2B and B2C coding and software development training. Founded in 2015, its business model operates a hybrid structure with flagship sites in Manchester and Leeds supported by a best in class digital offering to businesses and individuals across the UK. B2B clients vary in size ranging from large names like Barclays Bank, The Co-operative, BAE Systems and Jaguar Land Rover to fast growth tech startups.
Powered by IP rich technology, Northcoders’ coding school offers boot camp courses to consumers from a range of backgrounds, delivered through virtual and physical learning. The Group also works with blue chip corporates across multiple sectors to supply innovative EdTech solutions for the upskilling and reskilling of employees, and offers government-backed apprenticeships in the field.
With a keen focus on inclusivity, diversity and quality at its core, Northcoders aims to address the digital skills gap in the UK to meet the increasing demand for digital specialists from corporates and government. It operates in a significant and growing market with structural growth trends further accelerated by Covid-19.
Last year was admittedly tough for many companies – how did this impact Northcoders?
Like almost all businesses, the impacts of the Covid-19 pandemic forced us to think differently about the way we do business. In reaction to the restrictions on travel, we started to provide virtual learning and we found this to work really well, both in terms of learning outcomes and satisfaction from our B2B clients. From a financial perspective, virtual learning generates higher margin revenues too so as a result, whilst we still believe there is significant value to face to face learning, we now operate a hybrid model.
The Covid-19 pandemic has also driven demand for Northcoders; the digital skills gap was already widely acknowledged in the UK, and was receiving government support, but the last 18 months have highlighted this need and accordingly Corporate and government spending is increasing. We are also experiencing an increase in students who are wanting to switch careers, which Northcoders can accommodate.
Moving forward, economies look set to sustainably kick-start once more – how will this help your business?
Our mission to end the digital skills gap and provide life changing opportunities for individuals who will be propelled by a boost in the economy.
We will see Tech companies thriving and the demand for software developers will be higher than ever. A kick- start in the economy will also enable more businesses to invest in internal L&D and in our corporate solutions offering.
Growth catalysts are vital for any business to appreciate in value. What are the key ones to drive your business forward?
Following our recent IPO in July 2021, Northcoders’ strategy is to scale-up the Group’s hybrid delivery model through a roll out of further regional hubs. Initial target areas for new hubs include Birmingham, Liverpool, Newcastle and Sheffield with the ultimate goal of creating a substantial network of Northcoders hubs across the UK.
In addition to geographical expansion, we are confident that there is the opportunity to further develop our apprenticeship offering, with growth being achievable through other levels of qualifications and through other standards.
Imagine you find yourself in a lift with Warren Buffett. What would be your ‘elevator pitch’ to summarize why he should invest?
Northcoders provides market leading services in the coding and software training sector, and our strong brand is attracting growing numbers of B2C and B2B students. Our corporate customers include Barclays Bank, The Co-operative, BAE Systems and Jaguar Land Rover.
We have a strong financial profile, deriving business from both private individuals and corporate clients and its courses are delivered through a combination of classroom and online teaching. The courses are typically paid for in advance by private individuals. Alternatively, they are paid for over the duration of the course via government funded apprenticeships or on agreed terms with student finance providers or with corporate customers. The Group became a fully accredited direct apprenticeship provider in December 2020, and enrolled students on its first direct apprenticeships in January 2021. This has opened up a significant opportunity to grow revenues in an area which is already receiving and is expected to continue to receive substantial government support.
We have a clear growth strategy, as we expand our geographic presence and we are supported by strong growth drivers; The UK Commission for Employment and Skills estimates that 1.2 million new technically skilled people are needed by 2022 to satisfy future skills needs in the UK. The Directors believe that Covid-19 has accelerated the digital transformation, increasing the demand for technically skilled people which is recognised by the government through its funding initiatives.
Please note: this interview with Northcoders forms part of the ShareBuyers’ going for growth series. This series allows companies big and small to share their growth story with retail investors.