Global demand for the latest gadgets and devices is powering the British tech industry and creating big opportunities for digital businesses with bright ideas.
The technology industry is set for huge growth in the next five years, creating up to 750,000 new jobs in a market that already employs 1.5 million workers. As our report demonstrates, the UK has one of the world’s strongest digital economies, touching every sector and reaching all regions – dispelling the myth that it comprises just tiny start-ups or is dominated by a few high-tech clusters.
Sector at a glance
- 270,000 – The number of active digital technology companies in the UK – significantly higher than the government’s 167,000 estimate
- Salaries rose by 25% in 2012, fuelled by demand for skilled web designers and app developers
- The Tech City scheme, set up to create tech hubs around Britain, is helping to develop and expand the UK’s digital industry
Technology and the economy
Strong demand for the latest gadgets and smartphones is reflected in the technology industry’s recent performance. Indeed, companies in the sector have posted strong revenues every year between 2009 and 2012. In 2010, revenues grew 38.4 per cent and rose a further 43 per cent in 2011, before slowing to 35.2 per cent growth in 2012.
Industry research suggests that the good times are set to continue for British technology companies. This year, the number of jobs that needed filling in ‘Silicon Roundabout’ hit 4,753, up 44 per cent from 2012, according to Forbes.
Elsewhere, a KPMG and Markit report found that employment growth in the UK tech industry had surpassed the rest of the private sector for the past decade. "UK tech sector job and output growth have been especially strong since the end of the recession, with larger tech companies reporting steeper employment growth than smaller tech firms," the report explained.
High-tech takes the lead
Commentary by Joanna Shields, CEO and Chair, Tech City Investment Organisation
Digital innovation is helping us reimagine the way we work, live and play. World-changing technologies pioneered by the companies in this report are transforming whole industries, helping us tackle some of the most pressing problems of our times. In the process they are generating thousands of jobs and paving the way towards an extraordinary period of human and economic growth.
While the UK economy grew by 0.7 per cent in the second quarter of 2013, the digital economy has experienced more than 10 times that growth throughout the recession. It accounts for 8.3 per cent of GDP and is forecast to grow at an annual rate of 11 per cent in the next five years. According to a recent report by the National Institute of Economic and Social Research, digital companies are growing 25 per cent faster than non-digital ones.
Tech City is now home to more than 1,500 digital companies, up from 200 only three years ago. We’re working with 13 technology clusters nationwide, ranging from established centres of innovation such as Cambridge, to Manchester, home to one-tenth of the UK’s IT workforce, and Sheffield, which has an amazing engineering talent base. These clusters are becoming the driving engine for regional growth, creating a ripple effect in their cities and helping other businesses expand and grow.
"Digital companies are growing 25 per cent faster than non-digital companies"
In the last three years, a large number of policy changes have ensured businesses, and high-growth tech businesses in particular, can flourish in the UK. The result is that we now have one of the world’s most ambitious packages of incentives and policies for entrepreneurs and their investors.
The incentives are working, with record numbers of entrepreneurs starting businesses each year. In 2012, more than 484,000 businesses were set up – an increase of over nine per cent on the previous year.
The UK is already one of the best places in the world to imagine, start and grow a business. Moving forward, we need to see high-growth businesses succeed in the UK – and we’re implementing measures to make it easy for them to do so. Earlier this year, the Government and London Stock Exchange launched the High Growth Segment, while Tech City has launched Future Fifty, a programme to accelerate the growth of 50 of the most promising high-growth companies through public and private support.
There are already some phenomenal success stories, but through working closely with UK-wide clusters, continuing to refine our support package and pushing for our largest companies to fulfil their potential, we’ll soon see even greater growth.