Tech City: 27% of London job growth comes from technology

Over a quarter of the job growth in London comes from the technology and digital sector, according to Tech City Investment Organisation.

Nearly 600,000 people are now employed in technology or digital in London said the organisation’s annual report.

The Tech City’s report also claimed the sector in London grew by 16.6% between 2009 and 2012, while the number of digital and tech companies in London grew by 76% from 49,969 to 88,215.

The report which has been released on Tech City’s third birthday highlights the role the organisation has played in expanding the London tech scene since it was founded by the UK government in 2010 to establish London as the digital capital of Europe.

Over the last three years, policies and programmes implemented have included the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), R&D Tax Credits, Patent Box, Entrepreneur Visa, Opening Government Procurement, the Future Fifty, changes to IPO regulations and the creation of the High Growth Segment on the London Stock Exchange.

Alastair Mitchell, CEO and co-founder of the cloud collaboration tool Huddle, which began as a startup in London in 2006, said: “As Tech City has gained more profile, we’ve also seen the spotlight shine on our home-grown talent and many of our brightest grads have started to join smaller start-ups. 

"Rather than follow the traditional path of heading to financial or consultancy firms to tune technology as soon as they’ve finished their degrees, they’re heading to companies where they can have a real impact on its direction and service. 

"In fact, we’re now seeing an increasing number of US-based companies heading to the UK to poach our talented developers.”

But Mitchell said for Tech City to thrive there is still more to be done, including improving the amount of investment opportunities for mid-stage businesses.  “The government and investors now need to provide more large scale funding to help transform good medium-sized businesses into outstanding global leaders. Without this, all the good work done thus far will be for nothing and we won’t see organisations blossom as they should.”

Joanna Shields, Tech City CEO and Ambassador for Digital Industries said: “Our challenge now is to build on these firm foundations to drive higher rates of start-ups and create a landscape favourable to digitally enabled firms to thrive and contribute long term to growth and jobs,” said Shields.

Further growth plans

Further plans to grow on these foundations have been announced today, the Prime Minister has announced a number of initiatives including an Exceptional Talent visa for world-leading individuals in the digital technology sector. This visa will open in April 2014 and be available for individuals who have previously developed successful businesses.

But the government has been criticized in the past for not making it easy for UK startups to hire from outside Britain, and this new visa concentrates very much on experienced business people.

“There’s a lot of competition and there’s not enough good people. We need to be attracting the best and the brightest from around the world,” saidAlastair Paterson, CEO of startup Digital Shadows.

In his experience, hiring really high calibre tech people is extremely difficult. 

"There’s a huge skills shortage in tech and startups really struggle because we can’t afford the wages that the corporates can pay their employees," Paterson said. "There’s a shortage in an already limited pool - even in London - that everyone’s competing for.”

The government will also be launching a new UK Digital Services Index which will benchmark UK digital companies listed on the Stock Exchange.

Prime Minister David Cameron said: “As well as backing the businesses of today we are also backing the businesses of the future and in just three years we have seen London become a leading centre for innovation, helping to drive our economic recovery. But this is not just about London. We are determined to build a rebalanced economy across the country and get behind the entrepreneurs imagining a new tomorrow in the dozens of technology clusters, accelerators and start-up incubators across Britain.”

The government also announced yesterday in its Autumn Statement that it would add 50,000 startup loans for entrepreneurs in the coming months.

The chancellor of the exchequer, George Osborne also said the government would expand the number of startup loans, as well as extend the Enterprise Allowance for entrepreneurs.