According to a Tech Nation report, London’s tech sector accounts for more than one in five jobs, home to 2,183 fintech companies and is the fourth largest location for tech VC investment. The vibrant and growing tech hub in London remains the leading destination to grow a technology business outside of Silicon Valley according to a ranking by The Global Start-up Ecosystem Report.
More money than ever is entering the UK tech scene, with 2021 reporting a staggering £29.4 billion, up 2.3x from last year’s figures. 45% of IT decision makers claim they would choose London as their location of choice to launch their tech start-up. This paints a positive picture, but the growing evolution of tech means businesses are wanting to scale rapidly. This partnered with a growing struggle to hire due to the ever-disruptive tech skills gap means businesses must look for a long-term solution to successfully scale in the capital.
A city without borders
March 2020 saw the UK go into lockdown and businesses welcomed the world of remote working as office doors closed and we entered the ‘digital office’. Now in 2022, we have seen hybrid become the new working norm and it was soon realised that remote working isn’t going anywhere.
It’s no surprise a change in working ways has increased the war on talent. The UK hiring market has gone from regional to global, meaning recruiters are poaching people for jobs outside of the local region and businesses can now find the staff they need, regardless of location.
Remote work technology is creating endless possibilities and London-based tech companies are increasingly hiring latent internationally to solve increasing skill shortages.
Tipping the scales
Interestingly, out of all the unicorns created in the UK, 35% of the 29 new unicorns created in 2021 were outside of London in locations including Cambridge, Manchester and Leeds. Additionally, the report found 35% of futurecorns are also based outside of the capital, suggesting that tech growth in other regions will continue strongly in the next five years. This ultimately suggests that as the UK tech market grows, the war on talent in the capital will become extremely challenging.
Another challenge that start-up businesses are facing is a growing number of US tech giants including Google, Facebook, Amazon and Microsoft now employing tens of thousands of tech workers in attractive offices across London. This is making it difficult for London start-ups to hire and look to scale with the growing competition.
There has been an increase in hiring internationally to give relief to a progressive war on talent faced by tech companies. Remote working is here to stay, and businesses are adapting to become more comfortable with hiring remotely. Technology has provided the key to unlocking the potential for businesses in London to scale.
Mind the gap with nearshoring
With a recent study by Microsoft predicting the UK will require an additional 1.9 million software developers by 2025 to meet demand, businesses are looking for the answer to scale. The pandemic brought on an increased velocity in digitalisation, so eventually, most tech companies will have to consider hiring to grow their business.
Whether it’s a case of extending the tech team to develop a new project or expand a product capability, choosing to hire overseas will give businesses more access to readily skilled developers without compromising on the quality of work, in essence plugging the gap by scaling up – but not necessarily by the size of the physical office.