Capital groans: UK tech industry is thriving outside of London

The capital is losing its draw. Be it Brexit, high prices or packed tubes, something is turning people off London. Workers are leaving in their droves, and companies are looking beyond the M25 for alternative headquarters. In fact the rate of leaving the city is more than 80 per cent higher than five years ago, with 93,000 Londoners leaving for places outside the capital between 2015 and 2016. And the tech sector is no different. While London is still ranked as the UK’s primary technology hub, the fifth UK Tech Innovation Index suggests that winds of change are already blowing. Compiled by the Open Data Institute and the Digital Catapult organisation, the Index reveals that areas outside the capital are showing significant signs of growth. 

In particular, smaller cities across the UK are fuelling technology innovation in niche areas such as manufacturing, virtual reality and IoT production. The survey found that while London, Edinburgh, Manchester, Brighton and Southampton are the top five cities for data innovation, Reading and Liverpool are leaders in the internet of things (IoT). Meanwhile Coventry and Aberdeen topped the leaderboard for manufacturing and Cardiff was also identified as showing ‘early signs of an emerging virtual reality innovation cluster’. 

Tom Forth, head of data at ODI Leeds, said: “Our approach to measuring innovation pioneers new ways of picking out the early signs that industrial clusters are emerging. Our results are largely as expected, with large cities such as London, Manchester and Glasgow performing strongly in all areas and well-known over-achievers such as Edinburgh, Cambridge and Brighton punching well above their weight.

“Interestingly, our techniques seem to spot early signs of more focused excellence. In Reading and Liverpool, we see real strength in the internet of things. Leeds does very well in health. And in Aberdeen and Coventry, manufacturing is notably strong.”

And while the shift away from the Capital may spell bad news for the future of the Silicon Roundabout, a less concentrated economic hub may be the key to sustaining healthy competition (and funding) in a post-Brexit Britain.

One such place that is capitalising on London’s exodus is Wales. Start-ups in Cardiff and Swansea in particular are popping up every week, as Wales’ big cities redefine the way they make money. And according to industry experts it is only a matter of time until Cardiff develops its first unicorn (a start-up valued at $1 billion).

James Smith, chief executive and co-founder of IT consultancy DevOpsGuys has seen Wales grow from a place of sparse opportunity into a thriving technology hub destined for success. “Wales needs success stories of people who have put a business together and grown it, so others can understand how it was done,” he says. 

While official statistics claim that Cardiff and Swansea currently are home to around 17,500 digital jobs, the real number could be as high as 40,000. According to David Warrender, CEO of Innovation Point (set up by the Welsh government to encourage the development of the tech industry), the number of tech companies in Wales is only going to grow. “I grew up in Wales, went away to university, looked around for things to do in Wales and couldn’t find what I wanted, so I moved away for many years. When I compare that with the opportunities in the Cardiff region for having a career in digital and technology now, [there is] a world of difference.”

But why Wales? Stephen Thair, chief product officer at DevOpsGuys, believes that ‘cheaper office space’, ‘better relationships with regional government, local universities and local enterprise clients’ as well as ‘a better quality of life’ are all factors in drawing workers to Wales. “We are keen to build communities and see other tech businesses succeed,” he adds. “We will partner with local universities to help promote both innovation and commercialisation of those ideas. There are a lot of people who are working in London who want a better work/life balance, particularly as they establish families. They are often faced with being stuck in London or moving out of the tech industry completely if they move out. The more devolved the tech industry is the more opportunities there are to work in places with a better work/life balance and that’s great for the UK as a whole.”

Based in Cambridge, Raspberry Pi co-founder Eben Upton has seen his company thrive both in Cambridge and his native Wales. “The presence of technology companies in an area can be a powerful engine of job creation, both directly (at the firm itself) and indirectly (though the firm’s upstream supply chain, and spending by employees),” he says. “Our partners Sony UK TEC in South Wales (where we build the Raspberry Pi) are a good example of this, to the extent that they are even considered to be an ‘anchor’ company by the
Welsh Government.” 

It’s just as encouraging as you venture north. Manchester is fast becoming a technology hub, with more and more firms opting to relocate to the northwest city. The city’s thriving tech sector now accounts for nearly half of all enquiries for city centre office space. According to Colliers International around 40 per cent of new enquiries are coming from the tech industry and there are already around 63,000 tech related jobs in the city.

Heading further north and the technology sector shows no signs of slowing down with Scotland also booming. Craig Hume, managing director of Utopia Computers, says: “Scotland is a great place to be in business. While sometimes we realise it would be nice to be able to easily attend more events or visit clients in London more regularly, the advantages of being based in Scotland far outweigh the disadvantages. The direct costs of running a business in London are substantially higher, the competition for skills is greater and many areas outside of the Capital are screaming to attract tech firms, meaning there are many benefits to be gained locating away from
the city.

He added: “While the political landscape is a mess at the moment, as we stand today it makes sense that we are seen as a digitally adept and innovative nation in order to attract great people and great businesses. In order for this to happen it must be nation wide and not isolated to one city.” 

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