London needs help if it is to spawn more tech unicorns
Russ Shaw’s piece in this section today rightly highlights London as a great place to be as far as retail technology is concerned – some of the most exciting startups in this space are emerging from the capital.
Other sectors, such as fintech, are booming too.
However, London doesn’t yet have a great track record when it comes to producing world-beating tech companies – certainly not when compared with Silicon Valley.
The report from Tech London Advocates (TLA) released this week gives us many reasons to be optimistic but also reiterates an uncomfortable truth – that London, like the rest of the UK, is suffering from a serious shortage of talent.
In fact, 43 per cent of those surveyed in the TLA report cited this as a pressing challenge.
This echoes June’s report on jobs from the Recruitment and Employment Confederation (REC) that found that IT professionals were the fourth most sought-after profession in the UK and a lack of people to fill these roles was affecting companies' ability to grow.
There are a number of reasons for this – firstly, the UK isn’t producing the necessary number of graduates in Stem (science, technology, engineering and maths) subjects, which is a problem that could take a number of years to fix, while London is a very expensive place to live.
The dearth of the right kind of talent here means that those who have the right skills in IT command high salaries, putting them out of the range of startups who might have revolutionary ideas but also have constrained budgets.
But while the reasons might seem quite obvious, the solutions are less so.
Government policies aren’t very friendly to companies who want to bring in tech talent from outside the EU, and Tech City UK only granted seven exceptional talent visas in the first year after it was introduced. So if companies can’t get the talent in, they need to think about either moving their entire operation overseas, or taking advantage of today’s digitally connected world to use overseas talent while keeping their roots in London.
To succeed in London, tech companies need to think more globally. If they can’t get local talent in, then one solution for businesses that need to grow but don’t want to relocate is to consider outsourcing part of their operation. Finding skilled IT workers overseas who can work remotely and don’t cost as much to hire as people in the UK with the same skills is entirely possible, with the Philippines, Eastern Europe and India all locations to consider.
Long term, if London and the whole of the UK is going to produce more unicorns, then the government needs to take the lead. An overhaul of education policy to ensure that we produce more graduates in STEM subjects is the key to this, but recognising the need to encourage people with high quality IT skills from all over the world to come to London is also necessary.