While politicians argue about the best way to boost the UK’s economic prospects in the run up to the election, one sector appears to be in rude health.
When the dot-com bubble burst in 2000, the idea of running a successful digital business was a bit of a joke. But after this crash at the start of the millennium, the digital economy was resurrected. It has grown steadily ever since and managed to weather 2008’s enormous financial slump better than many other sectors.
Today, digital business is big business. Few companies remain unaffected by the internet, and entrepreneurs can make real money by delivering products and services digitally.
The digital sector is fascinating. Buzzing with ideas and packed with startups, it’s an exciting place to explore. And that’s what Tech City – which encourages digital businesses to thrive and grow – decided to do.
The result is its Tech Nation report, a comprehensive analysis of digital companies in the UK. This research combines company data with a survey of more than 2,000 digital businesses to paint a picture of the digital economy.
It makes for an interesting – and sometimes surprising – read. Here are six facts to whet your appetite.
1. Most digital companies are outside London
Coverage of digital companies tends to centre on ‘Silicon Roundabout’, an area of east London that’s become a hub of internet business.
But in reality, 74% of digital companies are located outside the capital.
There are significant digital clusters all over the UK, from Belfast, Bristol and Bath to Manchester, Edinburgh and Oxford.
2. There’s more growth in the north
Digital businesses outside London aren’t just surviving. They’re thriving.
In fact, the research comprehensively proves that you don’t have to be in London to be successful. Companies in Manchester saw average growth of 74% between 2010 and 2013, significantly outperforming London, where average growth over the same period was 42%.
But there’s optimist across the board. Of all small and medium-sized companies surveyed, 90% expect their revenues to grow next year too.
3. There’s cash on the table
If you read TechCrunch, TheNextWeb or any other websites that cover the digital economy, you’ll be aware that investment has been flooding into the sector. Barely a day goes by without an app or two attracting generous funding.
Indeed, the Tech Nation report found that, in London, venture capital has increased by 2,000% in five years.
Some pundits think this shows we’re in the middle of another bubble. But no matter whether you subscribe to that view of not, there’s little doubt that investment is easier to come by than it has been in quite some time.
4. Job prospects are good and improving
The digital economy is a major source of employment. The research suggests that some 1.46m people work in digital companies, with around 45,000 jobs being advertised at any one time.
For people contemplating a switch to a digital career, the signs are good. By 2020, 5.4% of the population will be employed in digital jobs. What’s more, a far greater proportion of people will be doing a job that has some digital aspect to it.
5. Digital companies can do anything
What do you think of when you think of a digital company? From the BBC’s Nathan Barley to HBO’s Silicon Valley, it’s easy to poke fun at the digital world. If the stereotypes are to be believed, it’s all gimmicky offices, free lunches and conversations that feature the phrase “it’s like Uber, but for…”.
As this research reveals, the truth is somewhat different. Digital companies span virtually every sector. In addition to pure digital sectors – such as ecommerce and software development – the digital economy cuts across all kinds of areas, bringing disruption and opportunities to traditional areas of business.
6. High-tech companies face familiar challenges
Although many digital companies create products and services that didn’t even exist a decade ago, the challenges they face are familiar.
According to the Tech City research, digital companies worry that they won’t be able to find people to fill new roles. A third of respondents said that a lack of local talent is a significant barrier to growth.
In some areas, transport links are a concern (what about online meetings and teleworking?), as is finding suitable, affordable premises. The issue of where to work is particularly acute in the South East, even though co-working spaces are now more common than ever.