Britain has created 45,000 technology companies in the last five years, equivalent to one every hour, according to a KPMG report.
The latest Tech Monitor UK Survey, which is carried out by KMPG in conjunction with financial information provider Markit, shows that the number of tech-related businesses in Britain’s private sector has risen by 31% since 2010.
By contrast, the total number of UK manufacturing enterprises has risen by only +2.2% since 2010, while for construction the figure stands at +3.7%, the number of retailers has increased by +2.2%.
Many of the UK’s technology companies are being founded in London, with particular clustering happening around East London’s Shoreditch are, which is home to wearable technology firm Vinaya, money transfer service TransferWise and mobile gaming company Mind Candy, amongst others.
While London has the largest number of tech firms, all regions of the UK have experienced growth, with 63 of the UK’s 326 local authorities experiencing over 10% growth in the number of tech businesses they’re home to. This is likely to please the government and the Tech City UK organisation that is looking to replicate London’s success across the rest of the UK.
Despite an overall increase in new business levels, the survey indicated a slight deterioration in profitability across the sector. Survey respondents said competitive pressures and the need to offer price discounts to secure new work had weighed on profitability in Q3 2015. In some cases, tech firms noted that higher salary costs had also contributed to pressure on operating margins.
“It is important for the UK to have a strong Tech sector and it is therefore hugely encouraging to see that not only has the UK Tech sector delivered six years of continued growth, but that this has happened throughout the country with some 63 local authorities experiencing double digit growth in the last year alone,” said Tudor Aw, partner and head of KPMG’s Technology Sector.
“We are also seeing increased specialisation within local technology clusters such as Biotech in South Cambridgeshire, AutoTech in the West Midlands and FinTech in London. This creation of tech centres of excellence will create a virtuous circle of attracting global investment and acting as a magnet to the best tech talent.”