Tuesday, 24 June 2014
London Surpasses Silicon Valley as Tech Capital of the World
Twenty years ago, California's Silicon Valley was the place to be if you were in the technology and information sector. The Valley was home to the most important technology companies in the world and, as such, attracted the best talent and the most investment money for new start-ups. How times change. Recent data shows that London and South East England have surpassed not only the Silicon Valley, but also the entire state of California.
The research comes from Bloomberg Philanthropies and South Mountain Economics, two American organisations specialising in tracking technology and business trends. Their research shows that the technology sector in London and the South East currently employs roughly 744,000 individuals; the same sector in California boasts approximately 692,000 workers. The research further shows London as leading the world in terms of the total number of financial tech firms located within its metropolitan area.
Former New York Mayor Michael Bloomberg told Real Business that much of the shift away from California could be traced to New York and London's “diversity, creative talent, and high quality of life” however his comments are likely nothing more than political speak from a man trying to defend the city he once presided over. In truth, London and the South East are excelling because the UK has made a concerted effort to push the technology sector.
Whether you are talking about companies offering IT services and managed services, or firms developing new hardware and software, they have found an environment in London that allows them to thrive. They have the infrastructure to support their businesses along with plenty of training opportunities to provide skilled workers. They also have a friendly regulatory environment that does not hamper innovation and progress. In fact, the environment is one that encourages both.
In many parts of the US, the exact opposite is happening. Government regulation and taxation is stifling the technology sector and preventing it from moving forward. Nowhere is this more easily seen than in California, where taxation and regulation are considered out of control among business experts. Of course, technology companies are going to move to more friendly places.
If the United States wants to continue on a path that stifles technology growth, the UK will be more than happy to pick up the slack. Separate research from London & Partners shows that the size of the digital technology sector in Britain's capital is set to grow by more than 5.1% annually over the next several years. They expect the sector to generate approximately 46,000 new jobs and upwards of £12 billion of additional economic activity.
It is time to say goodbye to the Silicon Valley as the home of modern technology. That distinction now belongs to London and the South East of England. As long as nothing changes, and we do not expect anything will, what happens in the UK will have the greatest impact on the technology industry for decades to come. That is a very good place for London and the South East to be.