About 15,000 new IT companies have been created in the UK over the past year – a testimony to the steady growth of the sector driven by London-based start-ups.
The data have been published in a new report by IT accountancy firm NoPalaver, which said the number of IT-focused firms in the UK has exceeded 320,000, a rise by 5 per cent compared to the previous year.
London’s Silicon Roundabout, an area around the Old Street Station known for its high concentration of technology start-ups, has been a major hub propelling the growth, with its financial technology and app-making firms having attracted £1.4bn of venture capital investment over the past 12 months, NoPalaver said.
"The UK, particularly London, continues to prove itself a breeding ground for technological innovation and offers attractive investment opportunities," said NoPalaver’s director Graham Jenner.
The firm cited Google’s estimates that put the contribution of the app sector to UK economy at £4bn and project a rise to £31bn by 2025.
Among the most successful IT start-ups based around the Silicon Roundabout are creators of Candy Crush King Digital, makers of Moshi Monsters Mind Candy and new taxi app Maaxi, launched as a direct competitor to Uber with financial backing from financier Nat Rothschild
Amazon has also announced plans to open a major office in the area in 2016 with over 5,000 employees.
NoPalaver believes the sector is set to further benefit from the rise of Big Data, which puts companies in front of the task to efficiently assess vast amounts of data to fine-tune their services – something the IT sector is best positioned to help with.
“Alongside the boom in consumer and retail apps, technological innovation is currently bringing the biggest shake-up to financial services since the launch of online banking,” Jenner said.
“This is an area where London has a massive headstart against any European rivals thanks to the close links – both physically and professionally – with the City, which means that app entrepreneurs are exceptionally in tune with the financial services market.”
NoPalaver notes that the vast majority of UK IT companies remain sole traders (79 per cent) or small companies with fewer than 50 employees (21 per cent).
NoPalaver points out that even in the larger IT companies, the majority of the workforce will be self-employed contractors as the flexibility offered is beneficial to both the contractor and the business. The skills of the contractor can be used to get projects off the ground and once their skills have been used, the contractor can move onto their next project.