Why the IT industry is deserting UK's 'Silicon Valley' (and where everyone is going instead)

The Thames Valley has homed the IT industry for 30 years. As that changes, this is where the country's next tech hubs are going to be located

If you are in the channel, the chances are you have served your stint driving (and sometime sitting stationary) on the M4. It is a simple consequence of working in our industry.

The M4 corridor is where the IT industry has grown and flourished for the past 30 years. However, the UK's "Silicon Valley" is in danger of looking increasingly like the desert which surrounds its US namesake.

The UK's tech hub is shifting as new cities compete to host the world's biggest technology firms and the country's own major players.

This all raises the questions: Why are firms leaving? Where are they going? And should you be doing the same?

The birth of "Silicon Valley"

The M4 corridor, particularly in Berkshire, Swindon and the Thames Valley, has long been the Blighty outpost for the world's biggest technology companies. Cisco has offices in Feltham and Reading, with the latter homing Microsoft too. IBM can be found in Bracknell (as too can HP), Didcot, Woking and Feltham, while Oracle has a Reading presence.

This has created the obvious channel ripple which has seen resellers set up camp in similar locations door-stepping their most important vendor partners. While Computacenter has its headquarters in Hatfield, it also has offices in Reading and Milton Keynes. Softcat has its headquarters in Marlow, while Bytes has offices in Leatherhead and Reading.

"For 30 years there has been a gravitation of tech firms to that Thames Valley area of Slough, Maidenhead and Reading," said Stuart Fenton, CEO at QuantiQ Technology. "It is not just because of cheaper office space either. At first, a lot of the companies were American. The American execs did not want to jump on the tube. They would come in and drive out west for 20 minutes as that was easier than going into London."

However, Fenton said that on visiting a vendor in Reading recently, he discovered a near-deserted office. "I have noticed a lot of firms moving out of the [Silicon Valley] business parks. Some offices are very empty," he explained.

Returning to his point on American execs not wanting to go into London, Fenton said this has changed as US firms now have strong local management teams in the UK to handle most matters.

Robertson Sumner boss Marc Sumner said the recruitment firm has also witnessed a shift of channel talent away from our Silicon Valley.

"This has especially happened in the partner community. That M4 corridor is not proving as popular. There are also a lot of American start-ups coming to London. In the last seven or eight months, roles are certainly spreading beyond the Home Counties," said Sumner.

So is the UK's capital the new Silicon Valley?


London calling

The perpetual lure of England's capital city has won over the world's biggest tech firms. In the last couple of years major tech firms have not just moved into new London offices - they have unveiled suburb-sized monster spaces.

Apple moved its UK headquarters to Battersea Power Station in 2016, taking up 500,000 sq ft spread over six floors. The move consolidated Apple's London staff from various city offices into a single location.

In November Google moved into its new £1bn London digs - a 870,000 sq ft building in King's Cross which was the first office it had designed for itself outside California.

Amazon also opened a new UK headquarters in London last year. The Principal Place building, based on the fringes of Shoreditch and the City of London, has 15 storeys and is 600,000 sq ft.

While Microsoft might still have Reading as its headquarters, its Paddington offices in London are frequently busier and more vital to the vendor giant. "Microsoft never had a London office of any scale and it now has several floors in Paddington," commented Fenton.

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Why the IT industry is deserting UK's 'Silicon Valley' (and where everyone is going instead)

The Thames Valley has homed the IT industry for 30 years. As that changes, this is where the country's next tech hubs are going to be located

You can visit IBM in Lambeth, HP in Hammersmith, Cisco in Finsbury Circus. As for Dell, while its Bracknell office is its flagship, the merger with EMC and the controlling ownership of VMware has seen EMC Tower in London become a more frequent meeting hub for the combined tech juggernaut. Dell EMC's resellers also have the option of snaring a desk in its London office when needs be.

It might seem like a strange reverse for the IT industry to snub the thriftier Thames Valley for an expensive London presence. However, offices are more efficient today. Hot-desking, a mainstay of tech firms long before it was popular, is common in London, and more cost effective too. "People are much more open to hot-desking in London as they are not there every day, while companies are more willing to support flexible working," said Fenton.

Britain is also still a country where most roads - and certainly most trains - lead to London. For example, you can get from Manchester Piccadilly to London Euston in two hours - the daily 7am arrives at 9am. If you were going from Manchester to Reading by train, you would be changing at Birmingham then Banbury and probably still need further transportation at the end.

"There is an increasing draw to London," said Fenton. "If financial services are going to be thinning out because of Brexit, then the IT industry is well positioned to fill in the spaces. Clearly the IT industry is not as many seats, but because the tech industry is growing so fantastically, maybe there will be a lot of firms gravitating towards London now."

Fenton said that when he was EMEA president at Insight, its main office was in Sheffield, with a small office in Manchester and a "reasonable office" near Wembley.

"In 2005, I moved us to Uxbridge. Not quite on the Thames Valley, but still a low-cost area," Fenton said. "About three or four years later I realised that was a mistake. Actually, it would have been better to have a smaller office in central London and get more talent. For central London, you can come in from everywhere, such as Cambridge, Essex, Kent, Surrey and Bucks. This is alongside the recruitment you can do on the tube network itself."

Fenton said for his current business, QuantiQ Technology, he bought it in London and he has since doubled down in the capital. "The availability of talent is fantastic; they come from all over, while clients find it easier to get there as they can jump on a train or a tube - so why would you have a business elsewhere?"

He continued that a contact at another firm had an office in "deepest, darkest Surrey", but it is easier for them to recruit staff in London. This resulted in the Surrey office being used for back-office functionality, but the growth focus is in London.

"It is not just the large firms leaving the Thames Valley, with smaller firms looking towards the city too," said Fenton. "Just look at all the tech firms in Shoreditch, you realise they do not want to open up in Uxbridge or Maidenhead despite the much cheaper rent. This is because you just can't get the talent - no-one wants to be stuck on the M25."

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Why the IT industry is deserting UK's 'Silicon Valley' (and where everyone is going instead)

The Thames Valley has homed the IT industry for 30 years. As that changes, this is where the country's next tech hubs are going to be located

Despite the allure of the nation's capital, it is not the only major UK city jostling for a slice of the fragmenting Silicon Valley.

Mad for Manchester

"There is a lot of great skills in Manchester, it is a great city," continued Fenton. "When I was at Insight we increased our footprint in Manchester. During my time there we went from having 13 people in Manchester to 120."

While football and music have long been the defining characteristics of the 500,000-plus city, it is technology in recent years that has taken an increasingly centre stage in Manchester.

In December 2016, a £4m grant funded two technology business hubs in Manchester with the goal of creating 2,000 new jobs over the next decade. Then in September last year, Microsoft opened a new office in Manchester as part of a plan to build a "strong base" in the north of England. "Manchester is really important to Microsoft," Derrick McCourt, general manager of Microsoft UK's customer success unit, said at the office launch. "We have a long-standing relationship built on common values, including industry, creativity and caring about people.

"The new office is a point of collaboration to help us work with partners and customers and as a strong base in the north of England. We see the region as a core part of our strategy. This office is a commitment to the area and our customers, business partners here and in the North," added McCourt.

It was a sentiment matched by Manchester mayor Andy Burnham. He has stated that he wants to establish Greater Manchester as "a world-beating digital city". Speaking at The Digital Summit in Manchester last year, Burnham said: "Our goal is to be the best [digital city] in the UK but I want everyone at the summit to have an input into how we do that and I will ask them to shape ideas with me.

"This is an incredible opportunity. My vision is for Greater Manchester to challenge neighbours in London, Bristol, Oxford and Cambridge to be the UK's leading digital city. I have gathered the brightest and most influential tech people here and together we will achieve that."

One of the biggest cheerleaders for Manchester as a tech centre has been UKFast CEO Lawrence Jones, who told CRN: "Manchester's profile is rising. We have a very vocal mayor in Andy Burnham, who has the objective of making Manchester the number-one tech city in the UK. That is a big goal, especially when you have a city like London on our doorstep.

"What Greater Manchester and the North West have is cheaper rent and rates. We also have huge access to talent, especially if you look at the universities here. In Manchester we have the biggest university campus in Europe."

Jones said there is a hub within Manchester of credible influencers who are collaborating by running events and sharing ideas. While this is happening in London too, Jones claims it is not to the same degree as Manchester.

"We are a small community, but have an international stage, with an international airport, international universities and international business players," said Jones.

"We are already beating London in many ways. For me, Manchester is already the capital of e-commerce [in the UK]."

Silicon Beach and Silicon Fen

It is not just Manchester and London that have gained their footing as tech homes. There are a series of honourable mentions. Sumner cites Sheffield and Birmingham as increasingly important locations, while the areas which wrap London in differing directions to the Thames Valley are also proving competitive.

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Why the IT industry is deserting UK's 'Silicon Valley' (and where everyone is going instead)

The Thames Valley has homed the IT industry for 30 years. As that changes, this is where the country's next tech hubs are going to be located

Teetering just miles from mainland Europe, Britain's south coast has quietly been building its reputation as a tech stretch of note. Or "Silicon Beach" for those partial to such names. IBM is headquartered in Portsmouth, while in July last year VAR heavyweight Softcat opened its seventh UK office in Southampton. "This will be an exciting move to the south coast of England, and one that has been on the cards for some time to enhance working options for existing staff," said Colin Brown, Softcat's managing director.

Sumner commented that when it comes to recruitment, Softcat has been able to tap into Southampton as a university town. "There is a well-documented talent shortage in the industry and Softcat has been able to look at graduates in a city with two universities," he said.

Tucked more neatly directly under London is Brighton. With a population pushing 300,000 and two universities, the seaside spot is gaining some tech interest. Research from Informi, which reviewed 63 cities, found that Brighton is one of the best places in the UK to start a small business.

There are now over 12,000 digital roles in Brighton, according to Brandwatch. Another report conducted by Wired Sussex and local universities found the average digital firm in the area is growing by more than 14 per cent a year. Brighton's Digital Catapult Centre was also launched in the spring of 2015.

There is one final mention of a UK tech hub on the rise. Also just over an hour out of London by train, Cambridge is the breeding ground for some of the country's finest minds as its city-swallowing university colleges remind you at every turn. "Silicon Fen", sometimes called the Cambridge Cluster, is a population of high-tech businesses, many with links to the university. The name comes from the location's proximity to the southern tip of the English Fenland.

While Acorn Computers, Aveva and Broadcom are all located there, Microsoft has a specialised research laboratory in Cambridge too. There is also the Bradfield Centre at Cambridge Science Park. The £20m centre opened last year and already houses over 200 science and tech entrepreneurs.

Should you be doing the same?

You might be reading this article in Slough or Chesterfield, and wondering if you have missed a trick. The demise of the city has been predicted for decades. Remember when the internet was going to fuel the rise of the rural worker? That has happened to some extent - you are far more likely to spend time working from home today and the internet makes that possible.

Whether your organisation should be heading to a new city tech hub is a question that can be answered only one way - with a resounding fence-sitting "it depends".

When it comes to back-office functionality it is difficult to build a case for a mass move into a major city. The numbers just do not stack up. However, when it comes to sales staff and other client-facing roles, the benefit of city dwelling is twofold.

Firstly, you will find recruitment much easier as you open up a transport network around your city location for potential staff. While compiling this feature, CRN discovered that one major reseller might be paying more for a London office, but the sales-per-head of their city staff outstrips their Silicon Valley staff by such an extent that they pay for themselves and then some. If the city talent is good enough, they will fund your move to the big smoke.

The second aspect is client meetings. While phone and Skype meetings serve a purpose, face-to-face interaction with current and potential clients remains relevant. Having a city presence makes this easier and potentially more profitable.

In short, it is worth doing the numbers. Can a bigger city presence boost your bottom line in terms of a strong talent pool and better interactions with clients? If that is a question you can answer with a yes, the UK's "Silicon spread" might be something worth joining.