London's Digital Industry
London's digital industry plays a fundamental role in the British economy. This industry has helped position London as Europe's undisputed digital capital and has been a catalyst for growth across various industry sectors. Thanks to its combination of modern infrastructure, a skilled workforce, and the ongoing support received from investors and from the financial sector, London is a point of reference in the global digital sector.An overview of the London digital industry
It is estimated that as a whole, the TMT sector contributes more than 8 per cent to the United Kingdom's total GDP, generating an annual value of £125 billion. Tech and internet-related businesses alone contribute in excess of £60 billion to the country's economy.
This industry is also renowned for its ability to create employment. A joint report published by Deloitte, Intel, EMC2, and London First revealed that currently one out of every ten jobs in this sector is based in London, and approximately 50 per cent of the UK's digital media jobs are in the capital. All in all, more than 251,000 people work in the city's digital sector, and a further 45,000 job vacancies are yet to be filled. Even during the financial crisis, this sector was the key driver of jobs growth in the city, sustaining annual growth levels of 3.7 per cent. In addition, the number of London-based digital companies increased by an impressive 92 per cent between 2010 and 2013. In 2015 Tech Nation surveyed nearly 2,000 companies across the country and found that the London digital cluster ranks first in terms of the employment volume generated. In terms of annual turnover volumes, London was fourth and was preceded by other digital clusters in Manchester, Belfast, and Sheffield. The survey also found that the most productive sub-sectors were e-commerce, fintech, data management / analytics, and digital marketing. London-based digital companies were found to have particularly good capabilities in areas like UX design, network infrastructure, data science, and online payment platforms. The sector also benefits from the existence of 36 business accelerators and from a large number of co-working spaces that suit the needs of new digital startups.
The city's digital sector is helping transform other industry sectors too. This is mostly evident in the case of retail due to the impact that digital technologies have had on e-commerce. A recent eMarketer report showed that more than £52 billion were spent in online transactions last year, and this figure is expected to grow to £76 billion by 2018. The m-commerce market is also growing exponentially, going from £3.85 billion in 2012 to £14.10 billion in 2014 -and its worth is expected to double by the end of 2018.
The real estate market is another sector that benefits from London's booming digital industry, as more office space is required to accommodate the needs of digital businesses. The presence of digital companies is no longer limited to the Tech City, but has expanded into areas north and south of central London and is particularly strong in Covent Garden, Soho, Canary Wharf, and the northern end of Oxford Street, as well as having large clusters in the South Bank, King's Cross (in particular around the Knowledge Quarter), Victoria, and eastern fringe locations. Companies that operate in this industry take up 13 per cent of the city's available office floor space and occupy 25 million square feet in central London, most of which are taken up by digital media businesses.
The results of a 2014 survey carried out by Propel London are also worth mentioning. This survey provided some insights into the city's digital industry and revealed that employees enjoy high levels of job satisfaction and have a wide range of opportunities for career advancement due to the dynamic nature of the industry. Starting salaries in London average £24,700 and can increase to over £100,000 for senior roles.What does the future hold for the London digital sector?
According to the 2015 Tech Nation "Powering the Digital Economy" report, the digital sector is on its way to seeing further growth, as growth rates are expected to outperform every industry by 2020. However, this sector is facing some challenges too. A Deloitte survey of over 150 companies found that owners of digital companies in London cite an unfavourable tax regime and the lack of suitable office space at affordable prices as the main growth inhibitors. Moreover, the digital sector in London is experiencing increased competition from other UK cities that are quickly becoming new digital hubs, like Manchester, Cambridge, Bournemouth, Bristol, Liverpool, and Brighton. Nevertheless, the future looks certainly bright for the London digital industry, which is expected to grow by more than 5 per cent every year.