The North East is second only to London for growth in the number of tech enterprises over the past year, according to research by Nixon Williams, a specialist accountant for finance and banking contractors.
According to an analysis by Nixon Williams, the number of tech businesses in the North East increased by 9.2% in 2015, compared to 11.7% in London. The number of tech businesses in the North East jumped from 9,695 to 10,285 between 2014 and 2015. In London the number of tech businesses, rose from 34,755 to 38, 810 during the same period.
According to Nixon Williams, in recent years, the North East has emerged as one of the fastest growing UK regions, with the tech sector being a key driver of growth. The surge in new business creation in the tech sector in Newcastle is fuelling a jobs boom, which is encompassing other urban areas, including Sunderland and Gateshead.
Victoria Kelly, Practice Manager at Nixon Williams, comments: “The North East is developing as one of the most innovative tech clusters in the UK. The region has five universities and with software giant Sage headquartered in Newcastle, has a talent pool with appropriate skills. Manchester arguably remains the Northern powerhouse for tech businesses, but Newcastle is snapping at its heels.”
“The North East has a much lower cost base than London, which makes it a perfect location for a start-up. Most start-ups have limited funds but those based in the North East would be able to allocate more cash to product development than an equivalent business in London, which would have to contend with much higher property and staffing costs in the capital.”
Nixon Williams points out that iginite100, the tech accelerator programme, has one of its three UK bases in Newcastle, and through venues such as Campus North is providing a support network for tech entrepreneurs and investors.
Kelly adds: “Tech businesses looking for investment have traditionally been drawn to the capital, which is still a hub for business development and networking. That is now changing too, with a number of tech funds now operating in the region, making the rationale for being in London less compelling. ”
Wales the second fastest growing region for tech businesses outside London
According to Nixon Williams, Wales is the second fastest growing region outside London for tech start-ups. Wales saw an 8.7% increase in the number of tech businesses between 2014 and 2015, from 2,630 to 2,860.
Victoria Kelly points out that over 28,000 people from the South Wales region alone are employed by digital companies, with 98% of those businesses expecting their revenue to increase in 2016.
Kelly continues: “Cardiff has become the focal point for tech businesses in Wales. Its strength lies in its diversity, with health tech, financial tech, data management and e-commerce businesses making up a varied digital ecosystem. Increasingly, businesses are able to attract funding locally, which is important if they are to grow within the region.”
“We are seeing growing demand for IT contractors from start-ups. Contractors frequently work on a wide range of projects, often for much larger organisations, and this experience can be invaluable to a small business. If a business needs to reduce its headcount, it is much easier and less expensive to do so with contractors than permanent staff.”