Birmingham targets London’s frustrated tech SMEs

BIRMINGHAM is hoping to capitalise on the fact that seven out of ten London tech firms have struggled to grow their business in the capital.

The firms have pointed to soaring costs, a struggle to recruit and a property squeeze, a YouGov survey says.

The most commonly cited obstacles that SMEs think are currently holding the City’s tech firms back include:

•   The cost of running the business (48%)
•   Lack of available, suitably qualified / experienced staff (24%)
•   A squeeze on high quality, affordable office space (25%)

In the past year, property rents in London’s Shoreditch tech heartland have soared by 46%.

The vacancy rate – a measure of available office space – has plummeted to a low of 5%, the worst level since before the financial crash.

Almost four in ten (37%) of the SME tech firms which have experienced obstacles to expanding in London say they have missed out on new business because of this, and a similar amount (41%) said their business has grown more slowly than anticipated.

Birmingham believes it can capitalise on the constraints to London’s tech growth, and snatch business away from the capital.

Neil Rami, chief executive of Marketing Birmingham – which operates inward investment programme Business Birmingham – said: “Birmingham and its surrounding areas are becoming increasingly popular with London-based companies looking to expand – in particular, ambitious digital firms that have the capacity to grow but are struggling to upscale in the capital.

“The city is already attracting household names like ASOS, and we believe that Birmingham has the potential to become a global centre for e-commerce.

“As well as its large talent pool, proximity to London and supportive digital community, the city’s excellent language skills and growing transport networks make it the ideal destination for additional customer service and delivery centres.
 
“Growing businesses cannot afford to be constrained by their location. Setting up a regional base can provide the space, flexibility and staff required for digital firms to realise their full potential.”

Pete Marsden, CIO of ASOS, said: “There are huge advantages for a digital company like ASOS diversifying beyond London. We’re an ambitious company with a need to expand our skills to keep pace with our growth.

“Birmingham has the space, talent and vision we are looking for and is still in easy reach of our headquarters in London. Although it wasn’t part of the business case for locating there, the unique culture of Birmingham’s digital cluster and its potential to become an e-commerce hub sealed the deal for us.”