Brexit is the biggest political and socio-economic issue that the UK has faced in decades. Since the 2016 referendum, the vote to leave has had a damaging impact on the British economy, with the ONS (Office of National Statistics) recently announcing that the economy had contracted for the first time since the recession in 2012. In reaction to this economic volatility and uncertainty, some multinational corporations are reducing their UK presence. And, despite the UK’s reputation as an international tech hub, the tech industry isn’t exempt from this trend. For example, tech giants Sony and Panasonic have both announced plans to move their European headquarters out of the UK.
However, the country’s skills crisis has been an issue since long before Brexit as a result of technology developing at a faster rate than the UK can educate or re-skill people. In fact, the deficit of digital talent could cost the UK £141 billion in GDP growth by 2028 and will no doubt stifle innovation. Now, with Brexit threatening the UK’s cosmopolitan tech landscape - and the wider economy - we may see this situation worsen as the UK’s brightest tech talent move their careers overseas. In fact, a recent report by Salesforce revealed that 60 per cent of London firms think they’ll lose access to digital talent once the UK leaves the EU.
To remain competitive post-Brexit in a strong, global hiring market, British companies must reassess their strategies for attracting, supporting and retaining domestic and overseas tech talent, taking inspiration from the thriving tech hubs around the world.
How can the UK compete with Silicon Valley?
The San Francisco Bay Area has become synonymous with tech innovation and is the birthplace of many of the most disruptive tech titans. A global brand can be attractive to any candidate, but being located in the Valley can add another level of validation and prestige.
While the San Francisco Bay area has its own draw, London has undoubtedly seen its fair share of innovation and growth. UK food delivery tech company Deliveroo reached unicorn status in 2017 and is an embodiment of the type of innovative and disruptive tech company that techies want to work for. The brand’s post-Brexit strategy is a push for a “unicorn” tech visa that allows fast-growing British businesses to continue to hire talent from the EU even in the case of a hard Brexit.
However, Silicon Valley remains home to the most desirable tech companies in the world. According to Hired’s 2019 Brand Health Survey, released this September, despite the UK’s flourishing tech landscape, British business are not featured on the global list of the top 15 private or public companies favoured by tech talent. San Francisco companies Airbnb, Reddit and Robinhood topped the global list of private companies that techies most want to work for, while Google, Netflix and Apple topped the global list of public businesses. In total, 12 out of the top 15 public companies and 7 of the top private companies are based in the San Francisco Bay Area.
Tech professionals can solve some of the greatest challenges of our time and it is no surprise that they want to work for well-known companies that have a lasting impact. As such, to attract new talent, the UK needs more big-name tech brands that have a reputation for breaking the mould. This will require continual investment in the UK tech landscape to ensure that these types of brands continue to flourish, despite the political crisis.
Unsurprisingly, salaries matter.
Salary and earning potential is a hugely influential factor for job-seeking candidates. Hired’s 2019 State of Salaries Report revealed that London tech talent earns £62K ($79K) a year on average, 67 per cent higher than the average London salary of £37.1K. However, these generous salaries aren’t so competitive when compared with the earning power of Silicon Valley techies who earn 59 per cent more than London tech talent with an average salary of £117.3K ($145K). As well as this, despite their higher than average earnings, only half of London’s tech workers believe they’re paid fairly given the city’s cost of living. In fact, almost three quarters (71 per cent) of London’s tech talent currently rents their home rather than owning a property compared with the other tech hubs where almost half (45 per cent) of people are homeowners. With this in mind, it’s understandable that London tech talent is looking further afield for new opportunities.
Another important strategy? Inclusivity.
A glowing, global brand and competitive pay check aren’t the only things that motivate tech talent. It’s a no brainer that businesses will have access to a much wider pool of top talent if they foster diversity and inclusion throughout their company’s hiring funnel. Our research this year has also revealed that both gender and racial disparity remain a massive problem in tech. Our UK Workplace Equality Report is coming out in October, but in the US there is still a 3 per cent gender wage gap in tech. On top of this, black tech workers were found to be paid the least, earning $13K less than Asian tech workers who are paid the most.
Tech firms need to eliminate bias in their hiring processes to boost diversity while remaining competitive. Implementing a compensation strategy that dictates that each candidate is offered the same salary, irrespective of their wage expectations, is critical. Other practices such as blind recruitment, where interviewers don’t have any insight into candidates’ personal information, should also be standard practice.
Hiring practices need to change to remove the outdated stigma surrounding ‘non-traditional’ education (i.e. non-university based education), as this also isolates a valuable section of the talent pool. We found this year that tech talent themselves see huge value in alternative education routes - for example, 76 per cent of people who graduated from developer bootcamps (such as General Assembly and Hack Reactor) said it helped prepare them for a software engineering job. Interestingly, almost a third of techies (31 per cent) with a Master’s and/or PhD said they could have the same job without their degree.
The bigger picture.
As the world counts down to the 31st October, 2019 (the current date when the UK is set to leave the EU) all eyes are on the UK to see how it deals with its exit from the European Union. Companies need guidance on how to navigate this unprecedented shift, but they should also be assessing themselves internally and devising strategies on how to retain and attain tech talent. After all, an organisation is only as good as its people and a strong hiring funnel is key to any business’ success.
The responsibility for shoring up the future of the UK’s digital talent shouldn’t fall solely on the shoulders of UK tech companies. As a nation, the UK needs to do more to attract and retain tech talent. Innovation is critical for the nation’s economy at large.
Nationwide funding needs to be made available to support the growth of the Deliveroos and Monzos of tomorrow. Furthermore, the UK government needs to create a more nurturing environment that is attractive to skilled migrants, with additional benefits such as lower corporation tax to support new and growing businesses. It must also address UK businesses’ fears about their ability to trade post-Brexit by retaining current trading regulations with the EU or developing equally powerful new trading deals with other parts of the world.
Mehul Patel, CEO, Hired