IT firms up 37,000 in two years, 'driven by social media and apps'

Boy with UK flag
The UK is no longer socially awkward

A burgeoning "app economy" and new social media platforms are giving the UK a technology-focused shot in the arm and helping it become a global player in the information sector.

That's according to accounting services company NoPalaver, which says that the number of businesses operating in the sector has risen by 37,000 - or 14% - to more than 300,000 compared with two years ago.

Social media is driving growth of IT start-ups and helping raise the profile of tech hubs such as East London's Silicon Roundabout in Tech City, it says, which is in turn breeding innovation in the sector.

Going alone

While the majority of the companies (19.17%) are small companies with less than 50 employees, the vast majority (79.7%) are sole contractors, the company found.

NoPalaver Director Graham Jenner said that many IT professionals are taking advantage of the economy recovery by setting up their own business and becoming a limited company, adding that now is an "ideal time" to do so as the sector improves on both the consumer tech and business IT sides.

He said: "Companies that were reluctant to do more than just patch-up their IT systems during the recession to keep them going are now feeling more confident about investing in their IT infrastructure again, in order to add value to their business and support competitiveness and growth.

"Many businesses are seeing the benefits of hiring contractors to fill skills gaps and provide specialist expertise rather than taking on permanent staff. Until the economic recovery becomes more entrenched, they may prefer to continue to use contractors as a more flexible, lower risk option."

Group warning

While the situation is looking up at the bottom end of the market, the situation may not be so promising for the mid market and above.

In an interview with IBTimes, Alastair Mitchell, CEO of Tech City-based success story Huddle, a Sililcon Roundabout-based company that provides cloud-based social collaboration software, warned that Tech City could find itself in crisis in less than two years unless medium-sized businesses are given the financial support needed to grow.

He said that many start-ups initially receive funding but struggle to find follow-on investment and either cease to exist or pack up and move to the US.

Kane Fulton
Kane has been fascinated by the endless possibilities of computers since first getting his hands on an Amiga 500+ back in 1991. These days he mostly lives in realm of VR, where he's working his way into the world Paddleball rankings in Rec Room.