UK IT companies fail to make the global grade

While the UK has the potential to be a world leader in technology in the years ahead, competition from China, India and others threatens to leave UK IT in the slow lane, according to a report published on Friday.

Of particular concern is the lack of UK companies with the size to compete on a global scale. The report, from Deloitte, based on research on 50 of the country's "leading technology influencers", says that, "simultaneous to a host of foreign-headquartered technology companies' strong growth, UK-headquartered companies have disappeared from the UK's public markets".

International competition from China and India is expected to intensify, the report says, while there is the "possibility of an exodus of research and development" from the UK.

Despite this, the report maintains that the UK is in a relatively advantageous position, but needs support, especially financial support, if it is to exploit it.

"We have a strong science base, good innovations in a number of important areas, a strong economy and a leading financial market," said William Touche, technology partner at Deloitte. "All stakeholders involved in the sector — the government, academic institutions, commercial companies and finance firms — need to work together to ensure that we capitalise on the next wave of technological advances now that the IT sector is maturing and consolidating fast."

Commenting on the UK software business, Dennis Keeling, chief executive of the Business Application Software Developer's Association, told ZDNet UK: "We have seen a significant decline in small and mid-tier software companies. Microsoft has bought them, Sage has bought them".

Keeling cited the UK banking and finance sector as a major impediment to growth. "The banks are very reluctant to give a second mortgage to allow someone to start-up a software company."

One of the key people responsible for ensuring the health of the UK IT economy, Lord Sainsbury, undersecretary of state for science and innovation, reaffirmed the UK Government's belief that "science, technology and innovation are of critical importance to the future of UK industry" and welcomed the report including the recommendation of better co-operation between the finance community and IT.

John Higgins, director general of the UK software and services industry group Intellect, called for "better collaboration with the sector, improved relationships with the financial sector and the emphasis placed on the important proactive role the government will play in making this happen."

The key conclusions and recommendations of the report are:

• UK government: The government is recognised as believing strongly in the value of technology in the UK and is seen as providing a platform for the sector to grow — with an economic and social environment that broadly supports UK-based companies and workers, as well as being attractive to multinational companies and foreign talent. However at a micro-economic level it was still felt that improvements could be made, particularly in regards to the funding of research, as well as provision of greater support from regional development authorities and development of cluster specialisations, such as that found in Cambridge.
• UK education system: Feedback from the technology sector on the current standard of technology education in the UK is positive, although one area of particular concern relates to commercial aptitude. Touche comments: "Our research found that while the UK is generally adept at developing world-class subject matter experts, there is a lack of commercial application. We need to focus on questions such as "what problem is this trying to solve?", or even just "so what?""
• UK financial sector: The UK boasts one of the most vibrant financial markets in the world, whilst also being one of the largest customers of technology. However respondents felt that there was a degree of mistrust between the financial and technology sectors, catalysed by the dot-com crash.