Chancellor of the Exchequer, Jeremy Hunt, has made his vision clear, he wants the UK to become ‘the next Silicon Valley’. To support this aspiration, during the Spring Budget Statement, Hunt stated that the Government intends to make the UK a more attractive place for technology businesses. To do this, the UK will need to meet the needs of these demanding businesses -starting with a world-class workforce. Healthy immigration will be key here.
If the UK is to compare itself to Silicon Valley, it would be minded looking to immigration. Silicon Valley has a proven track record of nurturing foreign talent. A report by the National Foundation for American Policy in 2022 found that, of the 582 start-ups valued at $1bn or greater in the US over 55% had at least one immigrant founder. Of these 319 companies, 48% were founded in the Bay area, including Stripe, Bex and Instacart.
Healthy levels of skilled immigration is a good thing. Skilled migration enhances the wider ecosystem, bringing in diverse ideas and innovation. And this is particularly important in a sector that is defined by pushing boundaries.
With healthy levels of inward immigration being vital for growth – how does this play out in the UK’s technology sector?
Immigration levels have risen inline with a growing UK Technology economy
Almost 54,000 international workers applied to work in the UK’s technology sector and migrated in 2022. The number has increased each year since 2017. Research from TechNation indicates that during 2022 4.7m people worked in the UK Digital technology economy – rising from 2.69m in 2017. On this basis immigration levels have risen broadly in line with increasing employment in the technology sector.
The increase in skilled workers in 2022 is the largest year-on-year increase – over 13,000 extra people. The coronavirus pandemic in 2020 provides an explanation for dips in migration through 2020, when global mobility of people was significantly restricted. The larger increase in 2022 may be partly explained by a post-pandemic lag, suppressing numbers in 2021 ahead of a rapid jump in the latest year on record.
However, with almost 5m people employed in the UK’s technology sector an inbound immigration percentage barely above 1% of the total levels of the industry employment does seem very small. One of the key benefits of healthy immigration is their impact in sharing new ideas. Smaller numbers of migrant workers significantly decreases the odds off creating a meaningful impact across the technology ecosystem in the UK.
The software and IT architecture skillset drives migration numbers
The classification of these workers includes:
- IT/Telecoms directors;
- programme managers;
- software development professions; and
- IT operations technicians.
Over 39,000 professionals work across the two subsets of IT business analysis/architecture and software development. These skills are especially crucial as each year our reliance on digital technologies increases
The importance of migration from Asia
The vast majority of skilled technology workers are migrating from Asia – over 43,000 people. Within this population almost 40,000 migrated from India. In this area the UK is comparable to the United States. A report from NFAP indicated that 66 one-billion-dollar companies had Indian founders. This is followed by 54 from Israel and 27 from the United Kingdom.
Post-Brexit, skilled migration from the EU has risen but still only constitutes a little over 2,000 workers in 2022. In fact, relatively few workers migrate from countries outside of Asia. This includes very small numbers of migration from North America. For the United Kingdom, a healthy pipeline of talent and ideas from the world’s leading technology economy will be vital if it is to compete on a global level.
Technology Migration as part of the broader UK economy
Circa 150,000 work visas were issued in 2022 and technology immigration is a significant component of the UK’s inbound skilled works. These technology Immigration levels have trended upwards in line with growth in the UK technology economy. That said, the relative percentage of migration is very small compared to the total technology workforce – and this should be a cause of concern. An inflow of skilled migrant technology workers will be needed to support growth and innovation if the UK is to truly lead on a global scale.
The current inflow of immigration may not be enough. Despite global (and repeated) layoffs in the industry, there are still a high number of vacancies. Per a LinkedIn search in late April there are over 43,000 open job roles in functions comparable to the roles focused on above. Searches across the industry yield 68,000 open vacancies across all job functions. Migration of course is part of a broader picture that also includes home-grown talent. If the question is, how do we develop a digitally enabled workforce that can support a leading technology economy, then there must also be sustained investment in education facilities and training.
For migration to flow there must be employment opportunities. Government policy to stimulate growth in technology companies will be crucial, especially in emergent technologies that will fundamentally change the global digital economy. Business communities that cultivate emergent technologies and ideas at an early stage need to be supported.
The Government focus on the technology industry is a good thing for the broader economy. Economist Tom Pugh makes the point that technology workers tend to be renumerated well and healthy immigration may add more to the economy in taxes than they will use in public services. This should allay concerns held over public services.