This is a best prospect industry sector for this country. Includes a market overview and trade data.
The UK is the largest ICT market in Europe offering major opportunities in cybersecurity, 5G/telecoms, AI and SaaS/cloud. Most UK enterprises realize the value of investing in ICT to accelerate their productivity and growth.
- $210 billion digital tech turnover in 2019
- Over 100,000 software companies in market
- Second largest ICT markets in ranking of ICT spending per head (U.S. #1)
- London second most connected place for tech, right after Silicon Valley
- No. 1 top scaling tech nation in Europe
- No. 1 destination for U.S. ICT businesses in Europe (often serving as EMEA HQ)
- UK tech VC investment is third in the world (after U.S and China), and more than any other European country (more than France and Germany combined), hitting a record high of $21 billion in 2020 in the face of challenging conditions.
The rapid development of digitalized services has been paralleled with significant growth in cybercrime, leading to greater spending on security in both public and private sectors and driving demand for more sophisticated and bespoke cyber solutions.
5G has begun rolling out across the UK thanks to strong commitment and investment from both the UK government and the UK network operators.
In 2016, the UK government announced its intention to invest in a nationally coordinated program of 5G testbed facilities and trials, as part of over $1.25 billion of funding to boost the UK’s digital infrastructure. Projects funded includes urban and rural connected communities, IOT, augmented and virtual reality, transport infrastructure, enhanced manufacturing, 5G security, and many more. The UK government significant funding to the program is being matched by private companies and network operators (there are four UK’s core networks: EE, O2, Three, and Vodafone).
Furthermore, in 2020, the UK Government announced a ban on new Huawei equipment from the end of 2020 as well as all existing Huawei equipment to be stripped from 5G networks by 2027. The U.S. sanctions introduced in May 2020 led UK security officials to conclude they could no longer assure the security of Huawei products. The exclusion of Huawei is creating opportunities for U.S. tech providers to supply services to UK operators.
Software, SaaS and Cloud Services
About 100,000 software companies operate in the UK including major U.S. firms such as Microsoft, IBM and HP. Also the UK datacenter market is the largest in Europe generating new sources of demand for ICT providers.
The rising tide of software as a service has created an industry of products and services that require subscription-like recurring payments and the mindset of UK customers has also shifted from one-off customers with a one-time purchase, to active, recurrent customers that adopt a recurring purchase routine.
Additionally the vast majority of UK enterprises rely on mobile connectivity of its workforce, which is an ideal setting for SaaS and cloud providers.
Artifical Intelligence (AI)
The UK is committed to creating an economy that harnesses artificial intelligence (AI) and big data providing great opportunities to U.S. tech companies. The UK has one of the strongest AI strategies in the world with strong government funding for AI, strong research activity in the field, strong VC funding and AI startups, and strong enterprise activity and adoption of AI. In September 2020 the United States and United Kingdom govenrments announced a declaration of cooperation on artificial intelligence research and devleopment.
The UK’s AI market is estimated to grow significantly during the next five years and to add $880 billion to the UK economy by 2035. UK artificial intelligence investment has reached record highs with UK AI scaleups raising almost double that of France, Germany and the rest of Europe combined. The UK is third in the world (after the U.S. and China) in terms of investment in AI.
Augmented Reality and Virtual reality (AR/VR)
The UK Government has announced an investment of up to $47 million in areas including virtual reality, augmented reality and mixed reality. The announcement forms part of the Government’s Industrial Strategy, which includes plan to grow artificial intelligence and data-driven economy. The UK is currently the largest market for VR/AR in Europe.
London is one of the world’s leading financial centers and a global hub for fintech innovation, advancement, and disruption. The market benefits from a major presence of financial firms from around the world and consistently attracts a high quality, diverse pool of financial services talent. The UK’s regulatory bodies, including the Financial Conduct Authority (FCA) and Bank of England are praised by industry for their open, welcoming policies that foster innovation and support cutting edge, disruptive technologies.
IOT /Smart Cities
Internet of Things (IOT) technolgy and services in the UK are growing rapidly specifically in applications within the heatlcare, energy, transport, public sector, and manufacturing industries. IOT/smart city projects are exceptionally well supported in the United Kingdom.
Opportunities exist to supply organizations of all sizes from SME to large corporations, with the most substantial opportunities to be found in organizations for which IT security is mission critical, e.g. major financial institutions, utilities and especially government departments (including Home Office, Ministry of Defence, Immigration and Border Protection, Revenue and Customs etc.).
- Large Enterprises: The bulk of the ICT market is orientated around large commercial enterprises. Financial services, utilities and transportation companies are large spenders.
- Public Sector: Central and local governments are investing heavily in ICT and data as they implement their digital transformation agenda to move more and more services online.
- Defense and Security (D&S): The D&S market is relatively niche and is focused on securing the nation’s secrets; involving the security and intelligence agencies, as well as the Ministry of Defence (MoD).
- Small and Medium-sized Businesses: While all the big enterprises in the UK have already implemented adequate tech tools for a while now, small and medium-sized enterprises have also started to direct their attention towards the right digital tools to optimize their processes.
Cybersceurity is the one of the most active ICT subsector in the market with U.S. cyber companies and technologies very well perceived in the UK. The impact of cybercrime is difficult to quantify but is estimated to cost the UK roughly up to $30 billion per year. The National Cyber Security Centre (NCSC) reports around 60 ‘high-level’ cyber-attacks on the UK a month, many of which threaten national security. Additionally organizations’ IT footprints are becoming increasingly complex, driving demand for more sophisticated and customized cyber solutions.
Artificial intelligence and machine learning also present substantial prospects with the UK being home to some of the biggest names in the business such as Deepmind, Swiftkey and Babylon. The UK has recognized AI as a huge opportunity and indeed the UK Government’s Industrial Strategy white paper identified AI and Data as 1 of 4 Grand Challenges (together with Future of Mobility, Clean Growth and Ageing Society). In 2019 the UK Government published the AI Sector Deal, outlining a package of over $1.3 billion of support for the sector. This support complements and leverages some of the $2.4 billion that has been announced under the cross-sectoral Industrial Strategy Challenge Fund so far. In addition to public funding, industry is also providing funding for AI solutions across key sectors: services, life sciences, agriculture and the public sector. Global AI powerhouses that have invested significantly in developing the UK AI market include Google, AWS, HPE, Beyond Limits and many more.
VR is the fastest growing segment of the UK’s entertainment and media sector and growth will be driven by a second wave of hardware that is easier to use, better supported and competitively priced.
FinTech is an area of growth and opportunity in the UK market, particularly in the subsector areas of blockchain and insurtech.
IOT opportunities streches across a variety of UK sectors including health and social care, power & utilities, transport, public sector, and manufacturing.
- Infosecurity Europe
- Digital Catapult
- National Cyber Security Centre
- Department for Digital, Culture, Media & Sport
For further information, please contact:
U.S. Commercial Service
Tel: +44 (0)20 7891 3443