The UK is the largest ICT market in Europe offering major opportunities for U.S. tech providers.
- $170 billion digital tech annual turnover
- 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)
- Key subsectors offering significant opportunities to U.S. tech providers include: AI, Cloud Computing and Cyber Security
- 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.
The rapid development of digitalized services has been accompanied by 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.
Software, SaaS, and Cloud Services
About 100,000 software companies operate in the UK, including all major U.S. tech giants. The rising tide of software as a service has created an industry of products and services that require subscription-like recurring payments. The mindset of UK consumers has shifted from one-off purchases to active, recurrent purchases by many customers. Also, the vast majority of UK enterprises rely on the mobile connectivity of its workforce, which is an ideal setting for SaaS and cloud providers. Additionally, the UK datacenter market is the largest in Europe, generating new sources of demand for ICT providers.
Artificial Intelligence (AI)
The UK is committed to creating an economy that harnesses artificial intelligence (AI) and big data, providing opportunities to U.S. tech companies. The UK AI market is valued at over $21bn and it is estimated to grow to over $1tn by 2035. The UK is the third largest AI market in the world after the U.S. and China. The UK has one of the strongest AI strategies in the world with significant government funding for AI, considerable research activity in the field, major VC funding and AI startups, and substantial enterprise adoption of AI.
Opportunities exist to supply organizations of all sizes from SMEs to large corporations, with the most substantial opportunities found in organizations for which IT security is mission critical, e.g., major financial institutions, utilities, and especially government departments (including the Home Office, Ministry of Defense, 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 the security and intelligence agencies as well as the Ministry of Defense (MoD).
Small and Medium-sized Businesses: While most large enterprises in the UK have already implemented adequate tech tools, small, and medium-sized enterprises have also started to direct their attention towards digital tools to optimize their processes.
Cybersecurity is the one of the most active ICT subsectors 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 $35 billion per year. Organizations’ IT footprints are becoming increasingly complex, driving demand for more sophisticated and customized cyber solutions. Over the last year, businesses and organizations in the UK reported hundreds of cyber incidents to the National Cyber Security Centre (NCSC), 63 of which were significant enough to require a national level response. The incidents included a range of malicious cyber activity such as ransomware, reconnaissance, malware and network intrusions, data exfiltration and disruption of services and systems.
Artificial intelligence and machine learning also present substantial prospects, with the UK being home to some of the biggest names in the business and with key players opening their first office outside the U.S. here. In April 2023 the UK Government pledged $125 million in funding to set up a taskforce responsible for accelerating the UK’s AI capability and support the broad adoption of safe and reliable AI. This funding is in addition to the $1.1 billion announced in the Spring Budget in March 2023 to invest in the next generation of supercomputers and a dedicated AI Research Resource. In addition to public funding, industry is also providing funding for AI solutions, with global AI powerhouses having invested significantly in developing the UK AI market.
The current uptake of AI in the UK varies significantly by sector and within sectors. Businesses and sectors that have digitized operations and services took up AI more easily and effectively than those that have not. The digitalization of banking, insurance, healthcare, and business services in the country is the key driver for the growth of the AI in the country. AI is also being deployed in addressing complex UK public sector challenges, including improving efficiency in mainstream public services, with applications in the processing of processing tax, benefits, visas, passports, and other Government licenses. For example, the UK Government Digital Service (GDS) works with the Pensions Regulator to improve efficiency using predictive algorithms for future pension scheme behavior and His Majesty Revenue and Customs (HMRC) uses AI to help identify call center priorities. AI solutions for data management and analysis are most prevalent in the UK, followed by natural language processing and generation, machine learning, AI hardware, computer vision and image processing and generation.
In Spring 2023, the UK Government published its policy paper on “A pro-innovation approach to AI regulation.” The UK’s pro-business approach and its commitment to work with business on safe and responsible innovation rather than just focusing on the risks should reassure U.S. AI companies in the UK market. Some concerns, however, remain around the UK regulators’ bandwidth to cover AI and how the UK Government will coordinate AI regulation across various industries. The UK is also going to host the first global summit on AI safety in the fall of 2023. The summit will bring together key countries, leading tech companies and researchers to agree safety measures to evaluate and monitor the most significant risks from AI.
- CyberUK, May 13-15, 2024, Birmingham
- Infosecurity Europe, June 4-6, 2024, London
For further information, please contact:
Claudia Colombo, Commercial Specialist, U.S. Commercial Service, Tel: +44 (0)20 7891 3443