London tech start-ups are concerned about competition from Silicon Valley companies.
As a result, benefits are being reconsidered.
But can start-ups based in the UK compete?
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Tech giants from the US like Facebook, Apple, Twitter, and Google employ thousands of people in London.
This looks set to continue as Google’s parent company, Alphabet, is currently building space for an additional 7,000 employees in King’s Cross. Additionally, Apple intends to place 1,400 staff in its new campus at Battersea Power Station.
Despite these companies providing new opportunities for skilled staff, London tech firms are experiencing hiring difficulties as a result of new salary expectations.
Oscar White, CEO and founder of venture capital-backed travel start-up Beyonk, told CNBC “Software developers are in higher demand than ever before, which is likely to worsen as more tech company campuses spring up around the city.”
He added, “For start-ups on tight budgets, who heavily rely on technology resource as the key enabler for growth, this presents a real challenge.”
Wage inflation in tech companies
White has explained that tech companies will now struggle to attract software developers if they advertise a job below £80,000 per annum. He also stated that developers can now be seen asking for salaries as high as £120,000 per annum.
On the back of rising wages, Tom Richardson, CEO of money management app Lumio, expressed that it is incredibly difficult to attract the talent desired without making financial adjustments.
Richardson noted “We are a start-up and with only a seed round and we cannot attract devs [developers] or great product managers. Starting salaries are mad.”
This issue is prompting changes in how companies hire and retain staff; many have had to alter their offerings. This is because there is not only a call for wage increases, but employees are seeking good perks, therefore employer benefits are being reconsidered.
Employee benefits
Richardson stated that he was considering relocating his business and hiring more remote workers. Equally, a CEO who asked to remain anonymous told CNBC that he had to update his benefits to retain staff; this included share options and a car allowance.
Although London tech firms are reconsidering how they hire and retain staff, the changes made in their offerings may be reflective of existing competition between companies.
Simon Menashy, a venture capitalist at MMC Ventures, made a point that London-based tech start-ups were already out-bidding each other for quality staff.
Furthermore, some believe that this is only a short-term issue. Alice Bentinck, the co-founder of start-up investment firm Entrepreneur First, claims that “long term” the competition presented from Silicon Valley companies is not “a bad thing, it’s a sign London’s tech ecosystem is thriving.”
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