Brexit has taken over discourse in the UK and beyond. In the UK alone, it is mentioned over 500 million times a day, in 92 million conversations — and for good reason. While the UK has yet to leave the EU, the impact of Brexit has already rippled through industries all over the world. The UK’s technology sector is no exception. While innovation endures in the midst of Brexit, data reveals that innovative companies are losing the ability to attract people from all over the world and are suffering from a substantial talent leak.
It is no secret that the UK was already experiencing a talent shortage, even without the added pressure created by today’s political landscape. Technology is developing rapidly and demand for tech workers continues to outpace supply, creating a fiercely competitive hiring landscape.
The shortage of available tech talent has already created a deficit that could cost the UK £141 billion in GDP growth by 2028, stifling innovation. Now, with Brexit threatening the UK’s cosmopolitan tech landscape — and the economy at large — we may soon see international tech talent moving elsewhere; in fact, 60% of London businesses think they’ll lose access to tech talent once the UK leaves the EU.
So, how can UK-based companies proactively attract and retain top tech talent to prevent a Brexit brain drain? UK businesses must ensure that their hiring funnels are a top priority and focus on understanding what matters most to tech talent beyond salary, so that they don’t lose out to US tech hubs.
Brexit aside, why is San Francisco more appealing than the UK?
Image via Getty Images / normaals
San Francisco is the most recognized global hub for technology and is home to some of the most well-recognized names in the industry (e.g. Uber, Twitter and Google). A global brand is attractive to any candidate, but being located in the Valley adds an additional layer of excitement and validation. It also offers tech talent the opportunity to be an integral part of the companies that are perceived at the forefront of digital disruption and innovation.
That isn’t to say that London is unattractive to technical talent. UK challenger bank Monzo recently reached Unicorn status and embodies the archetypical disruptive tech company that people want to work for.
However, as identified by our most recent Brand Health Report, Silicon Valley is still leading the charge. We asked over 2,000 tech workers to rate their level of interest in working for each company to discover which businesses were the most desirable.
As a result, we found that out of the top 25 brands that global developers wanted to work for, only one London-based business, AI company Deepmind, was ranked on the list (in 25th place).
Netflix, Google, and Tesla topped the list, all three headquartered in the San Francisco Bay Area and in total, 12 of the top 25 companies were based in the city. In order to attract new talent, the UK needs more big-name tech brands that are known for breaking the mold.
Another important factor that impacts a company’s ability to attract and retain tech workers is earning potential. Salary is a critical part of the conversation. We recently analyzed 420,000 interview requests and job offers from the past year facilitated through Hired’s marketplace and collected survey responses from more than 1,800 global tech candidates on the Hired platform. Our goal was to share salary trends by market and understand how compensation affects job satisfaction and personal fulfillment for tech talent across the globe.
This data collection culminated in our latest State of Salaries Report which revealed that London tech talent earns £62K ($79K) a year on average. This is 67% higher than the average London salary of £37.1K.
However, earning potential is much higher in US tech hubs — San Franciscan tech workers earn 83.5% more than London techies, with an average salary of $145K. Even in places that have not traditionally been considered tech hubs such as Austin, Texas, techies are paid a salary of $125K. With this in mind, it is no surprise that talent is tempted to look beyond the UK.
Of course, the cost of living is also a big part of the equation as San Francisco is known to be notoriously expensive — but so is London. Despite earning significantly more than the average Londoner, our research revealed that only half of London’s techies believe they’re paid fairly given the city’s cost of living.
What can UK startups do to make themselves as attractive as high-paying, recognized names from San Francisco?
The conversation begins with recognizing the value of top tech talent. As part of a wider hiring strategy which must be put in place by UK companies in order to retain talent, salaries — specifically higher salaries — need to be considered in a competitive hiring market. Today’s technology workers have the power to solve some of the world’s greatest challenges and UK employers must hire top-quality talent to ensure that they succeed in a saturated tech landscape.
Narrowing in on Software Engineering roles specifically — the highest paid developers in London are Embedded Engineers ($90K/£71K), Blockchain Engineers ($89K/£69K) and Data Engineers ($87K/£68K). In San Francisco, on the other hand, the best paid are Search Engineers ($157K/£129K), Security Engineers ($156K/£128K) and Blockchain Engineers ($155K/£127.6K).
However, if smaller startups are not able to compete with higher salaries for talent, there’s good news. Beyond compensation, tech talent considers company culture and opportunities to learn new skills among the top 3 factors when considering a new role.
Companies will find that they are able to access a much wider pool of top talent if they foster diversity and inclusion throughout their hiring funnel. This includes attracting and hiring candidates with non-traditional education backgrounds, such as apprentices and self-taught coders.
Our research found that 1 in 5 Software Engineers are self-taught coders and less than half have a Computer Science degree. Alternative education routes are valued by tech talent themselves — 76% of people who graduated from developer boot camps (such as General Assembly and Hack Reactor) said it helped prepare them for a software engineering job.
Lastly, how potential employees perceive your company is an important factor in attracting and retaining tech talent’s interest. Factors such as company benefits and company culture are critical to job seekers looking for new roles.
Our research found that developers have very specific wants and needs: the majority would rather work remotely, starting and finishing early. They prefer to work for organizations that offer pair programming (a development approach in which two programmers work together at one workstation) and they want the opportunity to work on open source code (software that is made freely available and developed via public collaboration).
Talent acquisition is at the forefront of a business’s ability to attract and retain talent, and is the foundation for a successful company. That’s why it is critical that companies understand what benefits matter most to their employees.
Looking beyond tech companies at the bigger picture
Image via Getty Images / South_agency
The responsibility to protect against the brain drain of talent should not be placed entirely on UK companies. Looking at the bigger picture, the UK should become more proactive in preventing tech talent from relocating to more attractive tech hubs.
Innovation does not only benefit private businesses and maintaining the UK’s thriving tech hub, it is critical for the economy at large. More government funding (nationwide, not just in London) for innovative companies will show that the government is committed to ongoing growth in the tech sector and hopefully will encourage an ongoing flow of capital from private investors as well.
There are already initiatives backed by the government encouraging tech innovation, for example, Funding London’s Greater London Investment Fund (GLIF) which is backed by the Mayor of London and is aimed at growing SMEs (particularly in the circular economy) that have previously been unable to obtain part or all of their funding from the private sector. More funds like this are critical to ensuring that the UK tech landscape can thrive post-Brexit.
It’s also important to remember that tech workers, want to be part of mission-driven companies that support causes that they are passionate about, such as socioeconomic inequality, climate change and a lack of access to education globally. Prioritizing funding for businesses that tackle these issues would be greatly beneficial for the wider hiring landscape in the UK.
With Brexit on the horizon, enterprises and small companies alike are worried about the rippling effects on business operations. However, the true impact of Brexit is yet to be seen.
The future will be turbulent, but UK companies can future-proof their businesses and products by investing in what matters most: people. A strong hiring funnel that caters to the wants of top international talent is the key to competing with other companies around the globe and combating the Brexit brain drain.