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UK tech sector recruitment is booming

30 April 2014

The UK tech sector is hiring like there's no tomorrow, outstripping the UK private sector average.

Employment trends in the tech sector are outstripping those seen across the UK private sector as a whole, according to the latest KPMG/Markit Tech Monitor UK Report, with almost half of tech companies (49 percent) expecting to employ additional staff over the next 12 months.

Meanwhile, the PMI Employment Index shows that current job hiring by UK tech companies is close to its strongest for three years, and faster than the UK private sector average.
“Recent falls in share prices of technology stocks have led some to question the health of the tech sector but all the data in this report point to a UK tech sector that is in rude health, and increasingly optimistic in its outlook on business activity and recruitment plans," says KPMG's Tudor Aw.

“Our data also shows the positive impact the sector has on the UK’s economic performance as a whole and the important role UK tech companies up and down the country play in the burgeoning recovery." Mr Aw believes it's time the sector received the recognition and support it deserves.

"There are some fantastic advocates in government and business for the UK’s buzzing start-up scene but we must not neglect the wider tech sector. We should ensure that the sector as a whole gets the profile and support that it needs such as focused government policies that help develop and encourage education in STEM subjects, and ease access to tech talent on a global basis."

Markit senior economist, Tim Moore says UK tech companies clearly punch above their weight in terms of contribution to UK GDP growth. "The latest survey results will be reassuring to policymakers given the importance of the sector to the sustainability of the economic recovery," he says.

"The health of the tech sector and its ability to deliver productivity gains across the wider economy are key factors that will determine how quickly the UK economy can recover without hitting growth constraints.

“The latest survey suggests that the tech sector again outperformed the UK economy in terms of job creation, reflecting widespread optimism that workloads will continue to expand over the months ahead. Moreover, a buoyant mood among tech companies about future job hiring intentions bodes well for growth in the year ahead and is a further signal that the UK economy is set to continue its upward ascent over the course of 2014.”

SMEs want to get tough on banks
On Friday April 25, the government closed its open consultation on whether the big banks should be forced to provide details of small and medium size enterprises (SMEs) they have rejected for funding to alternative lenders. On the back of this, the alternative lender Fleximize has new research revealing that 65 percent of SMEs think legislation should be drawn up to make banks do this.

Fleximize is a new finance company that launched in January offering a choice of flexible loans and revenue-based financing to small and medium sized businesses where repayments are tied to a client’s revenue flow – paying back more in good months and less when income drops.

Its latest research reveals that 65 percent of SMEs believe banks should be forced to provide details of SMEs they have rejected for funding to alternative lenders, with only 7 percent of SMEs against and 28 percent unsure.

Support for this change is partly explained by the fact that the research reveals that only 25 percent of SMEs describe their knowledge and understanding of the alternative funding sector as ‘good’ or ‘excellent’, and only 5 percent think it would be ‘very easy’ to find an alternative lender.  

Fleximize founder and managing partner, Max Chmyshuk says it’s ridiculous that so many SMEs have their applications for credit rejected by the big banks - particularly when many of them are financially viable, growing businesses that don’t pose a high risk of default.

"They are sometimes unable to persuade the big banks to lend to them because the banks use lending criteria designed for the last century and ignore some positives even when they see them, focusing instead on catching negatives," Mr Chmyshuk claims. "With new technology, data and insight, alternative lenders can often be ‘smarter’ than the banks when assessing applications for business credit.

Fleximize uses a  relationship lending model augmented by significant amounts of data available from online platforms and marketplaces, paym

"Empowered by the data, our relationship managers speak to many applicants in order to better understand their business and try to find reasons to lend rather than the reasons to reject,” Mr Chmyshuk adds. “The ultimate goal is to increase the amount of responsible lending to SMEs and this will be helped if new legislation forces banks to forward the details of SMEs they reject for finance to professional regulated alternative lenders.”
Analysis of industry data by Fleximize reveals that around £787 million of business loan applications alone were rejected during the third quarter of 2013. Some 22 percent of applications from small businesses were rejected, and the corresponding figure for medium sized enterprises was around 9 percent. 

Educating 'select' businesses
Some of the UK's most promising company founders and executives will have access to a new business education programme launched at Imperial College London last Monday (April 28). The ELITE programme, a partnership between Imperial College Business School and the London Stock Exchange, has been set up to provide support for high-growth SMEs.

It is a two year programme offering a portfolio of business support tools, tailored education services and access to more than 50 business advisory and investment partners. In addition, companies will have access to the programme's 'Entrepreneurial Fellow', angel investor Sean Phelan, founder of Multimap.

ELITE by name, elite by nature - the programme will be open to only a selected group of UK companies, chosen twice a year by an Approvals Committee. The first 20 companies to be welcomed into the UK programme include manufacturing, technology, healthcare, retail and media businesses.

SMEs often struggle to expand their businesses because they find it difficult to access resources, funding and build new key business relationships. ELITE aims to address these problems by guiding those on the programme on how to adapt and shape their businesses so that they can provide sufficient information, credibility and trust to an investor.  They will also be guided on how to increase their businesses' visibility and attractiveness to potential investors.

The scheme has already achieved success in Italy where it has had at least a year's head start on the UK launch. To date, 130 companies have participated in the programme, with several companies having raised private investment and others now looking at potential stock market or mini bond listings and actively engaging in funding talks with private equity and venture capital firms.

Les Hunt

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