London tech firms struggle to hire as Google, Apple, Facebook expand

Google’s new headquarters in London.


LONDON – Tech companies in London are finding it increasingly difficult to recruit technicians as Silicon Valley tech giants expand their operations in the UK capital.

US tech giants like Google, Facebook, Amazon, Apple, Microsoft, Palantir and Twitter now employ tens of thousands of technicians in fancy offices across London, and some have major expansions underway.

Oscar White, CEO and founder of venture-backed travel startup Beyonk, told CNBC that the expansions made recruiting more difficult, adding that they had resulted in inflated salary expectations and a lack of technical resources.

Alphabet, the parent company of Google, is building a huge complex in King’s Cross with space for up to 7,000 Google employees and around 1,000 DeepMind employees. A few miles away, Apple plans to move 1,400 employees to a new Apple campus in Battersea Power Station. While the builds have been held up by coronavirus lockdowns, they are still continuing. Elsewhere, Facebook and Amazon recently opened large multi-story offices in London.

Facebook currently has 266 open positions in London, while Google has 172 and Apple 103, according to its careers website. Amazon is looking for 162 software developers, 143 solution architects and 72 technical managers in town.

“Software developers are in more demand than ever, which is likely to deteriorate as technology company locations grow across the city,” said White. “For startups with tight budgets that rely heavily on technology resources as a key driver of growth, this is a real challenge.”

Twitter and Palantir declined to comment. None of the other U.S. tech giants mentioned above responded immediately to a CNBC request for comment.

salary expectations

White said many startups in London will struggle to attract software developers if they offer salaries under £ 80,000 ($ 110,000).

Tom Richardson, CEO of the money management app Lumio, told CNBC that it was “so hard” to find the right people.

“We’re a start-up and we only have one seed round and we can’t attract developers or great product managers,” he said. “Starting salaries are insane.”

To work around the problem, Richardson is considering relocating his business or hiring more remote workers, but he said both have their risks.

Another CEO of a London tech company, who wanted to remain anonymous over concerns that his company may have had difficulty recruiting, told CNBC that major U.S. tech companies have been trying to poach several of their employees in recent years. They said an employee’s response was “When Manchester United knocks on the door, you have to answer”.

The US tech company, which the CEO did not name, offered the employee the same salary but a much stronger overall package that included stock options and a car allowance. “In the end we kept them, but it was worth it and made them an offer they couldn’t refuse,” said the CEO.

Amazon has tried to poach more employees from the London-based tech company than any other US tech giant, the CEO said, adding that Amazon has reached out to several project managers and account managers.

To ensure the company retains its best employees, the CEO said they have developed a “more well-rounded benefit package” that includes stock options for high performing employees and career plans.

The VC view

Venture capitalists and technology investors have a relatively broad view of the recruiting landscape because they are involved in multiple startups.

Simon Menashy, a venture capitalist at MMC Ventures who has invested in dozens of startups, including Gousto meal set delivery service and travel startup Love Home Swap, told CNBC that the new Silicon Valley outpost in London “ definitely contribute to wage inflation ”. “And adds that the big tech companies are competing with local startups for engineers.

But London start-ups were also competing with other start-ups in the city for some workers, according to Menashy.

“If our portfolio companies lose candidates for high-level executives, it is to other start-ups and scale-ups, not to large established tech companies,” he said.

Eze Vidra, a former investor at Google Ventures who now works as a managing partner at Remagine Ventures, told CNBC that it is harder for London startups to keep good people as they are “from ever-expanding packages and perks.” larger tech companies will be attracted and better funded startups.

Meanwhile, Ian Hogarth, an angel investor who sold his music start-up to Warner Music Group, told CNBC that he was not convinced that the Silicon Valley expansions were making it harder for London start-ups to Hiring staff, adding that several factors play a role.

Hogarth argued that the rise in remote working has allowed companies to grow without everyone being in one physical office. Hopin, for example, which is headquartered in London but is completely remote, has scaled from one to 800 employees in two years, Hogarth said.

While Brexit may have made it harder for companies in London and the rest of the UK to hire, the growth of the UK tech ecosystem means there is overall more seasoned talent available than before, according to Hogarth.

Alice Bentinck, co-founder of start-up investment firm Entrepreneur First, told CNBC that Silicon Valley firms are increasing competition in London in the short term.

“But in the long run, I don’t think it’s a bad thing,” she said. “It’s a sign that London’s tech ecosystem is thriving.”

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