Google’s new headquarters in London.
LONDON – Technology companies in London are finding it increasingly difficult to recruit technical workers as technology giants from Silicon Valley scale up operations in the UK capital.
US technology franchises, including Google, Facebook, Amazon, Apple, Microsoft, Palantir and Twitter, now employ tens of thousands of technical workers in great offices in London, and some have major expansions underway.
Oscar White, CEO and founder of travel capital-supported travel startup Beyonk, told CNBC that the expansions made recruitment more challenging, adding that they have caused increased wage expectations and a lack of technical resources.
Facebook currently has 266 vacancies in London, according to the career website, while Google has 172 and Apple has 103. Amazon is looking for 162 software developers, 143 solution architects and 72 technical leaders in the city.
“Software developers are in greater demand than ever before, which is likely to worsen as more technology companies grow around the city,” said White. “For start-ups with tight budgets, which are heavily dependent on technology resources as the key to growth, this is a real challenge.”
Twitter declined to comment. None of the other US technology giants mentioned responded immediately to a CNBC request for comment.
Many startups in London will struggle to attract software developers if they offer salaries below £ 80,000 ($ 110,000), according to White, who said experienced developers can now have salaries of up to £ 120,000 a year.
Tom Richardson, CEO of the money management app Lumio, told CNBC that it is “so difficult” to find the right people.
“We are a startup and only with a seed round, and we can not attract developers or good product managers,” he said. “Starting salary is crazy.”
To get around the problem, Richardson is considering moving his business or hiring more teleworkers, but he said both have their risks.
Another CEO of a technology company in London, who asked to remain anonymous because it may sound like their company is struggling to recruit, told CNBC that large US technology companies have tried to lay off more of their employees in recent years. They said an employee’s response was “when Manchester United knocks on your door you have to answer.”
The US technology company, which the CEO did not mention, offered the employee the same salary, but a much stronger overall package that included stock options and car allowance. “We ended up keeping them, but had to make it worth it and give them an offer they could not refuse,” said the CEO.
Amazon had tried to poach more of the technical companies in London than any other American technology giant, said the CEO, adding that Amazon has approached several project managers and account administrators.
In an effort to ensure that the company retains the best people, the CEO said they had developed a “more rounded benefits package” that included stock options for high-performing employees and career development plans.
The VC display
Venture capitalists and technology investors have a relatively broad view of the recruitment landscape as they are involved in several start-ups.
Simon Menashy, a venture capitalist at MMC Ventures, which has invested in dozens of startups, including delivery of Gousto meal kits and start-up Love Home Swap, told CNBC that the new Silicon Valley outposts in London “definitely contributed to wage growth”, adding to the fact that the large technology companies compete with local start-ups for engineers.
But startups in London also competed with other startups in the city for some workers, according to Menashy.
“When our portfolio companies lose candidates for leading talent, it is to other start-ups and upscaling, not to large established technology 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’s harder for London startups to retain good employees as they are “lured by ever-growing packages and benefits” from larger technology companies and better funded start-ups.
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 made it harder for London start-ups to hire, adding that there are a few factors that recording .
Hogarth claimed that the rise of telework has given companies the opportunity to scale without everyone having a physical office. For example, Hopin, which is headquartered in London but is completely remote, has scaled from one to 800 people in two years, Hogarth said.
While Brexit may have made it more difficult for companies in London and the rest of the UK to hire, the growth of the UK technology ecosystem means that there are more experienced talents available in general than before, according to Hogarth.
Alice Bentinck, co-founder of start-up investment firm Entrepreneur First, told CNBC that Silicon Valley companies are increasing competition in London in the short term.
“But in the long run, I do not think it is a bad thing,” she said. “It’s a sign that London’s technological ecosystem is booming.”