By SHAUN DAWSON
If COVID-19 had struck ten years ago, would businesses have been able to adapt as quickly and operate remotely on such a scale as they did without the virtual tools at their disposal today? Even just five years ago, many businesses would have struggled due to low levels of adoption. The pandemic supercharged the adoption of workplace technology across businesses of all shapes and sizes. Both hardware and software have enabled millions of businesses around the world to function during the lockdown. Yet with economic pressures still kicking in, could future investment be a high cost, thus, impacting London’s tech hub?
One of the greatest enablers of the near-seamless switch from the office to homeworking has been the use of cloud-based technologies, data storage, and applications that connect workers without a location barrier. At the time of the 2008 Global Financial Crisis (GFC) such technology was in its infancy, with adoption rate low. Over the past couple of years, there has been a growing drive to migrate legacy systems onto the cloud – to gain greater efficiencies, introduce more automation, increase digital tools, and improve cyber and data and security. While the motivation for businesses to move to newer workplace technology varies from company-to-company, those reliant on older technologies will continue to be impacted in their response to the shift in working practices.
Collaboration tools and connectivity is just one area of workplace technology that has been of greater importance within businesses. The pandemic has pushed many firms to look at how technology can improve the functioning of the physical workplace, with wellbeing being a primary driver. For example, the use of facial recognition/hands-free technology instead of key cards, motion-sensor entry and exit options, and the adoption of personal environmental controls such as air-conditioning and lighting. Additionally, we are seeing larger firms gradually adopt products that help monitor utilisation of space, producing valuable data that feed into not just real estate strategy, but wider HR and recruitment decisions.
Investing in technology during an economic crisis for some would seem frivolous, but one thing the pandemic has taught us is that the agility to respond, and quickly, is key to survival. For many, the financial layout for new technologies will be a high-risk strategy. Yet, as the COVID-19 crisis continues, the importance of technology to keep us connected and operational will be paramount.
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Out of economic hardship comes a natural instinct to strive to do better; it also allows people to develop new ideas. This has very much been the case for the technology industry. Twenty years ago, the dot-com bubble crashed, leaving internet successes overnight worthless. Investors had flocked to be a part of this tech revolution. But over-promising and under-performing meant that companies started losing money, and fast. Valuable lessons were learnt from this period, and as such, the technical talent behind original successes was not lost. Entrepreneurial spirit kicked in amongst those impacted, including household names of today such as Apple, Amazon, and Adobe.
Ten years thereafter, crisis hit again with the Global Financial Crisis (GFC). Yet the same spirit and drive that had seen tech entrepreneurs persevere was now driving the birth of a new breed of finance, banking and fintech. According to information service Beauhurst, of the 1,139 fintech firms that they track, 87% have secured investment since 2011, three-quarters of which are based in London. While most remain at the relatively early stages of their evolution, they prove that there is room for growth and scale. Online newbies are challenging the very banks that contributed to the financial crash. Firms such as OakNorth, Revolut, Monzo, Transferwise, and WorldRemit, to name a few, have become a pivotal part of the financial sector, and also key tenants for office space.
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The technology sector, which experienced a high-growth phase following the GFC, quickly grew its commercial presence and office footprint in London. In 2011, the volume of office space leased by technology companies increased by 241% on the previous year, breaking the 1 million sq ft level for the first time. This was fuelled by the very firms that had faced difficulty ten years previously – Google, Apple, and back then, a new kid on the block, Facebook. But it was also the smaller fledgeling software businesses that were now committing to central London office space. Spurred on by investment and the need to attract talent into their businesses to grow, the sector was now on a par with other traditional office occupier sectors such as financial services, corporate and professional.
London’s technology sector has evolved over the years, not just attracting global talent and brands but nurturing home-grown businesses and people. Much of the sector thrives on social interaction, growing their businesses close to their clients and peers, and being part of the wider ecosystems that have developed. As such, the sector has continued to be a substantial holder of office space across the capital. Not just in areas like the Silicon Roundabout, Shoreditch, and King’s Cross, but in the core tenant areas of the City, West End, Midtown, and the Docklands.
While the current crisis has kept most of our offices closed and forced us to adopt new ways of working and collaborating with each other, it has also led businesses to have a newfound appreciation of technology. The benefits of adopting new technologies can far outweigh the cost, contributing immensely in support of business goals and the wider workforce. The economic downturn will undoubtedly continue to contribute to immense economic challenges, but as history shows us, our desire to do things better coupled with enthusiastic and entrepreneurial ‘techies’, will maintain the successful technology industry in London and the UK. It remains to be seen if COVID-19 will invigorate other sectors as the GFC did for fintech.
Shaun Dawson is the Head of Insights at DeVono.
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