ICT to the United Kingdom

(Last updated: 7 Apr 2009)

Read the ICT to UK market profile prepared for CEBIT 2009 (PDF 73KB)

Trends and opportunities

The market

It is difficult to define or quantify an ICT market and perhaps more helpful to view ICT as a provider of goods and services to a number of key markets from financial services to transport to government and ‘green’ industries. However, Intellect, the UK’s leading ICT industry association, estimates that ICT contributes to at least 10 per cent of the UK’s GDP and employs approximately five million people. The UK is also estimated by the European Information Technology Observatory to be the largest market for ICT in the European Union, overtaking Germany in 2008 with an estimated spend of €70 billion on technology products and services.

A few more facts about the UK:

• Investment from the private sector in intangibles, such as software, research and development and brand value, is approximately £127 billion. Comparing the USA with the UK, recent expenditure on intangibles is 11 per cent of UK GDP versus 13 per cent of US GDP. Of the £127 billion, 15 per cent is spent on software (£19 billion); 10 per cent on scientific R&D (£12.7 billion) and 20 per cent (£25.4 billion) on non-scientific R&D.
• Predicted that by 2010, 86 per cent of the UK population will be web users, making it second only to the Nordic countries within Europe. Already, nearly 60 per cent of households have broadband access and 87 per cent of households receive digital television.
• In 2007, the UK electronics market became the biggest in Europe, making up some 26 per cent of total European sales.
• The National Health Service (NHS) recently reported savings of over £200 million as result of new technologies implemented.
• The number of adults in the UK with access to online banking facilities has reached 17 million and online shopping reached a record high of £4.5 billion in February 2008, with web sales increasing 75 per cent year-on-year.
• Less encouraging is that the number of applicants for single subject computing courses has declined from 31,000 in 2001 to 16,000 in 2006 (Source: Race to the Top); total entrepreneurial activity in the UK is half the rate of the US (Source: Cabinet Office – Realising Britain’s Potential, February 2008); and according to Library House, the number of patents filed by British universities is declining. 

Opportunities

Many Australian businesses in the ICT sector have already established a successful presence in the UK, and opportunities currently exist in the following areas:

•  Government
  The UK Government is by far the biggest single user of IT in the UK, spending around £12 billion a year on services such as communication/e-government, security and health. As an example, the ‘Government Gateway’ (interface with individuals) provides 125 secure, online services, which span 12 central government departments, 14 government agencies and 35 local authorities, delivered by 56 IT partners (Cabinet Office). According to KableNet.com approximately 70 per cent of total government IT expenditure is linked to 20 top suppliers (eg. HP, EDS, BT, Fujitsu, Cap Gemini, CSC, Accenture, Oracle, IBM, ATOS Origin, etc) so relationships with, and access to these vendors, are critical when seeking access to larger government projects
• Security
  The UK Home Office estimates that up to £50 million of identity-related benefit fraud is committed each year, and that annually there are over 10,000 fraudulent passport applications. Over 75 per cent of UK businesses see protecting customer data as a very important driver of their expenditure (Source: PwC Information and Security Survey 2008) and major government departments and regulated companies (eg. banks) are under increased scrutiny when it comes to data management and privacy. Better and more targeted use of technology is viewed as a key solution to these challenges
• Green technology
  Green technology is a medium-term growth area in the UK, with opportunities likely to emerge for innovative ICT in areas such as renewable energy generation, recycling, greener construction techniques and lower carbon transport solutions.
• Olympics/Sport
  Although London 2012 is a major focus in the UK sports sector and there will be opportunities for technology providers, it is important to note that there is wider focus on improving the quality and quantity of facilities, coaching (often technology dependent) available to Youth, Elites and various sporting disciplines from swimming to rugby.

Marketing your products and services

Market entry

The majority of successful Australian suppliers to the UK technology sector have achieved success through a direct physical presence rather than relying solely on a virtual presence or a local partner/reseller. This is an important factor for any Australian ICT company seeking to do business in the UK because:

• One of the key success factors in the UK (particular when selling an intangible product) is the ability to build relevant networks and relationships.
• The distance and time difference between the UK and Australia makes it hard to build networks via occasional visits or regular tele/video conferences.
• A local presence can be viewed as a sign of long-term commitment to the market.
• A local presence enables you to keep up the pressure on people, partners and customers through direct face-to-face contact.

Setting up in the UK is not cheap but there are ways to minimise costs and still make an impact.

Consider the following:

• Initially, it may be possible to locate one or two key staff in the UK (working from low-cost home or virtual office) and supplement this presence with a local partner to help identify opportunities or make introductions to their existing customer base. As revenues grow you can consider investing in more people and space.
• The UK Government’s Regional Development Agency network www.englandsrdas.com often provides subsidised access to office space and other incentives to establish a business in particular parts of the UK.
• The UK is a densely populated and relatively geographically compact country. Therefore a single point-of-presence is normally sufficient to access and service most or all of the market, particularly as target customers are likely to be concentrated in just a handful of major urban areas that are closely linked.

Positioning your company and offering

British companies are relatively risk averse when purchasing technology. While Australian technology is well regarded, there is a general reluctance to deal with new entrants to the market (or companies perceived to be new). This can be countered by:

• The use of case studies involving internationally recognised organisations and demonstrating strong track record in other markets.
• Hiring experienced local staff with strong and relevant existing contacts.
• Clearly stating the benefits of the technology in terms of cost reduction or efficiency to the target company or sector.
• Identifying a suitable local partner.

Links and industry contacts

ICT-related resources

BioIndustry Association – www.bioindustry.org
Central Computer and Telecommunications Agency  – www.ccta.gov.uk
Independent Committee for the Supervision of Standards of Telephone Information Services – www.icstis.org.uk
ISP Buyer's Guide – http://thelist.Internet.com
IT Training – www.corplearn.co.uk
Presentation Assistance – www.claripoint.com
Standardization Service Telecom Standards – www.ascom.com

Government, business and trade resources for the United Kingdom

European Union Customs – http://europa.eu.int/comm/taxation_customs/customs/index_en.htm
European Union Portal – http://europa.eu.int/index-en.htm
HM Customs & Excise – www.hmrc.gov.uk/home.htm
Office of Telecommunication – www.oftel.gov.uk
Intellect – www.intellectuk.org
Trading Standards – www.tradingstandards.gov.uk
UK Government Portal – www.ukonline.gov.uk
UK Statistics – www.statistics.gov.uk
UK Trade and Investment – www.uktradeinvest.gov.uk

Media

Computer Reseller News – http://crn.vnunet.com
Comms Dealer –  www.commstrade.com
Computer Weekly –  www.computerweekly.com
Conspectus – www.conspectus.com
IT Europe – www.iteuropa.com
The IT Portal – www.theitportal.com
The Register – www.theregister.co.uk

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au