Search engine company is expected to pay about 5 million pounds in rent for 10 years for the new technology base
The Chancellor George Osborne has welcomed Google’s move to invest in a technology base in Silicon Roundabout, East London, calling it "great news".
This week, Google revealed its plans to lease a seven- floor building to open a "launchpad" for technology entrepreneurs in boost for the government’s ‘East London Tech City’ project, announced last November.
Google’s investment ranks among the largest among technology companies in recent months. The search engine company said it "plans to open up the space to other organisations that support technology entrepreneurs, working together to provide a launchpad for new London-based start-ups and developers."
Google’s new base is expected to have over 25,000 square feet of office space near Old Street for 10 years, for which the search engine company will pay about 5 million pounds in rent, which excludes costs for refurbishment.
Osborne said in response, "It shows that we can create the right environment to attract start-ups and established high-technology businesses.
He added that Google’s decision "shows that Britain is open for high-tech business."
The Tech City project is an attempt by the UK government to wean London from financial services and make it a technology centre, rivalling Silicon Valley. Google will retain its existing offices in central London.
Google UK engineering director David Singleton said, "Finding a suitable building is the first major step."
"East London is already home to hundreds of innovative British startups, and has huge potential for economic growth and new jobs over the coming years," Singleton added.
The Tech City Investment Organisation CEO Eric Van Der Kleij said, "This investment will pay dividends for Google as well as contributing to the long-term success of the Tech City."
Prime Minister David Cameron’s growth initiative was first announced last November, but in recent months, many entrepreneurs felt the East London Tech City initiative had lost momentum.
Earlier, the Government unveiled plans to create a vast hub of technology companies in east London – stretching from the existing ‘Silicon Roundabout’ cluster in Old Street right up to the Olympic Park – to rival Silicon Valley as a centre of innovation.
"Right now Silicon Valley is the leading place in the world for high-tech growth and innovation. But there’s no reason why it has to be so predominant. Question is: where will its challengers be? Bangalore? Hefei? Moscow?" That was the question Prime Minister David Cameron had asked as he launched the East End Tech City (or UK Tech City, or Silicon Roundabout, or Silicon Old Street as it has also been called).
Why not London? asked Cameron. All the ingredients are here, he added.
The aim is to extend the current hub of technology start-ups around Old Street, Shoreditch and Hoxton right out to the Olympic Park in Stratford to create a credible alternative to Silicon Valley, which occupies the southern part of the San Francisco Bay Area and now features the likes of Apple, Google, HP, Facebook, eBay, Oracle, NetApp, Juniper Networks and Cisco as well as many others.
"Our ambition is to bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic Park to help make east London one of the world’s great technology centres," Cameron had said at the launch.
And why this part of the capital in particular? "Something is stirring in east London. Only three years ago, there were just 15 technology start-ups around Old Street and Shoreditch," Cameron explained. There are now more than 100 high-tech companies in the area. This on its own is incredibly exciting. "But combine that with the possibilities of the Olympic Park," said Cameron. "Just a few tube stops away, there’s the potential for nearly one million square feet of flexible office and research space, which our technology companies could expand in to.
"Add to that the Olympic Park’s green spaces, cafés and sports facilities, the quick access to City Airport and St. Pancras International and the fact that London has more outstanding universities than any other city in the world and it’s clear that in east London we have the potential to create one of the most dynamic working environments in the world," Cameron had said.
Part of Cameron’s pledge was the involvement of some of the world’s biggest technology firms.
BT has said it will speed up the roll-out of its superfast broadband in the area, consultancy McKinsey & Company will be on hand to help nurture start-ups there, as will Qualcomm for matters relating to IP.
Intel will establish a research lab in the Olympic Park, while Google will set up an Innovation Hub, Cameron had said. Facebook too will be there.
But that element has not met with universal praise by all Silicon Roundabout ventures. Chris Downs, founder of Levelbusiness.com, a start-up that offers free data on Companies House accounts and director information, told CBR that having tech giants on the doorstep may not be beneficial to smaller firms.
"We’re already losing people to the big guys such as Google," Downs says. "Is it wise to invite them in? It’s tough to attract developers as it is. Do we need them there? It sounds great politically but may not help us much. We’re not there because of what David Cameron says, we’re there because other start-ups are there and we’re all being disruptive."
But Van der Kleij told CBR that he was aware of the challenges. He said, "We’re addressing it."
"What we’re saying to our large corporates coming to Tech City is that yes, this is a great place to hire smart talent, but that we ask you to embrace a policy of training up two more developers or engineers from the local area for every developer or engineer that you hire. If everyone does that we’ll never run out of talent in the area."
Van der Kleij added that from his experience of speaking to the community, they are generally in favour of having these companies around, as "they want to innovate and sell to them and with them. They need to be on the doorstep for that. The [big] companies like to be in the community as well because they believe the next generation of innovation that will fuel their growth will come from the area. It’s a very symbiotic relationship."
Earlier this week, BSA said that the UK has advanced one place in the Business Software Alliance (BSA) 2011 Global IT Industry Competitiveness Index to fifth position since the index was last published in 2009.
Technology and IT are now a fabric of the UK business environment, with one recent study from Oxford Economics suggesting that Europe is lagging far behind the rest of the world in its investment in technology and telecommunications, to the detriment of economic growth.
BSA Global IT Industry Competitiveness Index shows that the UK continues to outperform the other large European economies including Germany, France, Italy and Spain in IT industry competitiveness.
While the UK fell one place in the global rankings to 8th when it came to the business environment for IT infrastructure, the country remains among the world leaders at developing talent for the technology industry based on the quality of training and the skills its workers offer.