March 31, 2023 | Publication: Acquisdata - Country Industry Reports

United Kingdom Software and Information Technology - Industry Report - The industry - Q1 2023

The Industry

Last published date: 2022-09-11

Overview

The UK is the largest ICT market in Europe, offering major opportunities in cybersecurity, 5G/telecoms, AI, and SaaS/cloud. Most UK enterprises realize the value of
investing in ICT to accelerate their productivity and growth.

$210 billion digital tech annual turnover

Over 100,000 software companies in market

Second largest ICT markets in ranking of ICT spending per head (U.S. #1)

London is the second most connected place for tech, right after Silicon Valley

No. 1 top scaling tech nation in Europe

No. 1 destination for U.S. ICT businesses in Europe (often serving as EMEA HQ)

UK tech VC investment is third in the world (after U.S and China), and more than any other European country (more than France and Germany combined)

Leading Sub-Sectors

Cybersecurity

The rapid development of digitalized services has been accompanied by significant growth in cybercrime, leading to greater spending on security in both public and
private sectors and driving demand for more sophisticated and bespoke cyber solutions.

5G

5G has begun rolling out across the UK thanks to strong commitment and investment from both the UK government and the UK network operators.

Projects funded include urban and rural connected communities, IOT, augmented and virtual reality, transport infrastructure, enhanced manufacturing, 5G security, and
many more. The UK government's significant funding to the program is being matched by private companies and network operators (there are 4 UK's core networks: EE,
O2, Three, and Vodafone).

Software, SaaS, and Cloud Services

About 100,000 software companies operate in the UK, including major U.S. firms such as Microsoft, IBM, and HP. TheUK datacenter market is the largest in Europe,
generating new sources of demand for ICT providers.

The rising tide of software as a service has created an industry of products and services that require subscription-like recurring payments. The mindset of UK consumers
has shifted from one-off purchases to active, recurrent purchases by many customers.

Additionally, the vast majority of UK enterprises rely on the mobile connectivity of its workforce, which is an ideal setting for SaaS and cloud providers.

Artificial Intelligence (AI)

The UK is committed to creating an economy that harnesses artificial intelligence (AI) and big data, providing great opportunities to U.S. tech companies. TheUK has
one of the strongest AI strategies in the world, with strong government funding for AI, strong research activity in the field, strong VC funding and AI startups, and
strong enterprise activity and adoption of AI.

Opportunities

Opportunities exist to supply organizations of all sizes from SMEs to large corporations, with the most substantial opportunities found in organizations for which IT
security is mission critical, e.g., major financial institutions, utilities, and especially government departments (including the Home Office, Ministry of Defense,
Immigration and Border Protection, Revenue and Customs etc.).

Large Enterprises: The bulk of the ICT market is orientated around large commercial enterprises. Financial services, utilities and transportation companies are large
spenders.

Public Sector: Central and local governments are investing heavily in ICT and data as they implement their digital transformation agenda to move more and more
services online.

Defense and Security (D&S): The D&S market is relatively niche and is focused on securing the nation's secrets, involving the security and intelligence agencies as well
as the Ministry of Defense (MoD).

Small and Medium-sized Businesses: While most large enterprises in the UK have already implemented adequate tech tools, small, and medium-sized enterprises have
also started to direct their attention towards digital tools to optimize their processes.

Cybersecurity is the one of the most active ICT subsectors in the market, with U.S. cyber companies and technologies very well perceived in the UK. The impact of
cybercrime is difficult to quantify but is estimated to cost the UK roughly up to $30 billion per year. The National Cyber Security Centre (NCSC) reports around 60
'high-level' cyber-attacks against the UK per month, many of which threaten national security. Additionally, organizations' IT footprints are becoming increasingly
complex, driving demand for more sophisticated and customized cyber solutions.

With regard to 5G, the UK government announced a ban on new Huawei equipment from the end of 2020, and all existing Huawei equipment will be stripped from 5G
networks by 2027. U.S. sanctions introduced in May 2020 led UK security officials to conclude they could no longer assure the security of Huawei products. The
exclusion of Huawei is creating additional opportunities for U.S. tech providers to supply services to UK operators.

Cloud computing offers significant growth opportunities: almost all software companies in the UK are using cloud, and opportunities exist in both the public and private
sectors for companies offering cloud or linked services. The UK government strongly supported the adoption of cloud technologies, with G-Cloud frameworks allowing
the government to buy directly from suppliers after reaching an agreement on basic terms of use.

Artificial intelligence and machine learning also present substantial prospects, with the UK being home to some of the biggest names in the business such as DeepMind,
SwiftKey and Babylon. The UK has recognized AI as a huge opportunity. Indeed, the UK government's Industrial Strategy white paper identified AI and Data as one of
four Grand Challenges (together with the Future of Mobility, Clean Growth, and Ageing Society). The UK government AI Sector Deal outlines a package of over $1.3
billion in support for the sector. This support complements and leverages some of the $2.4 billion announced under the cross-sectoral Industrial Strategy Challenge Fund
so far. In addition to public funding, industry is also providing funding for AI solutions across key sectors: services, life sciences, agriculture, and the public sector.
Global AI powerhouses that have invested significantly in developing the UK AI market include Google (which owns DeepMind), Microsoft (which owns SwiftKey),
AWS, HPE, Beyond Limits and many more.

Resources

Industry Events

Infosecurity Europe; June 22-24, 2023, London

Trade Associations

techUK

Digital Catapult

Government Departments

National Cyber Security Centre

Department for Digital, Culture, Media & Sport

For further information, please contact:

Claudia Colombo

Commercial Specialist

U.S. Commercial Service

Tel: +44 (0)20 7891 3443

Source: Trade.gov

https://www.trade.gov/country-commercial-guides/united-kingdom-information-and-communication-technology#:~:text=2022%2D09%2D11-
,Overview,accelerate%20their%20productivity%20and%20growth.

Information Technology Telecommunications and Electronics Associations (techUK)

About us

techUK represents the companies and technologies that are defining today the world that we will live in tomorrow

Every day, digital technology is pushing the boundaries on what we can achieve. This is opening up new horizons and presenting new challenges. techUK brings
together companies, people and organisations who share our purpose to ensure digital technology is used wisely to build a stronger society and economy and ensure a
sustainable future.

techUK is committed to helping its members and the sector grow.

It does this by helping members to:

Develop markets

techUK works with its members to identify and advance innovation in the key markets representing the most significant opportunities for growth both
domestically and internationally.

Develop relationships and networks

techUK helps companies broaden their network, build connections and deepen relationships with potential customers, partners and suppliers.

Reduce business costs & risk

techUK works with our members to identify and help shape key policy issues to optimise our industry's economic potential-both domestically and overseas.
techUK affords unique insights on key issues to help members make more informed decisions-and ensure a competitive edge in their markets.

About techUK

techUK represents the companies and technologies that are defining today the world that we will live in tomorrow. Around 850 companies are members of techUK.
Collectively they employ approximately 700,000 people, about half of all tech sector jobs in the UK. These companies range from leading FTSE 100 companies to new
innovative start-ups. The majority of our members are small and medium-sized businesses.

techUK is committed to helping its members grow, by:

Developing markets
Developing networks
Reducing business costs and risks

techUK is the trading name for Information Technology Telecommunications and Electronics Association, a company limited by guarantee.

Registered in England number 1200318.

Any redistribution of this information is strictly prohibited.