Overseas investment boosts UK IT sector

More foreign firms are investing in this country

Foreign investment in UK IT created 5,772 jobs last year, as the sector topped the league table of industries attracting overseas funds.

Some 240 foreign companies invested in technology firms in this country during the 2004/5 tax year, an increase of 61 per cent on the previous 12 months.

The IT sector accounted for more than one-fifth of the record 1,066 projects recorded by government body UK Trade & Investment (UKTI), attracting more interest than the pharmaceutical, finance and automotive industries put together.

Typical projects include mergers and acquisitions, and the establishing of offices or new operations, such as international support centres.

Citigroup, Bank of New York and Dell are among the foreign companies setting up shared service operations in the UK, according to UKTI.

William Pedder, chief executive of inward investment at UKTI, says the figures show that the UK is benefiting from the global business culture, even though in some areas jobs are being shifted offshore.

‘We have seen dramatic growth in call centres and shared service centres worldwide. In the process we have seen some jobs migrating from the UK to other countries, most notably India,’ he said.

‘So is the UK losing out because of this? Far from it. In reality, the UK has been one of the principal beneficiaries.’

Trade and Industry Secretary Alan Johnson says that technology is an important factor in attracting investors from overseas.

‘The UK is still viewed as one of the best places in the world to do business, thanks to our unrivalled economic performance, emphasis on research and technology, and skilled, flexible workforce,’ said Johnson.

‘We must ensure that we maintain our momentum by adding value and exploiting technology. In an increasingly global market, established economies such as the UK cannot compete on the basis of low labour costs.’