The UK’s digital economy is much larger than the government estimates. According to a report from tech startup Growth Intelligence, there are nearly 270,000 active digital companies in the UK, compared with the estimated 167,000.
Growth Intelligence teamed up with the National Institute for Economic and Social Research and Google to redraw the UK’s digital map.
The traditional method of classifying companies used by the government is the Standard Industrial Classification (SIC) codes which are used to measure and classify the economic activity of every business in the country. But these SIC codes are 65 years old and largely out of date.
Growth Intelligence CEO and founder Tom Gatten spoke to Computer Weekly as part of a series of articles connecting CIOs with technology startups.
“The traditional ways of segmenting companies are full of errors,” he said. “SIC codes are extremely out of date, and many companies can choose their classification themselves – 10% of all UK businesses are in the ‘other’ category.”
Politicians, banks and insurers base their policy decisions on SIC codes, which means they could be missing out on an extra 40% of UK companies which are not visible, according to the research.
“Growth Intelligence can tell whether companies are growing or declining as a result of the policies made, while the government used to wait a couple of years to see if it has worked,” said Gatten.
He added that the Department for Business within the UK government is now using Growth Intelligence to monitor the effect of policy in real time. The product is also currently being used or piloted by 75% of UK banks.
Using machine-learning algorithms, Growth Intelligence classifies companies using information they put on the web about themselves. “It listens to the sound that companies make on the internet and the signals given off – it looks at a whole range of noisy information,” said Gatten.
The report also stated that areas with the highest concentration of digital companies are just outside the capital, in Basingstoke, Newbury and Milton Keynes, with areas including Aberdeen and Middleborough also the choice of home for digital companies.