Analysis: Big fish circle Silicon Roundabout's minnows

The unique character of East London's Silicon Roundabout is unlikely to survive the incursion of Google, Amazon and Facebook, but the tech giants' arrival may not be all bad news for the start-up community

East London's Tech City started out as a hub for technology start-ups, but recently the likes of Google, Amazon and Facebook have invested in the area. Their arrival, said Mayor of London Boris Johnson, "propels [the UK] well up the league table of global tech cities", but what will it mean for all the fledgling tech firms that have made the area around Old Street their home in recent months?

The Big Three are open about their desire to poach the right talent, and understandably, many start-ups are not exactly delighted.

The managing director of Amazon's London office recently told Computing that the firm chose the area as it is a "hotbed of tech talent". Facebook, meanwhile, said that London was a "perfect fit" partly due to the wealth of "great technical talent".

Before this invasion by Amazon and Facebook, Chris Downs, co-founder of business information resource levelbusiness.com, told Computing that by moving to Tech City, corporate giants would kill the booming start-up industry.

"When I hear conversations about bringing Facebook and Google innovation quarters to the area, I worry it would make [the area] something very different," he said. "It would be the land of big corporates, not the start-up corner. They'll force the prices up and we'll have to go somewhere else."

His fears were confirmed by Daisuke Kobayashi, country manager of Japanese social mobile gaming company GREE, another large firm setting up a tech hub in East London.

"The cost is second to the location," he said. "We're trying to relocate [our business] in the best place of the city. In Tokyo, we have the office in Ropponggi where we are in the same building as Google and Goldman Sachs, and in London, Tech City is the best place to recruit talent.

"There are so many companies in the industry in that area, it is easy for us to meet and recruit people. For potential candidates, it's easy for them to join because we are close to the location they are working in," Kobayashi added.

But the Japanese firm is not just looking to hire from start-ups; it is also looking at recruiting staff from larger corporations within the area.

"As long as they're good talent we don't care," Kobayashi said.

Up to 100 positions are up for grabs at the Japanese organisation, which currently has only 20 staff based in the UK. Half of the roles are in engineering, including iPhone and Android developers, while those with business intelligence skills are also in demand.

Analysis: Big fish circle Silicon Roundabout's minnows

The unique character of East London's Silicon Roundabout is unlikely to survive the incursion of Google, Amazon and Facebook, but the tech giants' arrival may not be all bad news for the start-up community

Some believe GREE's move to London, along with Amazon and Facebook, may adversely affect start-ups in the short term but will bring benefits further down the line, at least to those firms who survive the initial wave of staff losses.

"In the short-term perhaps it would be harder to retain talent," admitted Stuart Battersby, founder of social media analytics start-up Chatterbox. "We're in the process of recruiting and it is quite hard as it is. However, if we look at the longer-term view then there's potential for these larger organisations to increase excitement in the sector and encourage clever people to get educated and experienced in tech subjects."

Battersby believes both big and small tech firms can function in harmony, so long as the former do their bit to help the latter. "What is important is that the bigger firms play nicely with small companies either via partnerships, financing or resources. If they do this - and we have seen them doing this so far, especially through developer outreach programmes - then they can help a whole range of companies grow with them.

"The negative effects will come if large companies enter the area and try to dominate. If they drive custom away from small businesses and don't open themselves up for partnerships, this would be problematic," said Battersby.

Competition is one thing, but what many of these tech giants are looking to do is swallow any start-ups that take their fancy: a prospect that many of their potential targets are not averse to.

"What the smaller firms want is to rub shoulders with the bigger enterprises and some want to be bought by them. However, I don't think that small companies are worried about being poached or taken over," said Richard Holoway of analyst firm TechMarketView.

But this is nothing new. Larger companies have always been poaching from smaller firms in the technology industry and a dynamic workforce is generally encouraged as it broadens both skills and experience.

However, many staff who work for start-ups may not want to work for a bigger company as they see it as selling their soul, and would have to be offered a lot of money or exciting positions. Of course, the likes of Facebook and Google may well be able to offer both.