IT recruitment: Why the M4 is the road to success

From Reading to Swindon and beyond, the information technology industry is booming in what has become the UK's 'Silicon Corridor'

Tim Caiger is vice-president, real estate and facilities, for Oracle, with a patch covering Europe, the Middle East and Africa. His base is in Reading. Just up the road from Tesco. Oracle is consolidating its workforce in purpose-built premises on a business park alongside the main rail line to the West Country. Next door is Microsoft, and just down the rail line, close to where the Great Western Designer Outlet Village now occupies the site of the old railway works developed by Brunel, are Intergraph, Intel, Lucent Technologies and Motorola, in the borough of Swindon.

Welcome to Silicon Corridor, Britain's answer to Silicon Valley, hardly mistakable for California, but where an astounding array of hi-tech companies are colonising the hinterland of the M4, all the way from West London to Bristol. For the past three years this linear region (the Thames Valley and beyond) has been booming as information technology companies have flocked to join their peers, and their rivals.

The "cluster" effect became so noticeable that the Thames Valley Economic Partnership (TVEP) commissioned a report from Reading University on local economic structures and clusters. It found that these companies benefited from existing cheek-by-jowl with others in the same broad line, and quoted the findings of an American business academic, Michael Porter. "Internationally successful businesses tend to be based in city ranges with clusters of other successful businesses in related activities, where they gain qualitative advantage from local rivalry, information diffusion, close supplier relations and the development of a pool of labour and advantageous skills," Porter wrote.

"The Thames Valley has been booming in economic terms over the past two or three years," says Matthew Wright, the partnership's inward investment manager. "More growth comes from companies within the region than those coming in and there has been a great deal of expansion by companies already here. Ten years ago, Oracle, Microsoft, Dell and others were inward investors; all of them were in the sector of software and IT."

Oracle has moved most of its operation to Reading over a two-year period and is now starting to build its fifth and final building on Thames Valley Park. It has left leased buildings in Bracknell for just under 500,000 square feet of its own space. It has taken on between 500 and 600 new staff and now has about 2,800 people on the one site.

Next door, Microsoft's purpose-built UK headquarters accommodates all its UK workforce of more than 800 at the moment, and has capacity for 2,300 employees. Microsoft says it intends to employ local workers and it chose the site to avoid London travel, to be close to its technology partners and to give it room to expand.

While Swindon boasts its own stable of hi-tech companies it continues to bid for more. Its campaign to push "Swindon, the strategic business location" centres on the M4, the all-important proximity to Heathrow Airport for international movement in global companies, the rail line, and its many business parks. In 12 years its employment base has changed from the rail works (gone but for a heritage museum) to businesses involving no dirty hands. It has done this without offering financial incentives, although it says its rents are lower than competing locations.

Companies such as WH Smith, Reader's Digest, National Power, Raychem, Allied Dunbar and the Nationwide Building Society have either corporate headquarters or large divisions there, and the number of companies based in Swindon has risen by 76 per cent in the past decade, compared with 28 per cent in the UK as a whole. All these have a honeypot effect and, Swindon hopes, more.

But the queen of Silicon Corridor has to be Reading, whose borough council estimates that 45 per cent of its workforce (some 18,000) are employed in computing-related industries. All the top 10 US software companies, and seven out of 10 top IT suppliers, have bases within the borough. Oracle and Microsoft are joined by Silicon Graphics, Borland, Integralis and Nortel as "local" firms, and within the Reading postcode area, there are more than 400 IT companies with turnovers of more than pounds 500,000 - way ahead of any other town on the M4 corridor.

Most of the companies are concentrated on out-of-town parks such as Thames Valley, Earley and Arlington, and the council's economic and external affairs subcommittee agreed last autumn to conduct more detailed research into the industry. Among the topics it intends to address are transport issues, quality of life, housing, ethnic minorities and the low level of female employment in IT.

Matthew Wright says it is valid to question whether a region is wise to have so many eggs in one sector basket - his own organisation was set up to bring business to an area given a wholesale battering by the recession. "It's a point of view that a region shouldn't fully depend on a particular sector, but if it does have strengths in a sector that's booming, that would always count as a positive thing."