National statistics

Digital sector economic estimates: Business demographics, 2023 - main report

Published 16 November 2023

1. Background

• Release date: 16 November 2023
• Next release: Winter 2024
• Geographic coverage: United Kingdom and ITL1 regions
• Time coverage: March 2019 to March 2023
• Responsible analyst: Eri Hutchinson

This release provides estimates of the number, employment, and turnover of businesses within the digital sector and telecoms. All telecoms industries are simultaneously classed as being in the digital sector. Data on the number of businesses is rounded to the nearest five.

2. Headline findings

2.1 Number of businesses

In March 2023 the total number of businesses in the digital sector was 200,600. This represented 7.4% of the 2,726,830 businesses registered in the UK.

There were 7,855 businesses in the telecoms sector (wholly contained within the digital sector) in March 2023, making up 3.9% of all businesses in the digital sector.

Figure 1: Estimated number of registered businesses in the digital sector and the UK overall, March 2023.

Please note that due to rounding, the sum of the proportions will not add up to 100%.

2.2 Size of businesses

Business size can be measured either as the number of employees, or turnover generated.

Size of business by number of employees

In March 2023, businesses in the digital sector followed a similar size distribution to the UK registered businesses in general. The vast majority (91.9%) of businesses in the digital sector fell into the micro (0-9) employee band, slightly higher than 89.1% of UK registered businesses in general. The telecoms sector had over 87.3% of businesses that fell into the micro (0-9) employee band, this is lower than both digital sectors and UK registered businesses. 

Figure 2: Percentage of businesses by employment band for the digital sector and all UK registered businesses, March 2023

Size of business by annual turnover

In March 2023, businesses in the digital sector were more likely to be in a lower turnover band than UK businesses in general. 78.3% of digital sector businesses have a turnover of less than £250,000, compared to 68.1% of UK businesses in general. The telecoms sector had a lower proportion of businesses in a lower turnover band compared to the digital sector and UK registered businesses in general, with. 53.0% having a turnover of less than £250,000. 

Figure 3: Distribution of businesses in the digital sector and overall UK registered businesses by annual turnover, March 2023

2.3 Regional distribution of business sites in the digital sector

In March 2023, there were 209,725 business sites in the digital sector, representing 7.4% of the 3,175,710  registered business sites in the UK.

In common with UK business in general, the included digital sector has a higher proportion of business sites in London and South East England than other regions (as defined by the International Territorial Level 1, or ITL1, geographic classification of administrative areas). Of business sites in the digital sector, 65,445  (31.2%) were in London and 40,185 (19.2%) were in the South East. This is a higher proportion than for UK business sites overall, of which 584,415 (18.4%) were in London and 465,595 (14.7%) were in the South East.

The telecoms sector is less concentrated in London and the South East than the digital sector overall. Of the 11,260 business sites in the telecoms sector, 2,075 (18.4%) were in London and 1,905 (16.9%) were in the South East. 

Figure 4: Regional distribution of business sites in the digital sector, March 2023

2.4 Changes over time

The number of businesses in the digital sector has consistently decreased each year from March 2019 to March 2023. This is in contrast to UK businesses overall which increased each year from March 2019 to March 2022, before decreasing between March 2022 and March 2023. The number of businesses in the digital sector decreased by 39,205  (16.3%) from March 2019 to March 2023, in contrast to UK businesses in general which increased in number by 8,385 (0.3%) over the same period. This meant businesses in the digital sector went from representing 8.8% of all registered UK businesses in March 2019 to 7.4% in March 2023. Between March 2022 and March 2023, the number of businesses in the digital sector decreased by 9,090 (4.3%), compared to a decrease of 40,870 (1.5%) in UK businesses overall. 

The number of businesses in the telecoms sector has decreased between March 2019 and March 2023, however to a lesser extent than the digital sector overall. The number of businesses in the telecoms sector decreased by 555 (6.6%) from March 2019 to March 2023 and by 290 (3.6%) from March 2022 to March 2023.

Figure 5: Index of total number of businesses in the digital sector, March 2019 - March 2023, March 2019 = 100

The fall in the number of businesses in the digital sector between March 2019 and March 2023 are mostly driven by the computer programming, consultancy and related activities subsector. Some subsectors, such as film, TV, video, radio and music, saw increases in the number of businesses. 

Changes over time in business size

The relative size of businesses in the digital sector when measured by employee band has remained stable, with 99.7% having under 250 employees in each year from March 2019 to March 2023. This is very similar to the proportion of small businesses in the UK overall, with 99.6% of registered businesses having under 250 employees in each year over the same period.

Changes over time in regional distribution of business sites

The regional distribution of business sites in the digital sector has remained similar between March 2019 and March 2023. In March 2019 the region with the largest number of digital sector business sites was London, representing 30.7% of the total. The fewest business sites were located in Northern Ireland, at 1.0% of the total. This is similar to March 2023 where the region with the largest number of digital sector business sites was London, representing 31.2% of the total and the fewest business sites were in Northern Ireland, at 1.2% of the total. 

In contrast, UK businesses in general had 18.4% of business sites in London and 2.8% in Northern Ireland in March 2019. These proportions were similar to March 2023, with 18.4% in London and 2.9% in Northern Ireland.

3. About the data

DCMS and digital sector economic estimates are accredited official statistics. Accredited official statistics are called National Statistics in the Statistics and Registration Service Act 2007 These official statistics were independently reviewed by the Office for Statistics Regulation in June 2019. They comply with the standards of trustworthiness, quality and value in the Code of Practice for Statistics and should be labelled ‘accredited official statistics’.

When we refer to a national total or UK businesses in general, this is for all businesses registered with HM Revenue & Customs (HMRC) for Value Added Tax (VAT) and/or Pay As You Earn (PAYE).

We use a snapshot of the Inter-Departmental Business Register (IDBR) taken annually in March to generate estimates of DCMS and digital sector business demographics. Estimates in this release are not directly comparable to DCMS sectors and digital sector business demographics estimates published by DCMS in 2021 and previous years as they were based on a separate data source. 

We have made a number of changes to DCMS and digital sector economic estimates: business demographics in recent years:

• previous reports have included data on charities registered with the Charity Commission of England and Wales, Community Interest Companies (CICs) and the now-discontinued Public Service Mutuals which were defined as civil society organisations
• previous releases have included estimates of the turnover produced by businesses in each employment band and the number of businesses by foreign-owned status, both of which are not available in this release due to the change in data source from the Annual Business Survey (ABS) to the Inter-Departmental Business Register

Additional information about the change in data source from the ABS to the IDBR in 2022 can be found in the source data change summary note.

We welcome any views on these changes to our email evidence@dcms.gov.uk.

Further information on the methodology used to produce these economic estimates, along with a glossary of terms, is available in the methodology and quality assurance report accompanying this release. 

4. Further information

DCMS has developed a suite of Economic Estimates to understand the economic impact its sectors have on the UK economy. In combination with other economic indicators, these estimates help build a comprehensive picture of the UK economy, and of the DCMS Sectors’ importance within it. 

The responsible statistician for this release is Eri Hutchinson. For enquiries on this release, please email evidence@dcms.gov.uk.

For general enquiries contact:

Department for Culture, Media and Sport
100 Parliament Street
London
SW1A 2BQ

For media enquiries contact: 020 7211 2210.

DCMS statisticians can also be followed on X via @DCMSInsight.

Our statistical practice is regulated by the Office for Statistics Regulation (OSR). OSR sets the standards of trustworthiness, quality and value in the Code of Practice for Statistics that all producers of official statistics should adhere to. You are welcome to contact us directly with any comments about how we meet these standards. Alternatively, you can contact OSR by emailing regulation@statistics.gov.uk or via the OSR website.