Why US Companies Are Building Engineering Teams in London (2026)
US companies are building engineering teams in London because the UK combines senior software and AI talent, a total cost well below San Francisco or New York, a working morning shared with the East Coast, and a language and legal system that feels familiar. In April 2026 OpenAI signed for its first permanent London office, with room for 544 people, and Anthropic leased space for 800. In 2025 the number of US tech investment projects into the UK went up by 21%.
If you're a US founder or CTO asking whether your next ten engineers should be in the UK, this is the data I'd want in front of me: who is already here, why, what it costs, the catches nobody mentions on LinkedIn, and the practical ways to actually set it up.
The evidence: who is coming, and how big
The headline moves this year were from the two biggest AI labs:
- OpenAI signed an 88,500 sq ft office at Regent Quarter in King's Cross, with capacity for up to 544 people, more than double its roughly 200 London staff. It is due to open in 2027, and OpenAI has said London will be its largest research hub outside San Francisco (Tech.eu).
- Anthropic leased 158,000 sq ft at Regent's Place in the Knowledge Quarter, with room for around 800 people, up from more than 200 today, 60 of them AI researchers (IT Channel Oxygen). Its neighbours there include Google DeepMind, Meta, Synthesia and Wayve (CDO Magazine).
What the two companies said about it is the useful bit. OpenAI's London site lead, Phoebe Thacker: "The UK has an incredible depth of talent and a strong track record in AI." Anthropic's Pip White called it "an exceptional pool of AI talent".
And it isn't just two companies:
- AI firms took 661,068 sq ft of London office space in the first half of 2026, more than in the whole of 2025 (500,000 sq ft), according to Knight Frank (IREI).
- US-originated software and IT investment projects into the UK rose from 33 in 2024 to 40 in 2025, making the US the UK's top source of tech investment again (EY).
- The UK won 155 software and IT investment projects in 2025, ahead of France (104) and Germany (102). London alone had 85, more than twice as many as Paris (same EY release).
Why the UK, specifically
1. The talent pool is deep, and it is renewed every year
- Four of the top ten universities in the world are British: Imperial (joint 2nd), Oxford (4th), Cambridge (6th) and UCL (8th) in the QS World University Rankings 2027 (QS).
- The UK AI sector employed 86,139 people across 5,862 companies, with £23.9bn of revenue, in 2024 (UK government AI sector study).
- In EY's survey of 360 investment decision-makers, 57% said the UK beats competing markets on the availability of tech talent (EY).
2. It is where your customers are, if you sell into finance or insurance
- UK fintechs raised $3.6bn in 2025, second only to the US and more than the next five European countries combined (Innovate Finance via Markets Media).
- The Lloyd's market wrote £57.9bn of gross premium in 2025 (Lloyd's).
If you build for banks, payments or insurers, a London team means engineers who have worked on those systems before, and who can sit in a meeting with a customer's tech team the same week.
3. The time zone works, at least for the East Coast
London is five hours ahead of New York and eight hours ahead of San Francisco for most of the year. For an East Coast company that means a shared morning every day: planning, reviews and decisions happen in the overlap, and the UK team keeps shipping while you're asleep. West Coast teams get a much thinner overlap, so you'll need proper async handovers. I've written about how we run that across four countries in building a tech team across time zones.
4. Same language, familiar law
English-speaking, common-law, with business norms that US teams already understand. It sounds soft, but it does a lot of the work of making a remote team feel like part of your company.
5. The cost is lower, especially outside London
On Levels.fyi, median total compensation for a software engineer is £102,020 in London, against $280,000 in the Bay Area and $200,000 in New York (all levels, October 2026). Outside London it drops further: the median software engineer job advert is £100,000 in London and £70,000 in Manchester (IT Jobs Watch, six months to October 2026).
I've done the fully loaded maths, with employer taxes, pensions and US health insurance, in UK vs US software engineer cost. The short version: compared with the US tech hubs the saving is real; compared with a US national median it is much smaller than people assume.
The catches nobody mentions
- AI salaries in London are not cheap any more. City AM reported Anthropic advertising London research engineering roles at up to £630,000 before stock, and OpenAI with 32 open London roles (City AM). If you want frontier ML researchers, you're competing with the labs. If you want strong applied AI and product engineers, you're in a much better position. More on that in hiring AI engineers in the UK.
- Investment volume dipped. UK tech project numbers fell 4% in 2025 and London's fell 12%, even while US projects grew (EY). The trend is driven by bigger, higher-value moves, not more of them.
- UK employer costs went up. Employer National Insurance is 15% on earnings above £5,000 a year (HMRC). Budget for it from day one.
- Hiring takes time. A UK engineering hire is typically eight to twelve weeks from posting to start date, plus a notice period that is often one to three months. Plan the first hires a quarter ahead.
How US companies actually set up a UK team
There are three realistic routes:
| Route | Who is the employer | Who finds and leads the engineers | Best for |
|---|---|---|---|
| Employer of record (EOR) | The EOR platform | You do | One or two people you already found |
| Your own UK subsidiary | Your UK company | You, or a partner | Owning the operation from day one |
| Managed R&D Lab (build, operate, transfer) | A UK partner | The partner, with your approval | A working team fast, owned later |
An EOR only solves payroll. Opening your own subsidiary means a UK company (usually a private limited company owned by the US parent), plus UK accounting, payroll, legal and HR. Overseas companies that open a UK establishment have their own registration and filing duties too (GOV.UK). A managed lab, sometimes called a global capability centre or build, operate, transfer, gets you a working team first and lets you move it into your own entity later. In the UK that transfer usually falls under TUPE, so employees keep their terms and length of service (GOV.UK).
This is exactly what our UK R&D Lab does. We either run the team for you as a Managed R&D Lab, or help you open your own UK subsidiary with our accounting and formation partners. Either way our engineers and CTOs hire the team and a local full-time or fractional CTO leads it. To see what your own UK team would cost and which rules apply, try our free UK Expansion Planner. If you're a US founder weighing this up, start with building a UK engineering team as a US company.
A quick checklist before you commit
- Decide which roles belong in the UK. Usually a whole product area or capability, not a scattering of individuals across your existing teams.
- Pick the location model. Remote across the UK is cheapest, hybrid gives you a London core, a dedicated office helps for hiring and culture.
- Choose your entity route. EOR, own subsidiary, or a managed lab you can take over later.
- Put a local technical lead in place before hire number three. A UK team without someone senior on the ground drifts within months.
- Protect the overlap hours with your US team, and write the async handover process down.
- Budget fully loaded cost, not salary: employer NI, pension and recruitment fees on top.
Frequently asked questions
Why are US companies opening offices in London? For talent, lower total cost than US tech hubs, a shared working morning with the East Coast, and proximity to Europe's biggest AI, fintech and insurance markets. OpenAI and Anthropic both announced major London expansions in April 2026.
Is London cheaper than the US for software engineers? Than San Francisco and New York, yes: median total compensation is £102,020 in London against $280,000 in the Bay Area and $200,000 in New York on Levels.fyi. Against the US national median the gap is much smaller once employer costs are counted.
Do I need a UK company to hire UK engineers? No. You can use an EOR, or a managed R&D lab where a UK partner is the employer. You need your own UK entity only if you want to employ people directly.
What is build, operate, transfer? A model where a partner builds and runs a dedicated team for you, then transfers it into your own entity when you are ready. In the UK, staff transfers usually fall under TUPE.