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How IT Companies in the UK will be affected post-Brexit

Even though ‘no deal’ will not be finalised until December 2020, the UK’s vote to part ways with the EU has already sent shockwaves across the globe.

Attention has now diverted toward how businesses will respond to this change, and IT companies within the UK particularly should understand how this might affect the way they do business.

Post-Brexit implications on the UK’s IT Industry

The ongoing economic and political uncertainty leaves the UK tech and IT sector vulnerable to sizable impacts when it comes to delivering client contracts. Furthermore, it also raises concerns over declining investment rates and competitiveness.

The UK’s digital sectors are responsible for 16% of the nation’s domestic output; 24% of UK exports; and, 10% of employment. All sectors even remotely related to IT disproportionately contribute to productivity, growth and innovation, both directly and indirectly. Their development has been termed a ‘national priority’.

Owing to its EU membership and geography, the UK tech market acts as a clear access bridge to Euro markets for tech companies across the globe – from the Silicon Valley tech giants to start-ups oozing with innovation, who may very well transform into tech giants one day.

In 2018, the UK’s information and communications technology market was ranked 4th largest in the world, valued at $153 billion.

Free flow cross-border data

The digital market in the UK depends on free data flow across borders. It’s no secret that free and international flow of data is what drives economies across the globe. A ‘disorderly’ Brexit can seriously put this at risk by muddying up the regulatory certainty which currently exists between the UK and EU.

IT businesses depend on free data flow to access new markets, make global transactions and create effective supply chains that are also friction-free.

Data protection

A ‘no deal’ situation will have implications on other key areas like data protection. Even though the government has revealed plans for making technical amendments to data protection legislation – the UK would still become a full ‘third country’ under a no-deal arrangement, and that means EU data cannot be sent to anywhere in the UK.

Pool of talent

The UK IT sector depends rather heavily on global talent – with approximately 18% of the three million people working in the sector belonging to nations outside the UK, and a third belonging to EU nations.

Major skills gaps are already plaguing the country’s IT sector, limiting its growth. If tech and IT companies find themselves dealing with more hurdles when attracting skills and talent into the UK, then that means the country may not be the best avenue for tech growth.

A no-deal situation would quite severely impact UK digital businesses’ ability to service client contracts in the EU, due to issues with free staff movement – e.g. a UK staff member travelling to the EU to facilitate a data centre operation.

Closing thoughts

The political and economic uncertainty revolving around ‘no deal’ leaves tech/IT companies open to potentially severe impacts.

Hopefully, a no-deal option on the negotiation table will be done away with, helping IT companies move forward without any major restrictions.

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