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Brexit – Impact On UK IT And Tech

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Baskar Sundaram

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Brexit might alter UK’s position as an attraction destination for IT workforce

The UK’s IT sector is worth £185 Billion, employing about 1.2 Million people, directly and indirectly. Latest research reveals top IT executives expressing concerns that companies in the UK are in danger of losing software development work post Brexit.

Brexit might have various ramifications on UK’s Information Technology sector. Some of the possible impacts are examined below

Staffing – Brexit and the uncertainty that it is breeding may lead to closing of doors for EU talent. This will put great pressure on the UK in the post-Brexit era. As per latest figures from LinkedIn, London attracted more international tech workers than any other city in Europe. About 10% of the workforce in the city comes from other countries. There is already an ‘on-going’ skills shortage in UK due to a spate of continuous demand. Many top tech executives have expressed concerns about their ability to hire staff amid Brexit uncertainty as there would be restrictions on free movement of staff across borders. The shortage in staffing is likely to result in an increase in wages which can be a crucial factor in IT contracts.

Data Protection – Brexit will have its impact on data protection and there would be a change in ways in which companies manage and handle personal data. Currently, there is free flow of data across UK and other EU countries. Under a ‘no-deal’ exit scenario, UK might be coerced to reform its privacy laws in line with new EU rules.

IT Supply Chain – Procurement of technology for structural technological changes; for threat analysis of cyber-crime and for understanding and planning technological changes requires access to a functional procurement marketplace. There are signs that many EU companies are holding back on using British firms in their supply chains, which may involve parts crisscrossing borders several times- as they still don’t know about tariffs, regulations and the potential for costly delays.

Increase in cost for digital services – There could be cost implications on buying services and products from the EU after Brexit. The use of digital services e.g. Microsoft Azure, Office 365 and other Microsoft services, many of which are incorporated in the Netherlands, will lead to new VAT hike for UK consumers, who will now have pay duty upfront for services and products, including digital services and goods. This will create additional cash flow concerns for businesses due to an increase in cost. The cost of ‘doing business’ with EU tech companies will increase and subsequently cause an increase in the prices of components and digital technology.

Timely and accurate information on regulatory developments would help in building up a defence for IT companies stuck in the Brexit whirlpool.

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