Brexit IT Exit?

Brexit – ITexit?

Theresa May has put pen to paper and officially began the process of triggering Article 50 and leaving the European Union.

The IT sector was largely in favour of remaining in the European Union. This is no longer an option. Enterprises everywhere are planning for various scenarios. The stock market has been rattled and currency fluctuations are in full swing, as with every Brexit announcement.

Whilst the world has not ended, the landscape of the UK technology sector has changed.

Brexit effects on the IT skills sector so far.

IT hires

So far, it appears Brexit’s biggest effect is psychological.
The WTO imposes low tariffs on electronic goods, and the UK has a global reputation for providing services. This combined with large scale technology development being predominantly centred in the US, there is hope that the UK IT sector will weather the approaching storm.

Most UK IT companies fortunately haven’t taken this for granted, and are preparing for any eventuality. Between ensuring that strategies are robust, and streamlining operations: UK IT is getting ready for the unpredictable climate of the foreseeable future.

Despite this, certain unexpected and counterintuitive benefits have appeared – for example within the labour market. Freedom of movement was bitterly debated throughout the referendum, and questions are now being asked whether the UK will continue attracting specialist workers without that liberty. With staffing considerations currently paramount, surprising indications suggest that until we formally leave the EU, the opposite will be true.

Brexit has created a newfound urgency amongst people across the world who are looking to work in the UK. This is reiterated by the leap in skilled visa applications, and a sharp increase in talented IT staff available in the market since the referendum. Early indications suggest this trend will is growing, and the government is continuing to welcome skilled tech workers from abroad. The Home Office granted 250 tech visas in 2016, a 20 per cent increase on the year before.

Whilst demand for tech staff continues to race ahead of supply, the unlikelihood of major changes around skilled immigration before 2019, combined with the psychological effect of Brexit leading some companies to freeze their hiring efforts has resulted in current circumstances should provide IT companies more staffing options.

Brexit effects on the IT skills sector in the near future.

Investment and innovation

UK investment in tech sector

Concerns that Brexit will scare enterprise investors away from London and the wider UK are likely to remain unfounded – Apple, Amazon, Facebook, Google and Microsoft have all confirmed large investments creating thousands of new jobs in this country since the Brexit vote, and its unlikely things will change.

The UK has been supportive of large tech enterprises during numerous run-ins with the European Commission in recent years, which could further boost Britain.

One sector likely to see some turbulence and uncertainty ahead, is cloud computing. Given concerns about data sovereignty and regulations ensuring data can flow between the UK and Europe, we may have to prepare for a pause in U.K. data centre build-outs. This fear is already encouraging public cloud implementation engineers to begin shifting focus to implementing private cloud systems, and moving away from the new-build aspect to supporting existing systems.

Some IT consultants foresee a short-term hit, but potential gain in the long run. EU exit will presumably force companies to comply with one set of data regulations in the UK and another in the UK. Regulators in the UK understand keeping infrastructure providers in the country is vital to prosperity, and it’s possible the UK could become a haven for tech innovation – the go to location for companies to experiment and innovate without being stifled by EU regulations.

Data privacy and regulations may unfortunately take months or years to negotiate.

The UK is a global innovation hub, and this is unlikely to change. Start-up organisations will continue to launch and thrive, although those at the bleeding edge of technological development may find funding support is no longer provided by EU grants, but the UK government itself – a very vocal proponent of digital technology who invested over £6.8 billion into the sector in 2016.

Silicon Valley of Europe

Tech Hotspots EU

There are concerns around an initiative the EU is currently working on called the Digital Single Market. The aim is to allow free movement of people and capital in IT sectors and generally cut barriers surrounding digital goods. This isn’t something that we would necessarily loose, more something we would never gain.

Missing out on the Digital Single Market would inhibit UK IT’s ability to work seamlessly across EU borders. It would risk giving an advantage to European tech capitals fighting to be the Silicon Valley of Europe, with Berlin and Paris among others vying to be the go-to location for technology on the continent.

Allowing others to gain a competitive edge over the UK will cost potential jobs and opportunities, and encourage skilled staff to move away. The UK needs to maintain the same environment that helped Silicon Valley prosper in the first place. A spirit of cooperation developing strong professional networks. A large level of diverse and home-grown talent from leading educational environments.

Stem a Brain Drain

IT Gender Inequality

What options do UK tech companies have available to ensure they have continued access to world leading IT staff?

Companies need to ensure they do not let a fear of ‘what ifs’ prevent them from ensuring they are staffed to requirement, especially while quality technical workers are currently in the market for opportunities.

Investment in staff training needs to increase. There will always requirements for experienced people, but the focus should be on growing talent. Tech companies are traditionally leaders in staff training, and should be encouraged to increase volume of entry level opportunities.

UK IT should also consider these worrying statistics. Microsoft published a survey of technical and IT leaders finding that, on average, the gender mix among their teams was 80% male and 20% female. When asked whether plans were in place to change this imbalance, 35% said no.

A fifth of firms that employ between 250 and 999 staff have no female IT workers.

The tech sector missing out on female talent is certainly a well-known problem for our industry and it will be exacerbated if Brexit brings limits to immigration. But it does beg the question: Why does UK IT need to look abroad for skilled tech workers, if they have not yet explored the talent hidden within the remaining 51% of people on this island?

Chapman Tate is offering consultancy to companies interested in taking advantage of a wider workforce by developing plans to bring more women into skilled IT roles. Our competitiveness and status as the tech capital of Europe depends on it.