Brexit – the word on everyone’s lips. But what does it mean for the UK’s IT companies?

Car manufacturing, farming and financial services have been singled out as the industries most likely to suffer should Britain leave the European Union, but there has been little debate on how the technology industry would be affected. At last estimate, the tech sector was worth £58 billion annually to the British economy, so it is crucial to understand the impact that Brexit could have on the market. As a company operating in the technology security space, we at Semafone believe that while the Brexit is not the Armageddon some commentators would have you believe, Britain should remain part of the EU. So, what factors have lead us to this conclusion?

What role does North America play?

At Semafone, our focus is on the huge opportunity in the English-speaking North American market and the same is true for many other UK technology companies, not least because of the shared language - many technology businesses would be more concerned about the UK’s relationship with the US and Canada, than with the EU. Nonetheless, an EU exit looks likely to create nervousness in North America, which could adversely affect relationships with UK companies.

Clouds across borders?

When it comes to selling software, we are lucky that physical borders do not usually get in the way of the distribution of products. In particular, selling cloud-based solutions to different markets across the world is generally not dependent on big, unilateral trade discussions forged between nation states.

It could even be argued that the lengthy period of uncertainty that would follow a British exit could work in our favour, weighing heavily on the value of the sterling and making our software products cheaper overseas and easier to export!

However, the UK government’s task of re-negotiating individual trade deals with the other 27 EU countries would be no mean feat. The long, drawn-out process is likely to result in a lot of confusion while deals are replaced and such instability is unlikely to have an overall positive effect on business.

Movement of skilled labour

One of the main concerns of the IT sector has always been the recruitment and retention of talent. During the dotcom boom it was a true-ism among IT professionals that the UK sector would collapse if we lost access to the highly skilled South African and Australian workers who migrated to the UK using whatever family connection they could to qualify for a visa.

Nowadays our IT infrastructure and networks are much more reliant on Eastern European techies, with countries like Poland, Slovakia and Hungry offering a fantastic pool of resources. In fact, 15 per cent of Semafone’s UK workforce is drawn from these countries.

Losing access to this readily-available stream of talent would hit a lot of companies hard, particularly those trying to expand their operations. It’s possible that this might be addressed by the UK government implementing a more enlightened immigration policy, such as designation of a certain number of visas for EU workers with the required technical skills. But it would be considered a bold political move and not something on which IT companies would want to be reliant.

We can’t overlook technology and data security

Over the years, the EU has proven itself to be significantly more effective than the UK at not only creating, but also enforcing laws that protect customer data. Currently the UK is a member of Europol (the European Union’s law enforcement agency) and we are involved in a lot of cross-border collaboration to reduce cybercrime. Should Britain decide to leave the EU, its role in the organisation would be substantially different. And this could compromise information security for UK citizens. This would be especially true for phishing attacks, which could become harder to identify due to the uncertainty about whether or not global and European businesses are operating officially within the UK.

The new EU General Data Protection Regulation (EU GDPR) is also just on the horizon. This raises the question that if Britain is no longer part of the EU, how would the new data privacy and protection laws be affected? And how would it impact the transfer of data between the EU and the UK? The EU Commission’s deliberations have already taken years; adding another layer of complexity in the form of a Brexit could make the wait even longer, leaving UK citizens more exposed to the risk of data theft and fraud.

What’s the big picture?

The arguments on both sides of the Brexit debate have highlighted just how complex and interwoven our relationship with the EU has become. We do not believe that leaving the EU would be an unmitigated disaster, but as a business, we have to look for the factors that most directly affect us. Technology markets thrive when technical standards are consistent across an industry, enabling inter-operability and collaborative working. The EU has done a great job of delivering this. It has also proven itself to be one of the pre-eminent global regulators of the last 20 to 30 years and its care and concern for the privacy and security of its citizens’ personal data are second to none. For these reasons, we believe that Britain should stay in the EU.

Tim Critchley, CEO of Semafone

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