How will Brexit effect the IT sector?

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How Will Brexit Effect the IT Sector?How will the voters of

England, Scotland, Northern Ireland, and Overseas

Territories determine the future of the IT sector? Click

here to learn more!

We say likely because nobody knows for sure what the turn of events will be. It’s like walking through smog not knowing where exactly you are going to, but you just keep going. This is a

novel thing since, throughout the history of EU, no other nation has ever opted out and the whole situation is placing the world today in

truly uncharted waters.

It’s expected that this seismic shift in the political status quo is going to lead into

several years of not only economic, social and political instability, but also

uncertainty.

Although the lasting effect of Britain voting to leave EU may not be known for years, the immediate ramification

for global technology is already palpable.

According to a survey done by a technology group, 87% of the British technology firms opposed the idea of Britain leaving the EU, while 70% had reservations and felt that if Britain left, then it would severely hurt its

reputation as a technological hub.

No More IPOsPotential Investors prefer buying shares in an Initial Public offering when the environment in the global

markets is less chaotic and sounder. Any tech start-up considering an IPO would probably have to wait for all the Brexit hullaballoo to cool down so as to see

how to go about it. Considering the paucity of listings encountered this year, this decision does little to

help.

Telefonica SA, which is a European telecommunication company, is reported to

have postponed the plans to sell its infrastructure unit Telxius and UK wireless unit O2 shares. Elsewhere in the world, particularly

Japan, its most popular messaging service is also planning to delay setting a price range for

its IPO following the Brexit vote.

Data Flow and Data PrivacyBrexit has opened up another challenge for anybody who cares about data protection.

Britain is likely going to need some new data sharing agreements with both the United States

and the European Union.

Currently, Britain’s data protection rules are concurrent with the European Union’s Data

Protection Directive, but it’s expected by 2018, it will be replaced by a more stringent General Data Protection Directory. If the UK wishes to

freely move data between Europe and UK, then it has to offer equal levels of protection,

and that will necessitate changes in the UK law.

Meanwhile, the UK and the US were in the process of making final adjustments to their latest data privacy agreement

that would govern the flow of data between Europe and the US. It was expected to replace last year’s Safe

Harbor Agreement.

Following Britain’s back out, being a major player in the coalition, the questions that

linger is, what happens to data flow between the US and the UK? But since the UK will no

longer be protected by the EU privacy shield, it will have to renegotiate its own data sharing treaty with the United States.

This will also mean that countries that had the UK as their EU data processing centers will have to shift them to other countries so as to comply with the new EU data protective directives. The UK as a data processing Center for Europe will

no longer be an option.

Loss of Tech Talent and FundingBritain’s tech industry overwhelmingly

advocated for its stay in the EU. Approximately three-quarters of the start-ups were against the decision citing how it

would make it more difficult for them to secure any funding for their start-ups.

Also, according to a study carried out by Silicon Valley, if Britain left the EU, then it will reduce the amount of funding the start-ups receive from US investors. This would undoubtedly

throw Britain’s technology industry into limbo as the global market will no longer resonate

with it as a technological hub.

Considering that London rode on the EU’s freedom of movement rule and established itself to such an important technology hub,

Brexit is such a blow. EU nationals had enjoyed the freedom to work and live in the

UK which enabled the top tech talent to work in whatever place they pleased.

Since Britain’s Prime Minister David Cameroon plans to step down in three months and hand it

over to his successor, we only hope that the successor will be smart enough to settle a

beneficial agreement with the EU. But even so, maintaining the freedom of movement within the region seems to be such a far cry from certainty considering it was the leading impetus for the Brexit campaign, and the skepticism towards

immigration labor still stands.

Regulatory UncertaintyAt this moment, Europe’s internet

regulation is in shambles. Unfortunately for the UK, it will now be treated as the US whose tech companies such as Facebook and Google have always run afoul under

the EU digital consumer privacy laws.

Britain has been quite instrumental in fighting such regulations in the EU but since it will no

longer have a voice in EU consumer protection legislation and crafting future privacy policy, it’s quite uncertain what the future holds. Possibly, the British technology companies will comply

with both the UK set of consumer data regulations and also Europe’s.

The UK’s presence did provide some counterweight against privacy-heavy countries such as France and Germany. But since its now

out, France and Germany will have a more flattened ground to keep leading the charge

against major American tech Firms, especially Google with the right to be forgotten rule.

ImmigrationThe UK has always been such an attractive

technology destination thanks to the free flow of people within the EU countries. The British tech companies are getting more concerned about how they will be able to fill positions for highly qualified workers and Brexit risks

such a substantial shortage of labor.

Amazon.com, Alphabet, Apple, Facebook and so many other tech gorillas have built large offices in the UK as their

European hub to ride on the region’s lenient immigration policies and help recruit qualified engineers and other employees to bring to their teams.

Following Brexit, companies might consider moving their headquarters to

somewhere else in the EU. These concerns are directly echoing the tech

industry’s talking points calling for immigration reform, especially in the US

at the moment.

The tech industry has always pushed the narrative of how they need to

recruit highly skilled foreigners from all over the world to meet its labor

demands.

The Biggest problem for the global technology industry is the length of the

Brexit process. So many years of uncertainty can be quite detrimental to any business since it will make it difficult

for hiring, investment, and capital investment.

Until businesses have a much clearer view of what to expect in the long-term, they will most likely cancel or

delay decisions to invest in the technology infrastructure.

The tech industry is very interdependent, thus particularly

vulnerable to regulatory chaos and the political uncertainty Brexit would likely

unleash. The coming few years are going to be quite interesting and indeed

uncertain.

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