If there’s one thing you can credit the UK tech sector for, it’s a generally long-term view of the future. In this time of huge Brexit uncertainty, that pragmatism is perhaps the main cause for optimism for everyone working in UK technology.
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Equally, many of the strengths of UK IT have not gone away and will not disappear outside the European Union – we will still be inventive and innovative, Europe’s biggest online shoppers and among the most connected countries in the continent. We will still have English as the global language of business and technology.
Many tech firms will be patient enough to wait through the short-term economic and political crisis engulfing the UK and to see what comes out the other side. And when we do, they will still see a country with many strengths capable of playing an important global role in the digital revolution.
So it is not all doom and gloom for UK IT. But at this point in time, it is hard to see that we will not be diminished on the global tech stage as a result of a Brexit.
I wrote before the referendum that remaining in the EU is essential if the UK wants to be a global technology leader, and I stand by that for all the same reasons.
Analyst firm Gartner – not exactly a paragon of forecasting accuracy but one that is taken seriously by IT leaders and boardrooms – predicts that IT spending in the UK will decline by five percentage points during 2016 and 2017 leading to a drop in investment, instead of the previously anticipated growth.
IT budgets in the short term will be under pressure, new projects will be curtailed until the current uncertainty is over, and that will have a knock-on effect through the supply chain.
IT jobs will be hit, especially in multinational companies that will move work into EU countries. Datacentre providers planning to make the UK a base for their European cloud services will rethink their plans. The fall in the pound will make IT equipment more expensive – pretty much every item of hardware is manufactured overseas and prices will rise. Some investors will think twice about putting their cash into UK tech startups. Sectors where we lead the world such as fintech will see overseas rivals rubbing their hands in glee at the chance to catch up.
The government’s Digital Economy Strategy – already delayed until after the referendum – will have to be almost entirely rewritten for the new realities. The strategy was largely based on the UK being part of the EU’s Digital Single Market and that’s now as far up in the air as the rest of our future trading relationship with Europe.
UK universities that lead the world in science and technology research will see their funding from the EU cut – what affect will that have on hugely important areas of future research such as graphene or 5G?
It’s a grim short-term scenario and until we regain some form of stability in the UK and have some idea of our post-Brexit relationship with the EU – and indeed the rest of the world – it’s difficult to see many upsides.
However, if you’re a UK-based IT firm with a mostly UK customer base, there may be an opportunity for you. UK cloud companies, for example, might become comparatively cheaper compared to the likes of Amazon Web Services and Microsoft if the weak pound means they put up their prices to maintain dollar values. IT chiefs might even find recruitment a little easier if jobs go elsewhere and ease the skills shortage. Offshore outsourcing might become comparatively more expensive too, to the benefit of UK-based IT services providers.
Tactically in the short term, there are silver linings for some. But these are crumbs of comfort.
More than most sectors – more even, than heavily regulated financial services markets – technology is a truly global industry and to stay competitive the UK needs to maintain an open, international perspective.
As the Brexit uncertainty waits to unwind, we will in the meantime need to be smarter and more innovative than ever to make sure we are not permanently damaged and left behind in the digital revolution. UK IT can do that, but it will not be easy.