Brexit and the UK technology sector - read our analysis of the implications
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The UK IT community, users and suppliers, have reacted with alarm, fortified by some sangfroid, to the majority decision of the British people to leave the European Union (EU), in the Referendum of 23 June 2016.
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Julian David, CEO of IT industry trade body techUK, said: “Today the British public has decided that the UK should leave the European Union. This is not the outcome that the majority of techUK members were hoping for. It opens up many uncertainties about the future.
“However, the UK tech sector will play its part in helping the UK to prepare, adapt and thrive in a future outside the European Union.”
But, he warned: “Without the benefits of EU membership, the UK needs to be at its very best to succeed.”
More on the user side of the IT community, the BCS issued a statement saying: “This is the start of a long process for the country. For BCS, it is the beginning of a dialogue, led by members, but facing towards our society, to develop a shared vision for the UK’s digital future outside the European Union.”
BCS CEO Paul Fletcher added: “This morning we start a process of huge national significance, against a backdrop of uncertainty. It’s important for BCS as a chartered organisation to show leadership and foster debate in how we can make the most of that process.
“Our members, together, have an important role in creating a digitally successful, prosperous and thriving UK.”
David Evans, director of policy and community at the BCS, said the organisation would be talking to the Department for Business and the Department for Culture, Media and Sport in the first instance “about what needs to be done and how we can help”.
“We are already working on several projects around some of the key areas for negotiation – such as personal data regulation,” said Evans.
“Our starting point is that the UK must be a leading nation for digital innovation, with citizens at the heart of our approach, and very much open to international business. To support this, we need to ensure that the relationship we have with the EU is right around personal data and access to markets.”
BCS Elite, the computer leadership forum of the BCS, recently joined forces with EuroCIO, a group representing CIOs of international firms operating in Europe.
The UK representative of EuroCIO Ben Booth said: “We will inevitably be affected by things that are decided in Europe, particularly around standards, so having a voice in the process that decides those standards is more important when we are no longer part of Europe.”
Booth believes EuroCIO now has a role to play as a significant lobby group in Europe, which speaks for the user community. He previously worked as an interim CIO at a number of European organisations. He said some of these organisations may well delay major IT initiatives due to market uncertainties arising from the UK exiting Europe.
The Brexit vote has raised some concerns in the information security community, but the two-year transition period means that there is an opportunity to adapt.
More than a third of information security professionals have expressed fear that leaving the European Union (EU) will make the UK more vulnerable to cyber attacks, according to a pre-referendum poll.
They are concerned that Brexit will mean they will no longer benefit from intelligence sharing with other EU states, according to a survey by security firm AlienVault.
The research, which polled around 300 information security professionals at the 2016 Infosecurity Europe conference in London, also found that more than a fifth actively support EU legislation around data protection and believe that it benefits them and their work.
Despite these concerns, information security certification body (ISC)2 has urged calm, saying there is time for the profession to adapt to soften the effects of the Brexit vote.
Adrian Davis, European managing director at (ISC)2, said information security is well-recognised as an international concern that has motivated levels of co-operation that already transcend national boundaries and politics, and there is no reason to believe that this will come to an end or even be significantly interrupted by the Brexit vote.
“Practicing professionals in the UK and across Europe have at least two years ahead of them to understand the practicalities that will affect their day-to-day job. There is a good chance that quite a lot of what was anticipated over this time will not change,” he said.
UK will still comply with GDPR
The need in the UK to comply with the GDPR, for example, will remain the same, he said, as UK businesses will continue handling EU citizen data.
Commenting further on the GDPR, Peter Galdies, development director at data governance, risk and compliance firm DQM GRC, said the long-term effect of the Brexit vote is not likely to be significant.
“After Article 50 is invoked, which gives our official notice to leave the EU, there will be a mandatory two-year minimum period in which we remain a member of the EU while we negotiate an exit,” he said.
“During this time, all existing legislation – including GDPR – will continue as before. Many forecast that this process might take much longer, with many estimates between 3 and 6 years.”
The many organisations which already manage or contain personal data relating to EU/EEA state citizens, said Galdies, will continue to have to manage that data according to the requirements of the GDPR regardless of Brexit, or they will be in breach of the GDPR and risk large fines.
It is highly likely, he said, that the UK with a strong new commissioner with a proven history of backing and enforcing consumer rights will adopt a legislation directly modelled on the GDPR.
“So while we are going to be living in uncertain times for a few years to come, it is likely privacy will still be high on the agenda and the pressure for organisations to retain and build trust will remain,” he said.
In the startup area of UK IT, voices remain bullish, especially in Remain-voting London.
Russ Shaw, founder of Tech London Advocates, said: “Today’s result is not what the London tech sector wanted to see, but we will continue our efforts to build London tech and continue on our journey to make London a world-leading tech hub.
“Digital and tech entrepreneurship has taken hold in London, and we will continue to nurture this in the coming months and years.
“During this week, which is also London Technology Week, Tech London Advocates has been focusing on the importance of diversity in tech. After this result, the London tech sector will continue to celebrate and welcome talent from London, the UK, the European Union and from around the world.”
UK science post-Brexit
Nicola Blackwood, member of Parliament for Oxford West and Abingdon, and chair of the Commons Science and Technology Committee that earlier this published a landmark report on big data exploitation, said: “It is vital that the government moves quickly to reassure our scientists and their collaborators in Europe that the UK remains firmly open for business as a willing and reliable partner.
“If EU research funding is affected after the exit negotiations that follow, the Her Majesty’s Treasury may have to reallocate funds previously sent to the EU.”
The view from Scottish tech
Scotland, along with Northern Ireland, London, Manchester and Liverpool, voted in the majority to stay in the European Union.
Glasgow-based Jim Duffy, CEO of Entrepreneurial Spark, said: “True entrepreneurs are opportunity hungry and with change comes that opportunity. In our global economy, UK businesses are trading across the world, not just in Europe, and exiting the EU is unlikely to reduce trading opportunities in the long term.
“Entrepreneurs will simply just get on with it . What’s important today is that they continue to focus on planning to ensure that they can navigate any turbulence in the coming days and weeks, while exploiting bigger opportunities in the months and years to come.
“Today’s news also opens huge opportunities for the SNP to relook at Scotland’s position in the wider UK, being entrepreneurial in its approach to a further independence referendum.
“The mind boggles where this could stop with renewed calls for a united Ireland and the Prime Minister expediting his exit, but, speaking from an entrepreneurial mindset perspective and sensing opportunity, there’s scope for a variety of stakeholders to seize the initiative.”
Brexit confounds outsourcing
Kerry Hallard, CEO of the National Outsourcing Association (NOA), echoed many in the IT community with a “not the result we wanted, but let’s get on with it” comment.
“This is certainly not the result that members of the National Outsourcing Association wanted; this is not the result that the British outsourcing industry as a whole wanted,” she said.
“That fact was clearly demonstrated in March 2016 when we surveyed the UK outsourcing industry, and again just two days ago when we polled more than 200 industry representatives on their beliefs regarding Britain’s EU membership at our NOA Symposium conference.
“Nevertheless, the people of Britain have decided to leave the EU, and it is vital now that our political and business leaders do everything they can to restore and maintain market stability as a new relationship with the EU is established. David Cameron must protect Britain’s businesses during his last few months as prime minister.
Discussing UK citizens working in Europe, Hallard said: “It is paramount that our government does everything it can to protect the rights of EU citizens living and working in the UK.
“The valuable skills they bring to the outsourcing industry and our country are essential to the wellbeing of our businesses and economy – they will be significantly missed if those individuals are forced to leave our country.”
From a datacentre perspective, UK firms will need to consider EU data laws when deciding where to host UK and EU citizen data.
According to law firm, Freshfields Bruckhaus Deringer, an important question is whether the UK would be classified as a “safe third country” by the European Commission, so as to permit EU personal data to be transmitted to the UK.
“If it were not, UK companies doing business in the EU would need to re-think their data protection compliance strategy,” the law firm noted.
In the past, datacentre and cloud services have established European centres in places such as Dublin to get a foothold into the European market – serving UK and continental Europe customers.
Jon Leppard, director of Future Facilities, said: “Britain has decided to leave the EU, and this brings uncertainty in the short-term. The datacentre industry is, at its core, a bricks-and-mortar industry that has a long-term vision for the decisions it makes. It is therefore likely to see some increased caution from the industry as it waits to see how the Brexit evolves.
“This caution is likely to come in the form of increased use of colo and shorter-term projects instead of going for the new build in the months to come until the outlook is more clear.
“That said, the general trend of the industry is moving towards colo, and perhaps Brexit is simply going to be a catalyst for the adoption of this model. Right now, some see this as an opportunity, and others a risk – we need a bit more time to see who is right.”
As Computer Weekly previously reported, a number of cloud operators are actively establishing datacentres in the UK, including AWS, Microsoft, Oracle and Salesforce.
Box, which runs from Equinix datacentres, is believed to be operating a UK facility. Others, such as Dropbox, have publicly given a commitment to opening European datacentres. However, Dropbox has yet to give a specific date for a UK datacentre.
From a US and Silicon Valley perspective, Matt Pfeil, founder and chief customer officer at NoSQL database company DataStax said, on a trip to London just ahead of the poll: “We didn’t base our European efforts on London as the ‘capital’ of Europe. It was more that customers pulled us here. It would concern me if companies moved from here, though.”
Turing and Berners-Lee
“A poll of TechUK members prior to the EU referendum showed that some 70% were in favour of Remain. Today’s result is therefore disappointing for the industry. That said, I remain optimistic and confident over the future of UK Tech,” said Aw.
“My view is that the core attributes that make the UK Tech sector so strong and attractive remain in place, including an amazing talent base that has a long track record of creativity, such as Alan Turing’s first working computer to Tim Berners-Lee’s World Wide Web.
“Add to that the great infrastructure and facilities, first class universities, a stable legal system, appropriate fiscal incentives and an ecosystem of advisors that support the needs of tech companies.
“Technology is a sector that will only increase in importance and works without borders. I therefore continue to see the UK Tech sector as one that will not only withstand the immediate challenges of the referendum result, but one that will continue to grow and thrive.”
Read more about the British EU Referendum and UK IT
- Computer Weekly’s eve of poll view: Remaining in the EU is essential if the UK wants to be a global technology leader.
- Why leaving the EU would be disastrous for the UK digital scene.
- Largely ignored in the Brexit debate, network effects will damage the UK’s high-tech industry if Britain leaves Europe.