Brexit and The UK Tech Sector

Almost six months after the momentous Brexit vote, the UK finds itself none the wiser in terms of where we’re headed. With a certifiably one-sided back and forth, where the “remainers” probe for answers or even hints, and the Prime Minister’s tagline is “mum’s the word”, the UK tech industry is tentatively making predictions and trying not to panic. Prior to the vote, the IT sector was overwhelmingly opposed to the vote fearing a “techxit”, so where are we now and what can we expect?

It’s nearing the end of the year, a period when businesses all plan for the next 12 months, strategizing and setting goals. However, until the UK formally triggers “Article 50” there can only be speculation regarding the consequences to the British economy, let alone the tech sector. We’re told that the formal request to leave the EU will be sent through sometime in early 2017 and the current uncertainty is making it pretty much impossible to anticipate the future seeing how many sectors in the UK are closely tied to the European market, especially the tech one.

The UK tech sector has seen one of the biggest growths in the last decade, accounting for 10 percent of Britain’s GDP. It is almost double that of the average across the rest of the EU. London is Europe’s answer to Silicon Valley, and many of the concerns that have risen lately have to do with start-ups, regulations, recruitment and a mass migration of tech companies to mainland Europe. With the uncertainty that looms ahead, other major European cities such as Berlin, Paris, and Dublin are preparing themselves and flirting with the idea of dethroning London.

Proof of this is in Cornelia Yzer, Senator for Economics, Technology and Research in the government of the State of Berlin letter campaign, letters which were sent to hundreds of UK tech businesses regarding a possible move or branch opening in Berlin.

In terms of talent attraction and retention the UK has been a leader across the European IT employment market, however with uncertainty in the air, that may well change. There is a general feeling of ambiguity when it comes to future hires from the EU. According to a survey of British-based tech companies conducted by Tech City UK after the Brexit vote, 51% believe that it will now be more difficult to attract the best professionals.

The UK boasts a higher skill gap than anywhere else according to research by the European Commission, with 250,000 IT vacancies projected by 2020. It is important for the UK to start addressing domestic skills training alongside maintaining its attraction for talent from abroad. The lack of focus on nurturing domestic tech talent, has made it difficult for companies to find vast numbers of British graduates that meet needs particularly when it comes to quality of hires. Currently, companies are bridging that gap with hiring EU and non-EU nationals, with 1 in 5 tech professionals in the London area being from the EU (in particular Eastern Europe), while 1 in 7 start-up entrepreneurs are EU nationals as well. The whole of UK tech talent breaks down in to 50% British employees, 30% EU employees and 20% non-EU employees, something which will need addressing in the long run.

According to a study conducted by BIMA and SapientNitro, in which they surveyed 272 digital agencies across the UK, it was found that 90% of digital agencies have at least one non-British employee and that there is an average of 3.5 of unfilled vacancies.

So, what could the UK tech sector do to keep itself at the forefront of the global IT industry?

Addressing the Skill Gap

The UK needs to start putting digital and tech skills at the forefront of its education agenda, starting with primary school. Although children are starting to code in school already, there has to be a concentration on strengthening ties between universities and companies big and small for internships, graduate programmes, etc. Furthermore, professionals that would like to change career paths, or learn new skills should be given opportunities as well as there is untapped potential currently being neglected.

Talent from Abroad

Depending on what is decided upon after negotiations, a fast-track visa application system needs to be put in place. Currently it takes around 12 weeks, as a best-case scenario, for companies to bring non-EU tech workers on-board. If a visa system is put in place for EU nationals as well, then the length of attaining the right to work needs to be halved in the least. Making it an exhausting process will make it a far less attractive option for IT professionals, who could ignore the UK and choose to move inside the EU.

Minimising Bureaucracy

While the red tape in the UK has slowly been removed, there is room for better. In order to attract innovators and entrepreneurs, the process for starting a business needs to be made easier as we exit the EU. This might be the perfect time to revisit regulations and become even more attractive to new businesses, helping them start from a lower cost.

With many unknown variables still in play, one thing is for certain- the UK has always been a leader in innovation. At the forefront of tech, it should be able to adapt and mould itself after the new economic and political landscape. For now however, it’s business as usual while we wait to see what the negotiations bring.

What are your thoughts on Brexit and the UK tech sector? Have you been affected in any way? Let us know in the comments.

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