Is the UK tech industry ready for Brexit?

A handful of topics have been discussed more in the tech industry in the last two years than Brexit. The impact that the UK leaving the EU could have on the tech industry is largely unknown and opinion on whether the industry is actually ready for this, remains divided.

We summarised in a recent post that companies will be pushing to actively recruit digital skills amid a possible drop in EU nationals applying for jobs in the UK.

Although the UK’s tech sector is growing 2.6 times faster than the rate of the UK economy, many are uncertain about its ability to deal with Brexit’s onslaught.

No-one really knows what will happen with Brexit in the coming months, which makes it difficult to predict the exact impact it will have on the tech sector. The one thing we do know however, is that the industry is uncertain about how it will cope.

The current Brexit situation and its impact on tech

Speaking at a Wired Live event almost one year ago, the Mayor of London, Sadiq Khan, gave an optimistic presentation on how London’s tech scene will thrive after Brexit.

In his speech, he spoke about how fintech is attracting global investment, how the city is emerging as a world leader in Artificial Intelligence and Machine Learning and how it’s at the forefront of Virtual Reality. He said that the overall aim was to transform London into a Smart City.

The general feeling within the industry over the last few months, however, hasn’t been quite so upbeat. The UK is scheduled to leave the European Union at 11pm on Friday, 29 March 2019, whether it has made a deal with the EU or not.

Technically, Brexit can still be cancelled but would require a change in UK law. It could also be delayed if the EU agree to extend Article 50, which means we could see another referendum.

With so many ‘what-if’s’, the only real indication of how the tech sector will be impacted comes from statistics released by HR company CIPD. It reported that there was a 95% drop in EU nationals joining the UK workforce between the first quarter of 2016 and the first quarter of 2018. We might assume that this drop will maintain after the 29^th March, at least for a while.

What if the UK leaves the EU with no deal?

The UK leaving the EU with no deal means even more uncertainty for the sector, and a likely drop in the UK’s economy in general. According to a member survey conducted by techUK, of the 276 respondents, 70% said that a no deal Brexit would have a ‘very negative’ or ‘fairly negative’ impact on their business, with only 5% saying it would have a ‘very positive’ or ‘fairly positive’ impact.

Among the concerns raised by respondents was a lack of resources to cope with No Deal. Commenting on the Government’s plans to ramp up No Deal planning, techUK’s CEO, Julian David said:

“Brexit uncertainty is imposing more costs on tech businesses and driving jobs and investment away from the UK…While tech businesses will prepare for a No Deal as best they can, the reality is that many of the hard challenges that tech companies would face in the event of No Deal cannot be ‘managed’ away. Commercial contracts, investment, staffing and data are all at critical risk…”

The role of artificial intelligence among skills shortages

We’ve previously written about the impact of Artificial Intelligence on tech and we expect to see the technology making significant inroads following Brexit. Psychometric testing tools like Good&Co, augmented writing tools like Textio and AI-powered chatbots are already being used in tech HR departments.

Some believe that the current skills shortage will make way for even more job automation. In an interview with Information Age, our Commercial Director, Dominic Harvey, said:

‘‘There is fierce competition among companies in securing the best entry-level talent in the industry. Tech hubs are growing, specialist roles are developing, and we are seeing a rise in automation, calling for increasingly more niche skillsets.’’

According to a survey from temp staffing firm The Adecco Group, a decline in the number of European workers in the UK will lead to a rise in automation. Of the 1000 managers polled, 34% say that automation is inevitable regardless of Brexit’s outcome and 34% (44% in London) say that their company has considered automation in the face of the skills shortage.

How are tech companies preparing for Brexit?

In a bid to future-proof their talent pools, we’d expect to see companies offering salary increases to attract new talent and retain existing employees. We predict a rise in the number of companies implementing flexible working initiatives to attract more candidates and to ensure existing staff can create a better work-life balance.

With the industry’s skills shortage set to continue post-Brexit, we’d also expect to see more companies invest in up-skilling their staff through ongoing training.

As reported by technology news site Silicon Republic, pay-as-you-go insurance company Zego opened an office in Dublin to protect itself against the potential loss of ‘passporting’ rights, which allows them to sell products in Europe.

Companies are also turning to data science to help them identify trends and patterns in the marketplace. Speaking to Silicon Republic, Steve King, co-founder of data science company Black Swan Data said:

“We spend a lot of time talking to other CEOs and we’re all in the same place, which is that until we have more detail, all we can do is prepare.”