Tech after Brexit: What UK tech firms need to consider about life outside the EU

Hiring, free trade agreements and GDPR are just some of the issues the UK tech sector is uncertain about following the vote to leave the European Union.
Written by Danny Palmer, Senior Writer

There are uncertain times ahead for the UK technology sector following the EU referendum.

Image: iStock

Despite the UK tech sector -- alongside other business sectors, academics, and experts -- vocally voicing concerns about the possible consequences of Brexit -- the British electorate voted to leave the European Union.

And so the UK's technology companies are now preparing for life outside the EU -- if and when Article 50 is eventually triggered -- and for all the consequences it might bring, including the questions around what the short-term results of the vote are likely to be.

But despite the uncertainty surrounding the economy and the future of the country as a whole, UK technology firms seem to be facing up to the Brexit decision with an attempt to remain optimistic.

"It is no secret that the vote to leave came as a shock to the UK's technology sector and wider business community, but in characteristic fashion, the industry has shown resilience and the capacity to generate opportunity from a challenging situation," says Russ Shaw, founder of Tech London Advocates.

While the coalition of technology entrepreneurs, corporations, and startups has set up a helpline to "enable firms to voice any fears they may have resulting from Brexit", Shaw believes "London and the UK continue as a leading light in the global tech scene, and we must ensure this continues unabated."

One immediate issue facing tech companies is the lack of clarity around what the vote will ultimately mean for them.

"The main legacy for entrepreneurs and their businesses is that we are living in a much more uncertain world. There are still lots of questions that entrepreneurial businesses need answered before they can start feeling confident about the future. Many modern firms work within a network of European partners, suppliers, and customers and rely on a pan-European workforce," says Jacyn Heavens, CEO of cloud software firm Epos Now.

However, he adds: "I'm confident though that innovative businesses can continue to do well in what are now unpredictable times. The Brexit vote will focus minds and ensure businesses concentrate their attention on remaining resilient and robust," he says. "Now the dust has settled, we are already seeing signs from our own customer base that emerging businesses are beginning to look confidently ahead to the future."

And while Susan Bowen, vice president and general manager EMEA at Cogeco Peer 1, admits that Brexit "wasn't the outcome that Cogeco Peer 1 had hoped for", the hosting services provider is trying to make the best of it: "this is a time for positivity and to focus on identifying opportunities the decision opens up," Bowen says.

Cogeco Peer 1 hasn't altered its business plan following the referendum, but Bowen outlines one major concern about a Brexit Britain: "The UK government will need to address the issue of data residency as part of the exit, and potentially negotiate a new agreement with the EU around data protection," she says.

But that might not be easy with the upcoming General Data Protection Regulation (GDPR), which sets out how organisations should handle data. The European Union policy comes into force in June 2018 -- although it's unlikely the UK will have left the European Union by then -- and any British organisation that wants to do business on the continent will have to adhere to it, even if the country isn't part of the EU.

"Companies will ultimately have two choices: comply with the rules and retain access to that customer base, or ignore GDPR and wave goodbye to the business opportunities there. For smaller companies, the second option might be relevant and a way to reduce costs, but any company looking to grow can't ignore Europe as a market," says Rick Powles, vice president EMEA at data protection firm Druva.

It'll therefore be crucial for UK tech firms to adhere to EU policy if they want to grow following Brexit. But not only that, there are those who argue that it's necessary for them to access to European markets -- and the British government must work to ensure this access continues.

"The government should pursue opportunities to influence and participate in the EU Digital Single Market strategy and preserve the UK's leadership in innovation and long-term support of the digital economy after the UK finally separates from the EU," says David Stokes, chief executive of IBM UK.

Nobody, not even the government, currently knows how any sort of free trade agreement would work -- and that's assuming the European Union does indeed allow the UK to continue to have access to its markets.

But that isn't the only trading partner the UK needs to make new deals with and Stokes says an agreement with the US must be near the very top of the agenda.

"The UK government should pursue a bilateral 21st century, pro-data trade agreement with the US because the flow of data between Europe and America is the world's most important digital trading relationship," he says, adding: "Preserving the UK's access to this critical stream of transatlantic digital commerce will sustain an environment in which UK entrepreneurs can develop innovative new services and drive long-term economic growth."

Whether or not the US accepts this type of deal is another matter entirely -- prior to the referendum, President Barack Obama said that in the event of Brexit, the UK would end up 'back of the queue' for trade talks, while the prospect of a Trump presidency could also derail any sort of agreement.


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