Brexit: Nasscom sees more jobs for high-skilled workers from countries like India

Brexit (term used for UK leaving European Union) is a phase of uncertainty in the near term for the Indian information technology (IT) companies but will offer a mix of challenges and opportunities in the longer term, the National Association of Software and Services Companies (Nasscom) said in a press release today.

It said lesser intra-migration into the UK may result in more job opportunities for high-skilled workers from countries like India.

According to the IT lobby group, as much as 30 percent of the industry’s $100 billion revenue comes from the European market, which is the second largest for the India’s IT-BPM sector.

Nasscom’s initial analysis said in the near term a likely decline in the value of the British pound could render many existing contracts losing propositions unless they are renegotiated.

“The uncertainty surrounding protracted negotiations on the terms of exit and/or future engagement with EU could impact decision making for large projects,” the statement said.

Investors pummelled the pound today fearing the exit from EU will weaken the UK’s economy. The currency was weaker by 8.3 percent against the dollar.

Nasscom also said the Indian IT companies may need to establish separate headquarters/ operations for the EU, that may lead to some disinvestment from the UK. This is because many companies use the UK as a gateway for further investments across the European Union.

It expects the Brexit to impact skilled labour mobility across the EU and UK.

“Nasscom urged policy makers in Brussels and London to provide greater clarity and guidance on the next steps as soon as possible, so that the businesses have the certainty they need to continue to invest in UK and Europe,” Nasscom President R Chandrashekhar was quoted as saying in the statement.

However, the decision could lead to the strengthening of India-UK economic relationship in the long term, said Nasscom. This is because the UK will now have to seek compensation for loss of preferential access to the EU markets.

“This could open up new opportunities for the UK and India as well. With the existing 800 Indian companies employing 110,000 individuals in the country, a deeper partnership with India may be in Britain’s interest,” the Nasscom statement said.

Also it sees the possibility of the UK becoming more open to high-skilled immigration from other non-EU countries, including India.

“Further, UK would be under no obligation to adopt restrictive EU data localization norms which it does not subscribe to in their entirety. All these factors could benefit India-UK bilateral economic relations,” Nasscom said.

On the BSE, the information technology shares took a beating along with the broad market with the BSE IT Index falling 3 percent as against Sensex’s 3.5 percent fall.

Shares of TCS were down 2.5 percent, Infosys 2.4 percent, HCL TEchnologies 4.8 percent, Wipro 2.17 percent and Tech Mahindra 5.2 percent.