tech2 News StaffJun 27, 2016 16:40:33 IST
When the UK citizens voted to leave the European Union, popularly known as Brexit, one of the biggest questions that arised was how it will affect the existing commerce, innovation and tech industry there and elsewhere. The unanimous answers has been - the tech industry is bound to suffer. And yes, it would happen at least for a short term.
Loss of talent due to migration away from the UK
London, believed to be the growth pool is likely to see talent moving out of the UK. "Uncertainty over the UK’s future immigration laws (i.e., who will have the right to stay) will both drive footloose talent to look for jobs abroad and dissuade others from coming, and firms will struggle with new and likely more difficult work visa regimes. This will create painful talent shortfalls in customer-facing roles in retail, hospitality, healthcare, and financial services," a Forrester report points out. This may enable digital startups to set up shops in cities like Amsterdam, Barcelona, Berlin, and Stockholm over London.
The Guardian report, cites, Taavet Hinrikus, the chief executive and co-founder of foreign exchange service TransferWise, saying that "The industry will have to wait and see to find out the long-term effect." Hinrikus is said to have spoken about the effects of Brexit and how it will make him reconsider expansion, even before it was formally announced.
Slow down of innovations
Another factor is product and delivery innovations may slow down. Many firms that sell to the UK may now have to spend time over trade rules as moving goods between UK and EU will not be smooth like before. There will be paperwork and other custom tariffs involved. This could slow down the growth process overall.
Uncertainty over privacy regulations
There will be uncertainty over privacy regulations and this may bring hurdles to the firms' lookout for insight. "Previously, firms’ UK systems could share data with systems in any of the other 27 EU countries with no other required intervention — allowing them to easily spot product reliability issues across markets, for example. Data can predict what your customers will do next — as a result, getting great at digital insights s table stakes for competing today. When the UK exits the EU, it will have to either: 1) become a trusted entity like Canada or Switzerland; or 2) pass new privacy laws that meet the requirements of the EU General Data Protection Regulation (GDPR)," points Forrester report.
An IBM spokesperson told TechRepublic, "We also encourage leaders throughout Europe to preserve cross-border data flows that drive growth and innovation, and that underpin the worldwide digital economy."
Shift in financial patterns
There could also be a shift in the financial pattern. Forrester says if EU businesses can’t use British banks, then European banks will be more than happy to step in, and London’s currently vibrant fintech cluster will pack up and follow them to whichever other European financial center grabs the most business.
While many UK tech companies may sound disappointed with the Brexit vote, they will still have o strive and succeed. The report further adds that all is not lost and there are ways to address this uncertainty that may last a few years. Some ways are using technologies like automation and cloud for the agenda, and increase budget to risk management, regulatory compliance and operational process issues. It also suggests embracing social and collaboration technology, among others.
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