The risks to the UK tech sector from a disorderly No Deal Brexit include a hit on funding for innovative start-ups and an inability to service IT contracts and build viable future ones, according to data and analytics company GlobalData.
The company’s latest report, ‘Brexit’s Impact on Global Tech’, states that global tech titans with a European base should survive the Brexit turmoil, but smaller companies lack the resources and bandwidth to cope with the expected fallout from No Deal, including diverging regulations, more red tape and talent acquisition challenges.
GlobalData has identified five key areas where challenges must be overcome to mitigate the impact of Brexit on the tech sector. They are: securing the continued free flow of data; ensuring continued access to talent; enabling the frictionless movement of tech products and services across borders; providing alignment on rules covering digital services to avoid barriers to market access, and retaining access to EU funding streams such as Horizon 2020 and the European Investment Fund.
David Bicknell, principal analyst in the GlobalData Technology Thematic Research team, commented: “With no clear picture yet emerging as to what Brexit will ultimately look like, tech executives could be forgiven for adopting a ‘wait and see’ approach before deciding what to do.
“The big global tech players have the footprint to weather the Brexit storm because they have a big enough boat to ride the waves and a European harbour to sail for. Smaller players facing a skills shortage are more likely to be losers, as will telecom operators, which need skills to tackle full-fibre rollout.”
According to Bicknell, the biggest loser from a No Deal Brexit will be UK Plc, including tech start-ups and scale-ups in search of funding. The UK has typically been the default stop for US tech investment, but he claims any Silicon Valley CEO looking at the UK post-Brexit will either put off a decision indefinitely or opt for an alternative base that is both tech-friendly and offers strong English-language skills.
Bicknell concludes: “The government always talks a good game about winning the global race, in areas like AI, but the UK seems to be setting out to try and win the race with its legs tied together. Even Mo Farah would struggle with that. If the government expects the UK’s tech sector to continue to thrive, it has to create the conditions for it to do so, not destroy them.”