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What Brexit means for IT businesses

Tamlin Magee | March 15, 2016
Brexit means data headaches and business uncertainty, say IT pros and lawyers

"The IT hosting industry also needs to recognise these changes - being clear about their own service's data governance model is the only way customers can understand if they need to consider the impact of using the service on their own compliance requirements.

"Cloud interoperability remains a mainstream challenge, and our survey also showed customers felt it would cost an average of £1.6 million to change their service provider to a local, UK-based alternative."

Brexit for business: Reputation

Attracting both workers and businesses to Britain could also prove difficult.

Tech London Advocates warns the capital's reputation as a European centre for digital is at risk.

"There is significant concern Brexit would undermine this position and threaten relationships with the European market," Russ Shaw, Tech London Advocates founder, says. "Brexit could see global businesses locating in emerging digital hubs in Berlin, Paris and Stockholm rather than London."

According to Quocirca's Clive Longbottom, it would make life "far easier for EU companies to focus on their open market, pushing skills around the remaining EU, rather than bothering with the UK."

Monaghan of Pinsent Masons shares the concern that there could be a "significant period of uncertainty" while negotiations are concluded - a period that "might be extended if the exit of the UK led to a rolling wave of exits or threatened exits."

"It is quite conceivable that there would be a logjam on both sides - in the UK parliament, as it struggles to deal with the implications of the UK's new status," he says. "And in the EU where there might be more pressing immediate concerns than trade with the UK."

Brexit for business: Trade

The majority of members of British trade group Tech London Advocates, comprising 2,500 from the capital's technology sector, believe leaving the EU could have an immediate negative impact on supply and trade.

Three in four surveyed members feel that Brexit would make reaching customers in EU countries more difficult - and potentially threaten relationships with Europe-based suppliers.

"If we get a 'no' vote I'm sure we'll see contractual terms changing," says law firm Kemp Little's head of commercial technology, Calum Murray. 

"Contracts being shorter - particularly for services - as people hedge to see where we land. They will ask: 'Should we protect ourselves by doing shorter deals?'"

And Murray warns that in procurement, decisions are already being delayed - because businesses are unsure if a leave vote will affect deals that are already on the table.

"From the customer's side, you will see, and we're starting to see acquisitions being delayed," Murray says.

On the supply side, businesses either procuring or offering IT services are likely to have to wrestle with a change in terms and conditions, too, says Osborne Clarke's Mark Taylor.

 

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