ARE YOU READY FOR THE CHANGE TO ACCEPT?
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| The UK's EU referendum |
United Kingdom withdrawal from the European Union
The results are out, Britain has voted to leave the European Union. The results from Thursday's landmark referendum showed 51.9% voters choosing to leave EU, while 48.1% wanted to part of the bloc.
The vote instantly creates the biggest global financial shock since the 2008 economic crisis. It is also sure to impact India's $150 billion software services export industry which has a sizable exposure to Europe as well as the IT industry globally.
UK is the second-largest market for Indian IT services industry, accounting for 17% of the total exports. It has also traditionally been the gateway for Indian IT firms to enter Europe.
Here's how Britain exiting EU, or Brexit, as it is popularly called may impact technology companies in India as well global IT companies.
>> Short-term impact on IT companies, says Nasscom >>>>
Terming the Brexit announcement as a phase of uncertainty, Nasscom president R Chandrashekhar said, “NASSCOM urges policy makers in Brussels and London to provide greater clarity and guidance on the next steps as soon as possible, so that our businesses have the certainty they need to continue to invest in UK and Europe.” Earlier in a statement, Nasscom said that while it is still trying to gauge the extent of the impact, the immediate impact on the short term due to the uncertainty in the environment can't be ruled out.
"An initial analysis indicates that the impact on India's technology sector may be mixed; clearly negative in the short term and harder to discern in the longer term -- with either scenario having some positive and some negative points," added the statement.
>> Will take two years for the exact impact to show >>>>
According to Nasscom, "The exact nature of the impact of Brexit, if it happens, will emerge over a longer period of two years or more."
>> May hit IT spend >>>>
Ganesh Natarajan, former vice-chairman of Zensar Technologies said that the industry should be prepared for a shortterm impact of two-three quarters as companies may cut their IT spends. "Lots of UK companies have trans-Europe operations, Britain's exit will mean reorganization and impact on their business volumes as well, it would shrink their wallets and thereby by spend on IT will be hit immediately," said Natarajan.
Top Indian IT companies such as Tata Consultancy Services (TCS), HCL Technologies and Tech Mahindra among others derive a significant percentage of their revenues from the region.
>> May hurt movement of Indian IT pros in UK >>>>
Natarajan added that another impact could be on movement of people as one of main reasons behind the move was to help in job creation. "UK will become an island in the true sense and may follow a closed door approach which will make it difficult for Indian professionals to work out of there," said Natarajan.
>> 'To affect IT sector in UK' >>>>
India's NASSCOM, in a statement, said that Indian IT companies may need to establish separate operations for EU which may not only lead to some disinvestment from UK but also impact skilled labour mobility across EU and UK. Also, according to a recent survey of the UK's tech workers by Juniper Research, 65% think Brexit will have a negative impact on the global tech industry. Seven in ten of those who predict a negative outcome for technology industry.
Majority of respondents to Juniper's survey also said that the tech industry in UK would suffer as Brexit may result in reduced funding from the EU for the sector. This may make hurt London's 'branding' as a tech hub.
>> Could end Europe's dreams of a single digital market >>>>
Britain's exit from EU will also be a big blow to European Union's plans of having a single digital market, feel analysts. Europe has been seeking to create uniform rules regarding intellectual property, protection of consumer data, phone roaming charges and restrictions on content like movies and TV shows.
>> Google, Facebook remain neutral >>>>
Internet giants Google and Facebook, which have often been on the receiving end of EU regulations, remain neutral on the issue.
>> Microsoft against Brexit >>>>
Unlike rivals Google and Facebook, software giant Microsoft is against UK leaving EU. According to the company, Britain's membership of the EU makes it an attractive place in Europe to make investments.
In a letter sent to employees in May, Microsoft’s chief executive in the UK, Michel Van der Bel, said, “We appreciate and respect that there are a range of reasons that motivate people on both sides of the debate, but as a business that is very committed to this country, our view is that the UK should remain in the EU."
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