Brexit May Take A Toll On Tech Jobs In The UK And EU

United Kingdom (UK) and European Union (EU) job seekers and recruiters got a mostly unanticipated jolt with Britain’s vote to exit the EU.

Nothing is expected to change immediately following the “Leave” vote (popularly known as Brexit); the UK is still a member of the EU. Under Article 50 of the union’s Lisbon Treaty, the UK has two years after it officially requests to leave to work out rule changes, including immigration policies that could have a significant impact on the technology sector. But management consultants are advising industries in the UK to review their future recruitment needs now, including the status of European Economic Area nationals they now employ. (Currently, EEA nationals can move to the UK for three months, but to remain in the country they must be working or seeking work in the UK. The EEA covers all 28 member nations of the EU, as well as Iceland, Norway, and Liechtenstein.)

“Historically,” says Lee Biggins, founder and managing director of CV-Library, one of the UK’s largest online job sites, “the job market tends to slow down in June/July as we enter the summer months. To date, this year’s declines are actually smaller than those seen in 2015, suggesting that so far, the Brexit has had minimal impact on the UK’s job market.” However, he says it’s too early to say if any changes are a direct impact of the referendum or not. “The coming weeks and months will reveal more.” With many large European companies based in London, Biggins says a decision by the UK to go ahead with Brexit could result in a major shift in the country’s job market.

Another major international online job site, Indeed, says it saw the number of UK users of its service looking for opportunities in other European countries double in the 48 hours that followed the Brexit vote, a reverse in normal job search patterns. “The UK is the real champion of European job search,” says Tara Sinclair, chief economist of Indeed, “with significant flows coming to the island from virtually every other EU-15 country,” which includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the UK. Sinclair says Britain normally receives nearly three times as much interest from EU job seekers as either of the next two most popular destinations--Germany and France.


Skill shortages continue to plague most of the EU, but in a recent blog, Jonathan Portes, director of the National Institute of Economics & Social Research and a senior fellow at The UK in a Changing Europe, wrote, “Immigrants to the UK are considerably more likely to be highly educated than either natives or migrants to other countries.”

However, without the EU umbrella, Stuart N. Brotman, a nonresident fellow in the Center for Technology Innovation within Government Studies at the Brookings Institute, says the UK will have to innovate more from within, which includes expanding its digital talent pool primarily within its geographic borders. “This may be difficult to sustain since digital expertise will be more readily available in neighboring countries that remain part of the EU.”

Industry analysis in the 2016 EU Digital Scoreboard that benchmarks the progress of all EU member states, also notes that “the UK is lacking skilled [information and communications technology] professionals. Demand for skilled ICT professionals within the economy is rising rapidly while the supply is not keeping pace. Young people need to be attracted to ICT studies and jobs, which provide good career opportunities…”

Just two weeks after the Brexit vote, a subcommittee of the UK’s House of Commons published a 46-page study noting skills shortages and mismatches in several sectors of the UK economy, with forecasts indicating no improvement in the growing pool of tech professionals in the UK.  The Recruitment and Employment Confederation, which represents the recruitment industry in the UK, told authors of the EU study that “sectors consistently suffering from a shortage of skilled workers include engineering and information technology.”
A survey of more than 2,000 recruitment professionals in the UK by CV-Library, conducted a week before the June 23 referendum (but not focused on the technology sector), indicate respondents are concerned about the impact of Brexit on access to skilled workers. “This isn’t surprising given the nation is already facing skills shortages in key sectors,” says Biggins.

The Guardian, one of Britain’s major newspapers, reported that “years of underinvestment in technical education in the UK” could damage UK and EU relations in trade relations and foreign investment, and that Brexit could also stall the rapid progress of many tech startups in the UK.

While it believes Brexit’s impact on jobs in the IT sector is yet to be defined, Gartner, Inc., the management and research consultancy, says it expects it would quickly affect IT spending in the UK and in Europe. Other changes will take longer. “The long-term uncertainty in work status will make the UK less attractive to new foreign workers. Retaining current non-UK staff and having less access to qualified new hires from abroad will impair UK IT departments,” says Gartner. (A New Skills Agenda study published by the EU in early June forecasts 578,000 unfilled vacancies for ICT professionals in 2017, with the UK accounting for 125,000 of those vacancies.)


“An initial analysis indicates that the impact [of Brexit] on India’s technology sector may be mixed; clearly negative in the short term and harder to discern in the longer term,” says R. Chandrashekhar, the president of India’s National Association of Software and Services Companies (NASSCOM) and former chairman of India’s Telecom Commission and Secretary of its Department of Telecommunications. “Any negative impact on the British economy in terms of slower growth or worse could reduce opportunities for Indian companies in the UK.”

As Chandrashekhar points out, the UK has traditionally been the gateway for Indian IT firms to enter Europe. Indian technology companies have a large presence in the UK to serve the UK market. Many of these IT companies serve EU markets from their headquarters in London. “Easy movement of skilled workers between the EU and UK enables this,” he says. From an India tech perspective, Chandrashekhar says companies may have to establish separate European headquarters. “Skilled labor mobility across the EU and UK would be impacted.”

However, in the longer run, Brexit could lead to strengthening of India-UK economic relationship as the UK seeks to compensate for the loss of preferred access to EU markets. Additionally, with the UK less dependent on EU immigration into the UK, Chandrashekhar says it could become more open to high-skilled immigration from other non-EU countries, including India.


Internet of Things (IoT) and cyber security markets are also likely to be affected by any changes in the relationship of the UK and EU countries.

The connection of just about anything via the Internet is expected to grow rapidly through 2016 and well into the future, significantly boosting opportunities for tech specialists, particularly cybersecurity professionals. Complicating this is the recent investment by the EU of US $500 million to fund research into cybersecurity, and its call for industry to invest at least three times that amount to protect the EU economy from cyberattacks. Under the plan, the European Commission (EC), the EU’s executive body, has launched a public-private partnership under the European Cyber Security Organization, which calls for EU member states and cybersecurity bodies, including market players, research centers, and academia, to strengthen their cooperation and pool their knowledge to increase Europe’s cyber resilience. It’s not clear at this point where, or if, the UK would fit into this program.

Brexit may also have an impact on the UK video games sector. Richard Wilson, the CEO of TIGA, a not-for-profit network for video games developers and digital publishers and the trade association representing the video games industry, says that until now, the industry has had access to a substantial pool of skilled EU workers who can work in the UK without serious administrative restrictions. TIGA believes that Brexit is likely to result in new immigration rules requiring employers to secure some form of visa and to meet certain skills/salary criteria in order to employ immigrant workers. “It is vital that any new arrangements are not onerous or complex and that the industry is not held back by skill shortages,” says Wilson.

According to Wilson, the UK video games industry provides highly skilled employment for more than 30,000 people, including approximately 11,000 development staff.


Most companies, which could take a hit on several levels, have been cautious in their response to Brexit.

ARM Holdings, the Cambridge, UK-based market-leading chip designer, got an early jump on the country’s post-Brexit economic news, announcing in mid-July that it was being acquired by the Japanese electronics giant, Softbank, for $32 billion. Under the terms of the deal, Softbank will at least double ARM’s employee headcount in the UK and increase the headcount outside the UK over the next five years. Although British government officials immediately proclaimed this as an example of the UK as a leading industrial powerhouse after Brexit, several financial industry observers suggested that falling currencies in the UK could have made ARM a good bargain.

Vodafone, the telecom operator, said following the Brexit vote that it could move its group headquarters from the UK. (Vodafone currently has offices in Paddington in London and Newbury in Berkshire.) In a statement, Vodafone says the UK’s membership in the EU has been an important factor in its growth.  Its major concerns are the freedom of movement of people, capital, and goods.

United Technologies Corp. reaffirmed its commitment to doing business in the UK and the EU the day after the referendum vote. Noting that the process of the UK’s withdrawal from the EU will take time, UTC President and Chief Executive Officer Gregory Hayes said, “UTC remains committed to our business and their more than 8,000 employees in the UK.”

In October 2015 several tech startups across the UK sent an open letter to the government warning that “changes to immigration policy will make it more difficult to attract and recruit the talent high-growth companies need to compete and succeed in a global marketplace.”

Intel Corp. launched Intel Labs Europe across Europe in 2009 with 800 R&D professionals. In May, it signed a collaboration agreement with the AEC (Atomic Energy Commission) of France to extend its joint efforts in research in digital technology, including IoT, wireless communications, and security technologies. (Intel has not, as of this writing, commented on the impact of Brexit on its European operations.)

What does the Brexit vote mean for the UK’s participation in the EU’s Digital Single Market strategy, which aims to unify and advance cooperation between EU countries? That’s not clear either, but in a speech before a trade conference in Europe, Roberto Viola, director general of the EC’s Directorate General for Communications Networks, Content & Technology (DG CONNECT), said the program is going forward, with or without the UK.