Brexit-proof your tech business

6 June 2017

Much of the growth in the tech industry has been fuelled by startups which have benefited from the UK’s ability to attract talent from across the EU and the rest of the world.  Over one in eight of the digital tech workforce are from overseas. However, with Brexit planned for 2019 there are concerns that the UK’s days as a magnet for tech talent may be numbered in a so-called Techxit.

Techxit concerns have been eased by the current recognition of the political parties that the UK immigration system must be aligned with the overall aim of protecting and growing the tech sector.

In a survey conducted (prior to the Brexit vote) for the Government’s ‘Tech Nation’ Report, UK tech companies identified access to talent as the most significant challenge to growth. To address this challenge, companies have been forced to look abroad to meet their staffing needs. In the report, one in five technology businesses highlighted other EU member states as being an important source of tech personnel.  

Tier 1 (Exceptional Talent) visas, more commonly known as “Tech Nation visas”, allow Tech City UK to endorse visa applications allowing tech talent from around the world to live and work in the UK. The number of tech visas issued has quadrupled in the last year and is set to keep increasing.

Here we consider some of the key questions:

Why does the tech sector need foreign talent?

Years of under-development and a lack of investment in tech education from primary school up to university degree level has resulted in a shortage of UK graduates and a demand for foreign tech talent. The tech sector thrives on diversity and relies on the best minds from different cultures, backgrounds, ages and education systems coming together to create sophisticated and innovative technology. It relies on a mixed workforce from the UK, EU and the rest of the world.

What are the likely changes to immigration law?

There have been many experts discussing the likely changes that will occur post Brexit; a simple online visa waiver system (similar to the US ESTA) for EU nationals, a new “Australian” points based system, a “London-visa” for the highly skilled, reverting back to the old Work Permit system that existed until 2008. The list goes on. The truth is, nobody knows exactly what Brexit will bring, not even the experts. However, we can confidently say that in the next few years the most likely overall outcome will be that EU nationals will require some form of UK work permission.

How may these changes affect the tech sector?

The extent to which free movement of people helps the UK remain one of the leading technology centres is hotly debated. Amongst other factors, our stable economy, business-friendly tax environment and easy access to capital certainly play a role. However, any additional hurdles for people entering or being allowed to remain in the UK will undoubtedly reduce the amount of UK-bound skilled workers and may lead to an outflow of EU workers already in the UK. This in turn would reduce the quality and the quantity of tech talent available and the number of entrepreneurs (whether from the UK or abroad) choosing to begin their ventures in the UK.

With other countries vying to replicate the tech success enjoyed by UK companies, a lack of access to talent could have a big impact on the UK tech scene. Anecdotal reports suggest many businesses are already considering relocating or setting up in other competing hubs. Officials from some cities, such as Berlin, have even started actively targeting UK-based entrepreneurs in an effort to entice them to move abroad. Whilst only part of the UK’s successful formula, an immigration policy that welcomes highly skilled individuals is a vital ingredient if we are to remain the technology centre of Europe. 

What should tech owners be doing?

Stay agile - Brexit is clearly not the ideal outcome for the UK’s tech sector. However entrepreneurs by their very nature are resilient and should look for opportunities. For example will the Government need tech support to deal with the bureaucracy Brexit will bring? Historically we have seen that tech companies can adapt to hostile political and economic environments.  Microsoft started out in the early 1970’s US recession and Airbnb was founded during the 2008 financial crisis.

Audit - Undertake a full audit of your current workforce to gather data on the nationality of your workforce. You will need to monitor your EU workforce much more closely if work permission is required in the future.

Support your EU workers – An immigration audit will also highlight your current EU workers who could apply for a permanent residence document and possibly a British passport before Brexit occurs or during the transitional arrangements that may exist after we leave the EU.

Staff involvement - Reassure your staff that although not guaranteed there should be transitional arrangements put in place to allow EU nationals living and working in the UK remain after Brexit. This will be one of the main topics in the forthcoming negotiations between the UK and the EU regarding the withdrawal agreement.

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We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.

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