In or out?

Industry bigwigs chew over how a Brexit could impact the UK tech scene

In or out? That is the question facing the UK, and one that is likely to be asked time and again until the country's citizens put pencil to paper on 23 June to decide whether or not to remain in the EU. Yet for anyone with a stake in the UK technology scene, another perhaps more pressing question will be on their minds: If the vote says ‘leave', then what? Many in the IT industry - on both sides of the English Channel - are concerned about such an outcome.

At the centre of the Brexit debate lies migration. While those in the Leave camp argue that departing the EU will enable the UK to regain full control of its borders, impose stricter visa regulations, and limit the number of immigrants entering the nation, the Remain camp has expressed concerns that a Brexit would starve the UK of talented and valuable employees.

£2m

Annual public funding of London's Tech City development

Cloud software vendor Alfresco's CTO John Newton believes that no longer being in the EU would have a detrimental effect on the company's ability to remain competitive through hiring overseas talent.

"The UK cannot rely on home-grown talent alone," he says. "To stay productive and compete with businesses on a global scale, UK companies need to be allowed to recruit the best staff from throughout Europe. Any withdrawal from the EU structure would impact negatively on the current flexible labour laws and our ability to trade freely across national borders."

In 2010, David Cameron launched the Tech City UK initiative to support the burgeoning east London technology hub dubbed Silicon Roundabout. Receiving £2m in public money each year on top of an initial £50m government investment, Google, Cisco, Amazon and Twitter have all spread their wings and flocked to the UK capital. The Evening Standard reported in 2014 that two in five of the 250 largest companies in the world base their European headquarters in London.

US, Germany, Netherlands, France, Ireland

The UK's five biggest trading partners (Source: ONS)

Bob Tarzey, analyst and director at Quocirca, believes a separation from the EU would result in overseas businesses looking elsewhere for their European headquarters.

"The UK currently prospers from being part of the largest single market in the world. I do not think there will be a massive push for distributors and vendors to leave [the UK] if Brexit goes ahead, but I think they will consider if this is the best place to have their headquarters. Holland could prove to be more advantageous due to its strong geographical location in the heart of Europe."

Mike Rogers, sales and marketing director at Swedish software firm Formpipe, whose company has recently committed to setting up its EMEA headquarters in the UK, concurs with Tarzey, expressing his unease about how the firm will fare in a post-Brexit UK.

Two in five

Proportion of the world's 250 largest companies that have their European HQ in London (Source: Evening Standard)

"We have changed into a European organisation and just set up in the UK; we have a lot of EU partners," he said. "So if Britain leaves, our workload will go up with the amount of extra paperwork. We are committed to the UK so I have to wait and see what comes out of it.

"If I were a large US business coming to [Europe] after Brexit, where would I go? I would not have access to Europe if the UK left Europe; if I were [that company], I'd move to Germany instead."

Trading places
Those in favour of Brexit believe that EU rules and regulations are holding back the UK's true trade potential, and freeing the UK of such restrictions would enable the country to forge stronger, more independent trade connections with growing markets such as Brazil and India. Those battling against Brexit propose a counter-argument: that leaving the EU would close off the UK from its most fruitful market, the EU, as well as other international markets that might have EU trade agreements.

Mark Proctor, managing director of parts and services firm European Automation, said: "A Brexit could wreak havoc on business relationships between British firms and their European customers. Today's market demands flexibility, and anybody who engages in business will understand the need to access markets on a global scale. If leaving the EU makes it excessively hard for British companies to operate across the continent, it is likely that organisations will consider relocating to the EU."

23 June

Date of the UK referendum on whether to remain in the EU

Last year, figures from the Office for National Statistics (ONS) revealed that the UK's top export trading partners are the US, the Netherlands, Germany, France, Ireland and China. With four out of six of the UK's top partners being EU members, many are worried that the UK will burn bridges with its European friends.

Jens Puhle, managing director at software vendor 8MAN, however, believes that it is too early to predict whether or not new trade rules and regulations will be put into place if Brexit goes ahead. 8MAN also made the decision to invest in the UK as its headquarters for European expansion.

"We decided to move to the UK market because London has a status as the financial capital of the world," he explains. "The strength of the British pound and its membership in the EU were also huge contributing factors."

The question facing Puhle's firm and many others in the tech industry would appear to be the same as the one being put to the UK public.

So, are you in or out?