Brexit to Force Indian Firms to Rework Biz Strategy: Industry

Brexit to Force Indian Firms to Rework Biz Strategy: Industry

As Brexit roiled financial markets, top industry leaders Friday said India cannot be in a denial mode as the referendum has opened a “pandora’s box of grave uncertainties” and Indian companies, especially in IT sector, will have to rework their strategies for the region.

They also foresaw Indian companies having to shift their operations out of the UK to other European locations.

While the government and RBI sought to calm the nerves saying any impact on India would be transient lasting just for a few days, the exporters warned of immediate impact on their margins due to volatility in rupee value.

As the $108-billion (roughly Rs. 7,33,597 crores) Indian IT sector stared at a phase of uncertainty in near-term, homegrown multinationals Tata and Mahindra groups said access to markets and skilled workforce will remain key issues after Britain voted to exit from the EU, an event which also “highlights the importance of sound risk management for the corporate world”.

Tata group saw shares of their various companies including Tata Motors and Tata Steel with significant exposure to UK taking a big hit.

Exporters feared that the turmoil in global currencies would bring in more currency risks and could prove disastrous for the world trade, although rupee depreciation may appear to be good in longer term for those shipping goods overseas.

“It has opened up a Pandora’s box of grave uncertainties,” Biocon CMD Kiran Mazumdar-Shaw told PTI when asked for implications of Brexit.

She further said: “Will Euro remain intact or will we see others exit? What will be the impact on the Euro itself? Will it devalue and to what extent? How will India’s bilateral trade with UK and Europe be impacted?”

Mazumdar-Shaw said India cannot be in a denial mode that it will be immune to Brexit, adding that there is likely to be mayhem for several weeks before things stabilise.

Tech investor and former Infosys director T V Mohandas Pai said Indian IT players catering to clients in the financial services space in London may shift their operations to other parts of Europe as a cheaper Pound Sterling will have the biggest impact on these firms.

“That’s already impacting them, marginally, depending upon who is exposed to business in the UK,” said, adding “now, many of them may migrate to Europe…What happens there is something that needs to be seen. So, there could be temporary relocation over a period of four to five years”, said Pai.

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Tags: Brexit, Britain, EU, India, IT, Tata, Tech Mahindra, UK

Brexit Raises Questions for Global Tech Industry

Brexit Raises Questions for Global Tech Industry

The British vote to leave the European Union has raised many questions for the global technology industry.

In Britain, a majority of tech firms were against leaving the EU. A technology industry group survey found that 87 percent of British technology firms wanted to stay in the European Union, and that 70 percent of them worried a vote to leave would damage London’s reputation as a technology hub. Global companies with offices in Britain, such as Microsoft, also campaigned against the move.

Now that the votes have been cast, here are some major issues facing the tech industry in Britain and abroad, in light of the decision.

Data flow and data privacy
The United States and the EU are in the process of making the final adjustments to their latest data privacy agreement, which governs the flow of data between them. With a major player in the EU now backing out of the coalition, there are obviously some questions about what happens to data flowing in and out of Britain from the United States and elsewhere.

Despite the referendum results, however, things in this area will remain with the status quo – for now.

“The Data Protection Act remains the law of the land irrespective of the referendum result,” confirmed Britain’s Information Commissioner’s Office, but it added that Brexit does mean that Britain will not be subject to upcoming changes the EU is planning to make around data protection.

However, Britain is unlikely to deviate from the policies of the EU in this particular area, simply because EU standards basically have become standard around the world. Should Britain shy away from those regulations, experts said, it would face dire consequences.

“It will be left out of the group of progressive and forward looking countries with suitable safeguards for personal data,” wrote privacy law expert Eduardo Ustaran ahead of the vote.

That doesn’t mean, however, that Brexit will have no effect on the world’s data economy. There is also a sense, now that Britain has voted to leave the EU, that the counterweight it provided against privacy-heavy countries such as Germany and France will also disappear. Germany and France have been leading the charge against major American tech firms – notably Google, with the “right to be forgotten” ruling.

“This will help strengthen calls from the EU member states more concerned about protecting privacy rights,” said privacy advocate Jeff Chester, director of the Center for Digital Democracy.

Some are optimistic that, with fewer EU regulations, British companies would thrive. But the uncertainty in the immediate aftermath of the vote makes some uneasy.

“Europe is such an important economy; it would be a shame if this and some existing policy proposals by some in the EU came into effect in a way that dampened the ability to use technology and grow their economies,” said Ed Black, president of the Computer and Communications Industry Association.

Funding: One of the key reasons that many British technology firms said they were against a British exit from the EU was that it would be more difficult for them to secure funding for start-ups. London’s technology industry has been on the rise for the past several years.

Britain benefits in large part from funds such as the European Investment Fund, which backs an estimated 41 percent of venture capital investments in Europe. Its majority investor is the European Investment Bank.

But if Britain is no longer a part of Europe, that dries up a source of funding just as questions about how a Britain shorn of its EU ties will regulate health tech, financial tech and other technology industries.

For its part, the EIF has said that it will continue business as usual for the time being. But the vote has injected a note of uncertainty into the start-up market, as Britain will now have to make its own negotiations with the fund.

“The European Investment Fund takes note, with regret, of the vote of the British people to leave the European Union,” the group said in a statement. “EIF will actively engage with the EIB and relevant European institutions to define the EIF’s activity in the U.K. as part of the broader discussions to determine the future relationship of the U.K. with Europe and European bodies.”

Others also have financial concerns. For example, the video-game industry in particular has said that it’s worried that the new tax environment won’t be as favorable to it as the EU’s has been.

Immigration: British tech firms – and technology firms from around the globe with offices there – have also raised concerns that Brexit will fundamentally harm the tech industry’s ability to fill positions for highly skilled workers. Without the EU’s allowances to let workers move freely between countries, British companies are now worried about a shortage of qualified workers. That might be something that gets ironed out in a later agreement. But right now, there are plenty of expat workers in and outside of Britain that are raising questions about how Brexit affects their lives.

The concerns echo the talking points of the tech industry’s calls for immigration reform in the United States right now. The tech industry has repeatedly said that it needs to be able to recruit highly skilled foreign-born workers from across the globe to meet its labor demands.

Todd Schulte, president of the US immigration group, said that while the situations between the United States and Britain are obviously different, the need for support for a foreign-born workforce is not.

“In a globalized economy, when you’re trying to sell to the world, a diverse workforce is an asset,” he said.

There are also worries that companies that looked to London as an ideal place to start a company will now look elsewhere. Some start-ups have already begun to evaluate whether London is still the right place for their offices.

“To us, it was obvious to have London as a headquarters for all of Europe,” said Allan Martinson, chief operating officer of the delivery start-up Starship Technologies. “Today we may need to look for another location if we’re working with continental Europeans.”

© 2016 The Washington Post

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Tags: Brexit

Google’s Schmidt Says Brexit Vote Unlikely to Shift Investment

Google's Schmidt Says Brexit Vote Unlikely to Shift Investment

Google boss Eric Schmidt said on Thursday that Britain’s referendum vote to leave the European Union was unlikely to lead to a shift in the US tech giant’s business activities.

“I think it unlikely that Google would change our allocation based on this,” Schmidt told a Paris tech conference.

“We have large operations in Ireland, in Britain, France, Germany and so forth. You never know, but it would be hard for me to imagine that we’d make much of a change.”

Schmidt, executive chairman of Google parent Alphabet, was speaking one week after British voters opted for so-called Brexit in a referendum result that roiled global financial markets and sent the pound plummeting.

The resulting uncertainty and volatility will hurt tech spending in Western Europe this year and next, according John Lovelock, chief forecaster at research firm Gartner.

UK spending will fall 0.3 percent in 2016 and 3 percent in 2017, the firm predicts, with regional growth also turning negative. Spending growth in British tech, which accounts for about 10 percent of the national economy, was previously expected to reach 2 percent next year from 1.7 percent in 2016.

Schmidt also won hearty applause from the conference room after saying he did not understand the referendum outcome.

He called for coherent European regulatory framework for digital business whatever the eventual result of negotiations on Britain’s EU exit.

“What I would hope is … as common a platform as possible in digital,” he said. “I don’t want anything to splinter that market further.”

© Thomson Reuters 2016

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Tags: Brexit, Eric Schmidt, Google, UK