Britain has voted to leave the European Union. The so-called Brexit (short for British Exit) from the European Union could have a major impact on technology businesses, digital startups and IT service providers -- particularly those in the financial services vertical.
> Related: TechUK CEO Julian David statement on Brexit vote.
> Related: Brexit Checklist for Business Managers, Executives.
First, the big picture: A referendum was held on Thursday (June 23) to decide whether Britain should leave or remain in the European Union (EU). The EU, according to BBC, is
"an economic and political partnership involving 28 European countries (click here if you want to see the full list). It began after World War Two to foster economic co-operation, with the idea that countries which trade together are more likely to avoid going to war with each other. It has since grown to become a "single market" allowing goods and people to move around, basically as if the member states were one country. It has its own currency, the euro, which is used by 19 of the member countries, its own parliament and it now sets rules in a wide range of areas - including on the environment, transport, consumer rights and even things like mobile phone charges."
Critics who favor Brexit say Britain is being held back by the EU, which they say imposes too many rules on business and charges billions of pounds a year in membership fees for little in return, BBC asserts. On the flip side, Prime Minister David Cameron and 16 members of his cabinet also support remaining in the EU, BBC adds.
Updated June 24, 8:30 a.m. ET: Cameron has resigned amid the voting outcome, saying the country needs fresh leadership.
Brexit: Potential Impact on Technology Businesses
Brexit could potentially undermine digital businesses, technology companies and IT startups, multiple sources assert.
Among the areas of concern: If the free movement of workers within the EU ends, it could undermine the ability of UK tech and digital businesses to access developers and engineers with the right skill sets from abroad, BetaNews says.
Amid those concerns, only nine percent of the UK's technology businesses favored Brexit, according to a November 2015 survey by City:AM. More recently a Tech London Advocates survey found that 87 percent of London’s tech community wanted to remain an EU member, BetaNews reported.
Brexit and the IT Channel
Although the overall IT channel is quite mature across Europe, the shift from break-fix resellers to true managed services providers (MSPs) is just gaining critical mass.
Some MSP-focused companies, including LogicNow (recently acquired by SolarWinds) have longstanding experience in the UK market. Others, including Autotask, have spent recent years localizing their software to support European MSPs.
At this point, it's unclear if or how Brexit will impact IT service providers and MSPs. The biggest risk area could involve channel partners working in the financial services vertical.
Several banks have said Brexit will force them to rethink their attachment to the UK and review investment decisions, according to The Guardian. HSBC plans to move 1,000 jobs from Britain to Paris, France; and JP Morgan has said Brexit could mean the UK operations losing about 4,000 employees from its 16,000-person workforce, The Guardian added.
If banks cut employment in Britain, demand for associated IT projects, managed and cloud services could also take a hit. Still, Brexit's true long-term impact could take years to play out.