UK is the second largest market for IT companies. It is about 17-18% of the export revenue. As of now, companies are quite fine with how the businesses in UK are looking, Shivendra Singh, Vice President & Head – Global Trade Development, Nasscom, tells ET Now.
There has been a unprecedented vote down of PM Theresa May’s Brexit deal which can lead to a prolonged uncertainty in the UK EU client spending decisions or budgets. How much business do we draw from the UK and the EU region and what could be the cost for Indian IT companies?
It is a time of conjunctures. This is 16th January while the Brexit is supposedly going to happen on 29th March and we still have four options remaining. There is a deal option which is going to be increasingly more difficult given the 230-vote loss which Prime Minister May had in parliament yesterday; there is a no-deal option; there is no-confidence vote option and there is referendum option. Possibly, with the government expected to come out with plan B by 21st of January, it is not going to be easy to persuade the parliament to agree to that. So it is a bit of a concern in terms of where Brexit is heading.
Now coming to the specifics in terms of business, UK is the second largest market for the IT companies. It is about 17% to 18% of the export revenue. Rest of Europe is about 11%. As of now, the companies are quite fine with how the businesses in UK are looking. Business decision making has become slow. We are also carefully following up on the issue of passports and equivalent standards which may emerge because financial services is very important as a market for our member companies. Due to different regulatory standards, some kind of compromise may need to be reached in passports and other equivalent standards where some kind of regulatory framework is common. Fintech and financial services will still form a very critical part of the growth story in the UK and hence that is very important for the IT industry.
Currently the business models of our companies cater to the UK and the EU in separate ways. As the decision making gets prolonged and as we all know businesses want stability and continuity, we are looking for that.
On the skills front, the immigration white paper which came out recently talks about nationality agnostic preference for skilled workers. Nasscom welcomes that.
What is the way forward? London is the financial hub and is an important market. There is a lot of conjecture about how the financial sector would be hit and some of the key clients would be from that space. How are Indian businesses preparing themselves for the volatility that lies ahead?
As of now, it is business as usual and companies are waiting to see how the processes are going to be implemented. Businesses need stability and so there is unease in terms of all the options being present. Once the way forward is decided, we would want that to happen quickly so that businesses can go ahead. Planning gets impacted if uncertainty continues for a long period of time.