Impact of Brexit on Indian IT Industry – An Anecdote
In a historical judgment where democracy has shown its real power, a certain portion of Britons (52%) finally chose to opt out of the EU. The exact process for the UK’s withdrawal is uncertain, although it is generally expected to take two years. Following the event, same day, Global stock markets lost about $2 trillion; while Indian investors lost nearly Rs.4 lakh crore ($58.8 billion) with Bombay Stock Exchange plunges 604.51 points down.
Indian IT industry which enjoys 25-35 percent of revenue share from Europe gets into complete uncertainty after the ‘break-up’. The fiscal FY 2016 saw UK contributing 14-21 percent of $110 billion Indian IT export, can roll one’s eyes further with Britain’s share is greater compared to whole of Europe combined.
There are divergent views regarding the Brexit’s impact on the economy, especially in the BFSI and automobile sector. In one hand UK’s status as one of the world’s biggest financial centres can be impacted, but on the other hand, they can reinvent themselves as a Singapore-style supercharged economy. Other than banking, automobile sector could be a worst hit. Now they could no longer export tax free cars to the EU states.
Uncertainties have crept within the IT sector as well since Britain remains the most important doorway to reach the other EU nations. For IT servicing nations like India, as several of the Indian origin Global SIs have offices in Britain for catering the European markets needs to wait and watch in the next 2 years. The most lucrative of the strategic locations for many of the Indian service providers are currently under a cloud of uncertainties because of the Brexit.
Earlier it was the easy movement of skilled workers and tax relaxations between EU and Britain, which helped the industry to grow. Now that Indian companies, perhaps would have to shift their operations or separate headquarters for serving the remaining EU. The aftermath of Brexit can also open new opportunities for India’s IT market with business getting a direct entry into UK rather than sliming through EU norms like before.
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