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IT Outsourcing

A hard Brexit will turn into an inflation disaster for UK digital and software economy

Frédéric Lasnier
Frédéric Lasnier
Chief Executive Officer, Pentalog

A hellish machine has been at work since day one after the historic 2016 British vote. And, it’s nurtured by a combination of a growing number of emigrating programmers, the resulting inflation and its potential impact of Brexit on the UK’s growth.

A hard Brexit will only exacerbate this.

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The UK is losing its tech talent. The signs can’t be ignored.

This isn’t the first time someone’s sent a friendly reminder of Brexit’s effect on the amount of developers emigrating from the UK – a country whose STEM graduate population doesn’t even come close to covering the demand of tech jobs. This decision will surely deliver a massive blow to European resources.

Figures have already confirmed this; the number of eastern Europe residents leaving the UK now far outweighs the number of people entering. And, guess what? A lot of them are developers.

This imbalance is reflected in the inflation rate of development costs. The UK’s digital economy is directly impacted by its programming operations for 2 reasons:

  1. As we leave scarcity and enter real shortage, the cost for local developers doesn’t stop growing. The impact is huge. Over 5% a year in a sector generating 1.5% growth.

  2. The sterling is experiencing a 3-year low and an almost confirmed hard Brexit is about to drag it down to a historic low – triggering technology costs at their max.


Is a hard Brexit synonymous with a scarce outsourcing supply? What about internal inflation?

Having reflected on the first 3 years after England’s 2016 referendum, I can only deduce that Brexit has indeed massively contributed to outsourcing’s acceleration. A quick look into the numbers of IT Outsourcing firms makes it crystal clear:

UK digital customers are favoring a strategy that will immunize them against talent shortages by opting for yearly contracts in different places like Eastern Europe, Russia and India.

A 10% drop of the sterling has far less impact for a company not outsourcing imports than a 7% increase in salaries – and for a simple reason. Yearly salaries for programmers in the UK range between 50 and 90,000 while the skilled equivalent outsourcing resource varies from 20 to 45.


What now with hard Brexit and Boris Johnson?

Recent statements made by Johnson have further reduced the Pound’s value. And, by the looks of it – this climate will far outlast the coming decision in October.

My personal opinion is that the number of candidates willing to immigrate to the UK will continue to dwindle while the tendency for attrition rises.

As all other nationalist leaders playing with isolationism, Mr. Johnson is actively encouraging his national digital entrepreneurs to look for external, more stable solutions. Ironic, isn’t it?


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Read more:

Low Cost IT Outsourcing in Moldova, Mexico, and Vietnam: Pentalog Ramps Up its Teams to Tackle the Coming Crisis

Pentalog London Office: The Premises of our Story in the UK

Digital Transformation is Agility. 8 Insights to Get Started.

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