For years, the tech sector has been a story of success in the UK. Its continuous growth has championed the role of tech firms in buoying the UK economy. As a consequence of this growth, the UK and particularly London, has attracted high skilled engineers from other EU countries. This being a great deal for both parties because British tech firms needed more and more talent, and EU engineers found interesting projects to develop their careers.
According to statistics, about 6% of UK employees in the information and communication sector are EU nationals. London is particularly international, with 11% of EU workers in the sector. Ever since the decision to leave the EU was voted, tech firms focused on the challenge to attract and maintain talent from EU countries. To feed their business with talent is not a new challenge for them, but the new scenario anticipates harder times in recruiting skilled staff. Actually, talent supply is considered the biggest challenge for digital tech companies this year.
Of course, British tech companies may hope for an agreement where they can retain their EU employees, assuring their rights while at the same time being able to attract more talent from EU countries and gain wider access to international markets. But, until negotiations between the UK Government and the EU Commission reach a final agreement (or not) the uncertainty is already a factor running against the sector. Additionally and unfortunately, it is a fact that a feeling of social rejection is growing among EU migrants in the UK, and in the highly competitive tech job market employees may simply move to other EU countries.
To face the talent retention and attraction issue while also mitigating any loss in competitiveness or impacts in production capability, the British tech companies have various options.
1. Implement or accelerate the inclusion of remote working models. It is already an important and growing trend in the sector, so, part of the solution could be moving from on-site work to full time remote work. However, despite it being a very attractive option, there are some problems to consider:
- Even the best possible implementation would create a lower interaction level between teams, with some impact in production.
- Not all employees enjoy remote work. In fact, many of them may reject a full time remote working model and seek employment elsewhere.
- Personal and team management problems. It becomes harder and, sometimes, impossible to detect personal problems that are easily managed in-house.
- Company culture. If a company moves from an in-house model to a remote model, its culture will also change dramatically if not adapted to the new structure. However, the same principles may not apply to the new situation and, consequently, employees may lose their affection for the company.
- Traveling costs. We are not just talking about remote work, but international remote work, and ultimately, sometimes people need to meet in person.
2. Make use, or increase the use of outsourcing companies. With the goal of avoiding any negative impact in production outsourcing is an option, but it also has limits and possible problems:
- Not all tasks can be outsourced. To hand the core of your product and private information over another company is a big risk and, quite often, not a good idea.
- Tax, legal and regulatory issues. Depending on where the outsourcing is located these could be complex issues to afford. Also, it is important to take into account the growing data protection regulations.
- Communication issues. Frequently this is the major outsourcing issue, because outsourcing ultimately means a client-vendor relationship with all the usual and significant differences between what is said and what is understood.
- Lack of control. Even when the agreement is pretty clear, the work is not under your direct control and problems on quality and deadlines are common. Plus the outsourcing companies have their own problems, and they have to find a balance for all their projects, while trying to maximize profits. In the end, you are just another client.
- Cost. Although outsourcing is usually a cost-cutting option, this is not always an advantage of outsourcing, and sometimes proves to be more expensive because more often than not, outsourcing companies charge more than what you anticipate. Again, this is another factor not under your complete control.
3. Create a captive centre in another EU country. Although this seems to be a more complex option, it brings many advantages:
- The company retains talent and employees maintain their status within the company.
- Employees see a high commitment from the company, which in turn improves their commitment level to the company.
- The company maintains full and direct control of all production processes.
- It holds the same level of attraction and can easily retain talent from other EU countries.
- Depending on the country where the centre is created, there can be a significant cost reduction in hiring new employees.
- Retain access to EU funding programs. In 2015 the EU provided €1.2 billion in funding to the UK from Horizon 2020 Programme.