The June (2016) vote by UK citizens to leave the European Union could very well be the most important geopolitical and economic decision of recent times. Ending an economic and political relationship more than four decades old is no small matter by any measure. The most important thing now is for the United Kingdom and EU to negotiate a compromise settlement that appeals to the interests of both parties as much as possible. Whatever the outcome, Brexit could open the door to a whole new nearshore outsourcing market in Europe.
At the core of the Brexit vote was the question of whether the UK wanted to continue on the evolving path of globalization. Globalization, along with its symbiotic immigration partner, appears to be threatening sovereignty and national security in the eyes of those who voted ‘leave’. And as surprised as most of the world was about the outcome, an even bigger surprise is the reality that UK’s decision could lead to a new wave of anti-globalization that would eventually see the EU collapse altogether.
What does this mean for nearshore outsourcing? It actually means quite a lot. For example, consider what might happen if the United Kingdom and EU cannot negotiate some sort of agreement to maintain open borders for European citizens. A lot of foreign tech people now working in the UK would be forced to return home. Furthermore, British tech companies may have trouble filling positions if Europeans decide they do not want to move there permanently. This would inevitably lead to new opportunities for nearshore outsourcing.
Time and Geography No Problem
It is rather easy to envision an emerging nearshore outsourcing market in Europe due to a lack of any real time and geography constraints. Europe is a very compact continent with most of the countries in the western portion so close together that doing business there is no different than doing business here across state borders. Furthermore, decades of working relationships within the EU mean that companies all over Europe are already used to one another’s time zones, business cultures, and so on.
The lack of time and geography constraints would make it very easy to establish an outsourcing tech firm capable of immediately stepping in and serving UK clients. The same would be true in the opposite direction. The only barriers to a successful market would be government regulations that prohibit the free flow of economic benefits between the United Kingdom and the rest of Europe. And although such stifling regulations are unlikely, they still are possible.
The World Getting Bigger Again
There are rumblings across the globe among greater numbers of citizens looking to put the brakes on globalization. What happened in the UK last month may be just the start of something a lot bigger than the EU. Indeed, the world appears to be getting bigger rather than smaller. Whether that is good for politics or not no one knows. But it seems to be very good for an emerging outsourcing market that is now an entrenched player in IT and technology.
Regardless of the outcome of the negotiations between the United Kingdom and the EU, nearshore outsourcing in Europe is likely to get a good boost as a result of Brexit. There will be little surprise if we see dozens of new outsourcing firms set up shop in countries such as France, Germany and Spain. They will provide outsourced services that UK companies need to remain viable as an independent nation and economy, even as their own countries decide their positions on Europe and globalization.