Brexit’s impact on recruiting and retaining tech talent  

Halloween. That’s the day, or 31 October at 11pm to be clear, when the UK is set to leave the EU after failing to depart on the original deadline of 31 March, two years after Article 50 was triggered. Yet, even at this late stage – more than three years after the electorate cast their votes in the referendum – we don’t know if there will be an orderly departure or if the UK will crash out without a withdrawal agreement ratified. The one thing we are constantly reminded of is how stock markets and businesses hate uncertainty. Right now, Britain seems to be locked in a holding pattern circling above destination uncertainty with no breakthrough in the impasse within sight.

Putting the deal or no-deal scenario to one side, some within the business fear Brexit, which signals the end of the freedom of movement of people between the UK and the 27 EU member states, will accentuate an IT skills shortage in the UK. A survey of 1,000 business leaders by cloud-based software company Salesforce last month found that just over half (52%) believe the country is at risk of a brain drain after the UK leaves, with many concerned especially about a shortage of tech skills.

The research found that 55% of business leaders intended to invest more in their own tech talent. Meanwhile, another survey published in April, this time from Barclaycard, revealed that eight in 10 UK CIOs are concerned about recruiting and training tech talent. Just over half of the 100 IT chiefs interviewed said they worried Brexit would prevent them hiring enough employees with the right technical skills.

Many hands make light work

According to the UK’s Office of National Statistics (ONS), there were an estimated 2.38 million EU nationals working in Britain between January and March this year. So having access to tech talent from across the EU and retaining those already in the UK will be critical post-Brexit. “UK-based tech companies rely on European resources to complement their other overall technical and development teams,” says Stuart Godfree, managing director of app development and digital agency mkodo. “[So] anything that creates a level of unease for those European workers will of course impact UK companies.

“That said, maintaining good working environments that are properly remunerated will help retain this resource, especially considering the agreements that the UK has entered into with the EU to protect European workers’ rights.”

Situated in the heart of Leeds, 200 miles north of London, is the HQ of one of egaming’s biggest success stories: Sky Betting & Gaming (SBG). Bought by The Stars Group in 2018 for $4.7bn, SBG employs 1,400 staff, of which more than 1,200 are based in the Leeds office. Just over a third of the Leeds staff, 419 employees, are engaged in various tech roles powering the online-only brand. So, has the operator faced challenges around recruitment and retention in tech positions since the referendum?

Sky Betting & Gaming’s Leeds office

“Initially, after the vote and results were announced, we lost a few EU employees who headed home, but since then it seems to have settled down,” says Matt Hughan, SBG’s head of people proposition. “I think many of them still think that nothing has changed. From experience, it’s been harder to have those initial conversations with candidates in the EU if the UK has had a bad week in the press with Brexit. However, we are still having candidates join us from outside the UK.”

Indeed, two software engineers just recently upped sticks and relocated from Spain to Leeds to take up roles with SBG. “They did not see Brexit as a concern for them,” Hughan states. He continues: “Sky Betting & Gaming has always seen the advantage to investing in local talent and has grown our own technical talent proactively in order to future-proof the needs of the business.” For example, this includes the creation of an in-house tech academy to upskill and cross-train existing employees, as well as a top-tier graduate scheme that sees graduates – a vast proportion of which do not come from a standard STEM background – work towards a Masters in digital and technology solutions.

Scaremongering or sound projections?

If the Salesforce or Barclaycard surveys are to be trusted as a reliable gauge of the mood among business chiefs and CIOs, it shows us nearly half of those quizzed don’t foresee hiring challenges after Brexit. Much like the vote itself when 52% of the UK population voted to walk away from the EU and 48% expressed a wish to remain, opinion is divided. As things stand, the likes of mkodo insist it’s “business as usual”, while Rob Lee, commercial director for Reading-based Realistic Games, says the egaming supplier has no job vacancies. “We currently have no open roles for the first time in a number of years and our wage structure, while still competitive, has also remained unchanged.”

He also tells EGR Technology: “It would be a huge shame for Britain to become a less attractive destination for highly skilled employees after Brexit, but from our experience in the last three years, a complete brain drain seems highly unlikely. While some parts of the tech industry have raised concerns over the impact of a potential skill shortage, others should use this as a positive effect of the likely increase in competition for talent by ensuring that their company is the number one choice for any prospective candidate.”

Ardent Brexiteers would probably argue that those suggesting skilled IT workers will pack their bags are doom-mongering Europhiles spreading ‘Project Fear’ propaganda. And they may be right to a certain degree. Many other EU nationals have put down roots in the UK and have children settled in schools. In addition, working for the likes of SBG or bet365 means having access to the latest tech and being at the forefront of the global online gaming industry. They also tend to offer generous salaries and other enticing benefits.

Hughan says: “Companies that are working with cutting edge technology will still be an attractive proposition to candidates and, Brexit aside, we think people will move worldwide often to work with the latest technologies.” This means the leading UK-based companies are still sure to be huge draws for skilled professionals from the EU following Brexit, even if Leeds or Stoke-on-Trent (the HQ of privately owned bet365) don’t quite have the cachet of London. Indeed, Hughan concedes recruiting highly skilled tech professionals to regional parts of the UK has “always been a tough task” compared with London and other European capital cities.

London calling

While some international companies from various sectors have relocated staff and their offices from the UK capital to mainland Europe, citing Brexit as a reason, the tech giants seem committed to London. For instance, Apple plans to open a new London campus for 1,400 staff in 2021, while Google’s new base in Kings Cross will house up to 4,500 people. In addition, Amazon and Facebook plan to increase their footprint and headcounts in the city, while Spotify revealed in April that it will create nearly 300 new tech jobs in London with the creation of a new R&D centre.

London also remains the epicentre of Europe’s digital start-up space and investment in tech firms. In fact, the tech sector there attracted a record £2.6bn in venture capital in the first five months of 2019, according to London & Partners. This was comfortably more than Paris, Berlin and Stockholm combined. With it being one of the world’s most expensive cities in which to live, competition for talent remains understandably fierce. “It’s just damn hard to recruit and retain decent development personnel, especially in London,” mkodo’s Godfree says.

Just downstream of two of London’s iconic landmarks, the Tower of London and Tower Bridge, is St. Katherine Docks. It’s here where betting exchange Smarkets is based, with 80 employees of 27 different nationalities focused on engineering and operations. Celine Crawford, who oversees the company’s hiring and talent function, says: “Although we believe there will be some brain drain of British talent emigrating for the same reasons Europeans came to London, the bigger problem is the diminishing European immigration to London and the many who are now leaving London with a lot of valuable skills acquired during the pre-Brexit start-up boom.

“In fact, looking at our most recent leavers, 21% cited relocation as their primary reason for leaving London to start new jobs in Berlin, Ireland and Poland to name a few.” The 11-year-old business has also seen some employees quit for “more established corporate companies” to reduce the risk of any potential visa issues when acquiring their Indefinite Leave to Remain (ILR) status.

Replacing them means going back into the jobs market where, Crawford points out, wages for tech roles “have risen significantly” since the referendum, especially for junior positions. She says a graduate with under one year’s experience was typically offered £40,000 to £45,000 in 2016. Starting salaries are today in the region of £50,000 to £70,000, partly due to the need to compete with the banks and the fintech industry.

Yet, while wages have increased, the looming prospect of the UK crashing out of the EU without a deal, which has caused the pound to plunge to a two-year low against the euro in recent weeks, isn’t ideal for EU candidates. Or those already in the UK. One pound is worth €1.08 at the time of writing. It was worth €1.30 just prior to the referendum.

“Before the falling pound, European nationals were keen to move to London not only to enjoy working with the latest technologies but to also, in turn, benefit from greater purchasing power at home,” Crawford says. Now, though, some EU migrants will see it as a negative to living and working in the UK. A no-deal scenario becoming a reality could cause the pound to slide to parity with the euro – or even lower.

Hedging their bets

The online gambling sector is insulated from the effects of Brexit to some degree by certain companies having tech teams and tech ‘hubs’ outside the UK. For example, William Hill has tech teams based in its head office of Leeds, but the London-listed firm also owns Grand Parade with around 340 staff in Poland’s second city, Kraków, supporting the operator’s tech operations. Indeed, many gambling firms have tech hubs in Eastern Europe, the Baltic states and increasingly Ukraine, to gain access to a highly educated IT workforce at lower rates than in Britain.

According to Chris Miller from Betting Jobs, Malta has also received a boost since the EU referendum, yet much of this is down to the uncertainty and concern of Brexit in Europe’s other egaming hub Gibraltar. He says it’s been more of a tough sell of late to persuade Europeans to relocate to Gibraltar where 97% of the British Overseas Territory’s citizens voted Remain. Brexit fears are why bet365 is moving around 1,000 of its Gibraltar workforce to a new office in Malta. This, of course, is a blow to Gibraltar’s economy and maybe even the start of its own brain drain.

Irrespective of Brexit, Alastair Cleland, managing director of recruitment specialist Pentasia, insists Europe faces growing pressures finding qualified people. “Europe’s tech talent pool has long been running dry. Practically every online gaming company is held back by tech talent shortages and have already adapted workforce structures and hiring plans in an attempt to attract talent.” This is a viewpoint largely shared by Godfree: “There is a general shortage of quality IT resources globally. Brexit will have an impact as we will not have access to the European talent pool as we have today, and this will undoubtably have significant and detrimental repercussions on UK companies.”

Those UK companies will perhaps cast the recruitment net further afield to ensure they still attract top talent and meet growth targets. “What this would likely look like for Smarkets is an increase in hiring from other countries with strong computer science education such as Russia, India and China, where applicants require more labour and cost intensive visas. Such individuals would turn to the UK instead of the US, for example, in part due to the highly restrictive US visa system,” Crawford says.

Assessing the situation

So where are we right now with under three months until the UK’s departure? Well, it would seem pretty much business as usual in the UK, and the country also remains an attractive place for skilled professionals from other EU countries to live and work. But that’s not to say the prospect of Brexit hasn’t persuaded some to relocate elsewhere, such as Malta. Indeed, one anonymous gambling tech industry veteran based on the Mediterranean island tells EGR Technology he witnessed this first-hand. “I was interviewing a guy from Poland [who was working in the UK] and I asked him why he wanted to leave.

“He told me he was happy and settled but he said he was so fed up with living with the uncertainty and what’s going to happen to his pension, his savings and the pound and the euro. ‘We are just so fed up of it that I just want to go to Malta now’, he said.”

Meanwhile, Godfree says: “Without doubt, many European nationals believe the UK is not the ‘friendly’ workplace it once was and the current rhetoric in government and ‘alternate’ parties is not making the situation any better.”

As political journalists conjure up metaphors about 31 October being ‘fright night’, ‘a horror show’ and ‘trick or treat’, the truth is no-one knows for sure whether there will be some sort of brain drain – or ‘Brexodus’. While it does seem improbable, the UK leaving without a Withdrawal Agreement in place was seen as a remote possibility not long ago. That’s now an even-money chance with one online bookmaker. Indeed, Leave winning the referendum was, according to the polls and political analysts, never going to happen. And we all know how that turned out.