UK exit to hit Indian IT: Nasscom

Ahead of Thursday’s referendum on Brexit, Indian information technology industry body Nasscom called the event a defining moment in India’s relation with Britain and her European neighbours.

Ahead of Thursday’s referendum on Brexit, Indian information technology industry body Nasscom called the event a defining moment in India’s relation with Britain and her European neighbours.

“Irrespective of the outcome of the referendum, this is set to be a defining moment in the relationship between UK and its European neighbours, but the emergent configuration could end up being a defining moment for Indo-UK economic relations as well. How, and to what extent it will impact Indian IT companies in the region will become fully clear only after the dust settles on the referendum,” a statement from Nasscom said.

In its detailed analysis of the two possible outcomes, Nasscom said that the immediate fallout on the IT industry in India would be the impact of any possible decline in the British pound, which would render many existing contracts losing propositions unless they are renegotiated.

“Decisions regarding large projects could get postponed till clarity on the terms of exit crystallise. Furthermore, any negative impact on the British economy in terms of slower growth or worse, could reduce opportunities for Indian companies in UK,” the statement said.

The flip side of Britain exiting EU in the longer run, could lead to strengthening of Indo-UK economic relationship, as Britain seeks to compensate for loss of preferential access to EU markets.

With the existing 800 Indian companies (IT and other sectors) employing 110,000 individuals in the country, a deeper partnership with India may be in Britain’s interest. “This could work to the benefit of the IT sector in India, since UK accounts for about 17% of India’s IT exports worldwide.”

Britain choice to exit the EU would also mean that the country would cease to be Indian IT sector’ s gateway to the larger European market, which would also impair free movement of Indian IT staff within the continent.

However if Britain votes to remain, then the current uncertainty would abate with the return of stability in markets and the value of the pound. Business certainty would be restored, though much would depend on Cameron’ s final deal with the EU.