The Impact of Brexit on MSPs

BY IT GLUE | April 25, 2019

Last year’s GDPR implementation was fun, wasn’t it? If you’re in the UK, you went through all of that, not really knowing how long that rule would apply to your business. At the time of writing, you still don’t really know, because the status of Brexit is uncertain. While we here at IT Glue cannot force the politicians to remove this uncertainty altogether, we can provide some advice as to what the issues are going to be for you, especially in light of a no-deal Brexit. The way we see it, a no-deal Brexit will impact MSPs in four key ways.


What’s Likely To Happen:
IT service providers catering to a range of small businesses are likely to find their business suffers, should the UK economy suffer from Brexit – regardless of whether it is hard or soft. Major banks are predicting an economic slowdown, decreases in tax revenue and fewer jobs, none of which are good for your customers.

How You Can Respond:
Avoid the temptation to compete on price, even if your clients are trying to cut costs. The reality is that you deliver uptime and efficiency for them, and those are things that have genuine value. An economic slowdown doesn’t mean your clients are going out of business, just that they are motivated to control costs. Ensuring uptime, and making sure their tech runs smoothly, are key components to cost reduction. Keep the conversation focused on value.


What’s Likely to Happen:
Deal or no deal, Brexit will cause a certain amount of chaos for any British firm that trades with the EU. If you’re an MSP with clients on the continent or Ireland, you will probably be allowed to continue with business as usual for a little while. However, things could start getting complicated at some point, especially if you work for a UK subsidiary of an EU company, or an EU office of a UK company.

How You Can Respond:
Unfortunately, this is going to be a wait-and-see situation. The lack of clarity right now regarding situations like this is exactly why there is so much uncertainty surrounding Brexit. The best advice is to keep a close watch on how different trade rules develop.


What’s Likely to Happen:
All signs point to disruption in the UK labour market as the result of Brexit. The UK has long been able to attract educated, talented immigrants from around the world, and EU membership in particular was a boom to labour pool depth in the tech sector. But over 132,000 EU nationals have already disappeared from the UK labour pool, and Brexit will only bring more of the same, as people rightfully fear that they will be unceremoniously uprooted from their lives, and choose to leave voluntarily instead.

How You Can Respond:
Any looming labour shortage requires similar responses. If you can find ways to bring in non-EU talent, go for it. Otherwise, you have to structure your operations in such a way that you can do the same amount of work, but with fewer workers. You may end up paying more for the workers you do have, but if you’re able to offset this with higher efficiency, you can make this work. Pay attention to process, training, and use technology that makes your life easier. Boost the productivity of your techs by 20-50% and maybe the labour shortage won’t hurt as badly.

Data Privacy

What’s Likely to Happen
After the amount of effort required to conform to GDPR regulations, it’s a little odd to then just walk away from them. The good news in terms of data protection is that the UK was a significant contributor to GDPR, and has committed to aligning its data protection laws with GDPR, even in the event of Brexit. The Data Protection Act of 2018 meets the criteria for the EU to allow data flows from the UK into the European Economic Area (EEA). So in that sense, data protection rules probably won’t change very much.

The biggest potential issue here is that a no-deal Brexit will leave the UK without provisions for controlling the flow of data from the EEA into the UK. It is highly unlikely that this lack of provision will affect the normal course of business but it will be important for UK-based IT service providers to be ready when or if a deal does come into place that changes things.

Transfers of data from the UK to the EU will not have any restrictions, therefore in this scenario, it will be business-as-usual whether a no-deal Brexit takes place or not.

If you provide services to companies outside of the UK and specifically in the EU/EEA, you will need to comply with the Data Protection Act as well as GDPR. This is not going to be complicated since both are very similar, but some requirements will need to be adjusted. For instance, you will have to appoint an EU representative if you do not have offices outside of the UK. If you do have offices in the EU, you will need to ensure that your lead supervisory authority is not the UK but the country where the rest of your EU operations mostly take place.

How You Can Respond:
When doing business with the EU, follow the GDPR rules you’re accustomed to. Domestically, follow the Data Protection Act. Keep abreast of any changes that are made, if there is a deal. If there is a no-deal Brexit, it is not as though the data pipes are going to be cut off, but paying attention to the legal environment is well worth it as well as having alternate arrangements in place such as standard contractual clauses or binding corporate rules if your organisation has offices in other EU locations. You may also want to check regularly with the ICO in order to keep informed of developments as they happen. For our part at IT Glue, we will be monitoring the situation with respect to data transfers and will make a strategic move in accordance with whatever is best for the security and compliance of your data.

There’s a lot of uncertainty surrounding Brexit, what form it will take, and how that will impact on UK businesses. Our advice is simply to be aware of the key issues that could affect you and seek out professional advice in order to maintain compliance.

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