Brexit happened.  Most of us didn’t think it would, but it did.  As an outsider, I’m not going to address the foolishness of the vote and the harm it is already doing to British financial and currency markets.  That would simply be piling on.

But as an analyst of the sales intelligence space, I can make some observations about how it is likely to impact my industry.  The short-term impact will mostly be financial as US firms find that H2 revenue will decline due to the fall in the Pound (and less so the Euro).  Sales Intelligence products are priced in Pounds and do not float so the impact will likely be felt by American vendors reporting lower revenue from their European operations.  I expect the term “currency headwinds” will again become popular on earnings calls.  This situation may be compounded by British firms being more conservative in H2 due to political and economic uncertainty.  They may choose to license fewer seats or hold off on licensing a service.

Should the pound remain weak going forward, vendors may raise sterling-denominated prices in 2017; but this decision is somewhat dependent upon the location of staff, denomination of licensing contracts, and degree of Brexit economic contraction.  As UK company content is mostly licensed from UK vendors, it is likely to be denominated in Pounds so content licensing expenses are also likely to drop for American vendors.  (US companies will often sign licensing deals in pounds as it provides a partial hedge against currency fluctuation).

Britain is the second most important market for sales intelligence services after the United States.  While other markets may be growing faster, Britain has long been either the home of sales intelligence products (Bureau van Dijk, DueDil, Artesian Solutions) or the logical second market for American firms.  US firms have long enjoyed access to the European market via offices in London and some even configure their products with regional UK and European editions.  Britain will remain a critical market for these companies and there is little reason to believe that American firms cannot continue to sell into the EU via these offices.

But a long-term problem may be staffing their British offices with multi-lingual sales, support, marketing, and editorial staff.  The status of EU citizens working in Britain is unclear and may not be resolved for two years.  A study by Wayra UK found that 34% of British start-up employees are not British citizens with 20.7% of employees carrying EU passports.  Whether EU citizens will continue to freely live and work in Britain is an open question subject to negotiation over the next two years.

Wayra UK found that British startups have a built in competitive advantage from this diversity.  They found that 79% believe that cultural diversity helped them compete while 75% said it helped them overcome challenges and 72% argued that it assisted with new market entry.  However, if EU work visas become an issue, the British will lose this competitive edge.  There is also the negative impact of reduced work and study opportunities for British citizens which will erode British understanding of individual country markets.  In the context of information services, the cost and difficulty of maintaining a multi-lingual research and support staff in Britain may increase.

“Without access to Europe the pool of applicants shrinks dramatically,” DueDil founder Damian Kimmelman told Forbes. “We are a venture-backed business, and a venture-backed business means we are invested in to create super growth. But you can’t create super growth if it’s so difficult to hire the people that can create that super growth. People in tech are the number one commodity.”

DueDil is in the middle of building out its sales intelligence coverage of Europe so multi-lingual staff is critical.  Kimmelman is already looking at expanding operations outside of Britain and will be spending the next few weeks researching options with DueDil executives.  “We’re going to be opening up new offices.  We have to. We’re scaling far too quickly to jeopardize our ability to scale because we have to hire people in the U.K.”

One area of benefit for UK information services may be around Safe Harbour.  The EU is moving towards greater restrictions around personal information and it has always been difficult to gather and market emails.  However, the British have been an exception to this rule with vendors including UK business emails in their products.  A Brexit suggests that the EU Safe Harbour negotiations may become more difficult as continental sensitivities will no longer be balanced by British openness.  The net is emails and executive profiles are likely to remain available in the UK but that complying with EU Safe Harbour restrictions could greatly limit access to executive information and create issues for American multinationals and cloud vendors.

As a shorthand, I’ve color (or should I write colour for the Brits?) coded my analysis to highlight the benefits and drawbacks to Sales Intelligence vendors.  The net is rather negative.  Unless you are marketing British contact files for email campaigns and teleprospecting, it is unlikely that you would welcome the vote’s outcome.  For vendors providing global information services, Brexit provides additional financial and planning challenges in the number two sales intelligence market.