The Three Big Trends in 2018 That Will Matter When Doing Business in Europe

Having a crystal ball that predicts future trends would be immensely helpful for American tech CEOs to plot the optimum course and avoid speed bumps when it comes to doing business next year.  So consider this a start in that direction by identifying three developments that will be a challenge unless companies are aware and implement strategies to successfully deal with them.

1. New Government Regulations Will Redefine Information Transfer

Major European data privacy, security and sovereignty regulations will be enacted in 2018 that will affect every company doing business there and beyond. The EU’s new General Data Protection Regulation (GDPR) rules, which go into effect in May of 2018, make up-front corporate investment for compliance unavoidable. GDPR’s goal is to strengthen and unify data protection for all individuals in the EU while also addressing the export of personal data outside the region, with huge fines imposed for companies that breach its provisions.

While any company handling consumer data will be impacted, the effect on some industries will be particularly acute, such as medtech and biotech. For example, gathering patient information in one country and storing it in another will require new oversight, with possible implications for any firm performing clinical trials in Europe.

One fortunate aspect of GDPR is the possibility of a “one-stop-shop” compliance framework in which companies with European operations will be regulated by the supervisory authority where they have their “main establishment.”  This eliminates the possible nightmare of opening data privacy operations in Europe’s 27 jurisdictions but some countries are better than others as that “main establishment.”  Ideal would be where the data-center kings like Facebook, Google, Amazon, LinkedIn, Twitter, Microsoft, Apple and others are running their European data centers such as Ireland. At the very least, CEOs should beware if no existing rules or regulations for data protection are in place.

2. Companies Internationalize Earlier

To stay up with competitors moving into a lucrative market like Europe and particularly to follow the talent trail, companies find themselves internationalizing earlier than before, which will only increase next year.  Increasing demand for tech products has, unfortunately, not been accompanied by an adequate supply of H-1B visas domestically so to feed their personnel requirements, more American firms will be looking for qualified professionals in the EU.

For example, U.S. businesses located on the West Coast have set up offices in Ireland at an average of one company every two to three weeks over the past two years. As of the end of 2016, more than 220 such companies had established Irish operations in order to tap into the vast, profitable European market as well as Ireland’s favorable labor supply. But internationalizing earlier for young, high-growth companies such as Square, Zendesk, LinkedIn and Fitbit — all with new European offices — isn’t a trivial process.

The usual growth process in setting up a European office begins with hiring sales and support teams and expands to technical personnel and beyond. Lately, however, more young companies are hiring engineers in Europe at an earlier stage, with the high price of tech talent in the United  States a factor as well. Thus companies must perform due diligence regarding the availability of well-educated, skilled personnel with diverse languages and backgrounds in their chosen location or suffer the consequences of stalled growth.

3. Technologies Dependent on Data Centers Will Grow Significantly

Data handling is already a fundamental requirement for any tech company anywhere but new technologies that leverage data center will explode in advanced markets like the United States and Europe next year. For example, cloud computing will increase in complexity with the expansion next year in private clouds and mixed cloud environments. Meanwhile, hot technologies reliant on databases like artificial intelligence (AI), machine learning and blockchain will come to the forefront in 2018.

It’s inevitable that companies will need to increase their data center investments — for additional capacity and data-handling capabilities — for operations so they need proximity to hyper-scale cloud providers and top-notch, high-speed connectivity in their location, along with the proper tools to handle the increasing requirements and regulations related to data.  AI and machine learning directly impact data center capacity and network speed, with AI-enabled Big Data forcing an up-level in software and staff capabilities. 

Finally, blockchain also puts pressure on companies for improved software and personnel assets so this revolutionary approach to distributed, tamper-proof databases can be put to work in competitive US and European markets. Blockchain — whose first manifestation was the digital currency bitcoin — enables verified, authentic transactions to be made digitally instead of physically with obvious benefits in speed, accuracy and accountability. All these new data center-related technologies like blockchain, AI, machine learning and new cloud computing approaches put the focus on data like never before.