Indian IT companies may have to hire more UK staff

UK, one of the top export markets for India’s over $40-billion software industry, is evaluating stricter immigration rules proposed by the Migration Advisory Committee (MAC) after several British trade lobbyists and workers alleged that Indian tech firms are replacing local workers with overseas staff at lower salary levels.

Top Indian tech firms including TCS, Infosys, Wipro and Tech Mahindra serve British customers such as BT, British Petroleum and British Airways by sending Indian professionals to the country on short-term project assignments. With more stringent norms, these companies may have to employ more local UK workers instead of sending their Indian staff for onsite projects.

Anti-offshoring lobbies including Unite and the Association of Professional Staffing Companies (APSCo) allege that Indian tech firms are misusing the ‘intra-company-transfer’ rules by replacing UK workers at wages lower than prescribed levels in the country.

The MAC report submitted by the committee’s chairman Professor David Metcalf to UK’s Home Office on Wednesday has recommended that the threshold salary levels for allowing entry of a graduate skilled worker be raised from around £17,000 currently, making it tougher to earn points needed for allocation of work permits.

“We believe that the earnings thresholds should rise in line with earnings inflation. We recommend raising the minimum threshold for gaining 10 points to £24,000 per annum, and raising the minimum threshold for gaining 15 points to £28,000 per annum,” the MAC report added. These figures compare to £20,000 and £22,000, respectively, under the current system.

Last year, UK granted around 45,766 work permits to workers coming to the country through intra-company-transfer route, a majority of them awarded to the IT professionals. The majority of intracompany transfers are for Indian nationals, who account for 69% of the permits granted through this route.

Almost half (48%) of intra-company transfers are for Indian nationals in just one occupation — software professionals . “Companies are even allowed to pay these workers offshore in foreign currencies, so intra company transfers are potentially very easy to exploit in order to bring cheap foreign labour into the UK,” Ann Swain, chief executive of APSCo said in a recent statement.

Nasscom, the Indian software industry lobby, said the recommendations will help fix the loopholes in the system. “There were some cases of abuse reported in the past and the new norms ensure compliance to guidelines and there is a system in place to audit the visa process,” said Som Mittal, president of Nasscom. “The issue of salary — at least £20,000 a year as minimum wage for an employee going to the UK is also acceptable as less than 0.2% of the current ICT employees going to the UK are at a salary less than that. This measure has been put in place to check abuse,” he added.

The report also recommends that migrants coming to UK under intracompany-transfer route cannot have a right to permanent residence. “Because the intra-company transfer route exists to facilitate temporary immigration to the UK, we recommend that time spent in the UK under this route does not lead to a right to permanent residence,” the report said. Under the current rules, after five years of working in the UK on the intra-company transfer route or any other route under tier-II, it is possible to be granted permanent residence.

Meanwhile, Indian IT workers in UK feel such recommendations are not required. “Tier-II visas without the right to settlement will lead to exploitation of skilled professionals who will have to pay taxes but will not be able to settle in the UK,” said Amit Kapadia, executive director of the Highly Skilled Migrant Programme (HSMP) Forum in UK. “In recommending so we believe the MAC has gone beyond its scope in answering the questions which were raised by the then home secretary Jackie Smith,” he added.

Experts such as Bob McDowall, who is the research director with Tower-Group said these allegations are true. “The wages are lower than the UK minimum wage, though there remains a substantial cost of living differential between India and the UK,” he said. The backlash, according to him, is set to gain more momentum because of the rising unemployment. Moreover, IT workers coming to UK for short-term projects will also need to have more work experience. “To ensure that the route allows only people with company-specific expertise to come to the UK, we believe that the qualifying period with the company overseas should be doubled from the current six months to 12 months.”

However, MAC’s recommendations are pure advisory and the Home Office may or may not accept them. “We need to remember that these are recommendations at this stage and the government is considering the report before responding formally. No decisions have been taken and it’s too early to speculate on the government’s response ,” Chris Dix, regional director South Asia and the Gulf, UK Border Agency, told ET on Thursday.
Source: EconomicTimes