Indian IT Firms Exploit Loophole in UK Visa System: Report

By Little India Desk | August 16, 2018

An immigration think tank in the United Kingdom has accused Indian IT companies of exploiting an existing “loophole” in the Intra-Company Transfer (ICT) scheme to obtain visas for Indian employees, thus narrowing down the opportunities for British workers.

International IT companies, mainly from India, obtain a project or contract from a UK-based firm, and then tend to bring workers from the native country via the ICT visa route, which is a system intended for posting senior executives to and from the United Kingdom, the report by Migration Watch UK said.

The migration advocacy organization has cited many discrepancies in the ICT visa route, and also recommended some measures to change the current situation, in its report titled “Distortion of the ICT visa system” that was released on Aug. 14.

“This is known as third-party contracting and usually involves an international IT company, typically based in India, obtaining a contract to deliver a project or support services to a UK entity and then staffing it with workers from the company’s home country,” the report said, adding that this route has no cap on numbers and does not require the sponsoring company even to try to source its workforce within the United Kingdom.

The report lists 32 international companies, each of which issued at least 50 percent ICTs for third party contracting. A total of 16 of these firms are India-based, including Infosys Ltd, Wipro Technologies, Tech Mahindra Ltd and HCL Great Britain Ltd. American companies such as Cognizant and IBM have also been named in the list.

Topping the list is India’s Tata Consultancy Services, which issued 6,285 ICTs in 2017, of which 6,205 were meant for third-party contracting. Infosys and Wipro issued 2,030 and 1,795 ICTs, respectively, of which 1985 and 1690, respectively, were for third-party contracting. The corresponding figures for Tech Mahindra were 1,020 and 1005, respectively, while HCL Great Britain issued 750 out of 800 ICTs for third-party contracting. Cognizant issued 2,720 out of 2,780 ICTs for third-party while IBM used the route for 1035 out of 1,135 ICTs. Companies from Ireland, France and Japan made the rest of the list with smaller numbers.

The major loophole being exploited by Indian IT firms, according to the report, is the absence of any cap on the number of visas issued under Tier-2 (ICT). A limit of 20,700 visas is applied on the Tier-2 (General) visa route, which is the appropriate way to bring in skilled workers in the United Kingdom.

The misuse of this route by foreign-based companies undermines the integrity of the immigration system in the United Kingdom, the report said, adding that it also leaves a drastic effect on the British workforce.

Citing the huge surge in the numbers of visa issued under ICT, the report pointed out that since 1992, the number issued has increased eightfold and now constitutes over 60 percent of all work permits. “In 2017, 58,000 of 94,000 Tier 2 work visas issued to migrants and their dependents, were via the ICT route – the majority of which were for third-party contracting,” it said.

“Many people are asking why non-EU migration has not been reduced. Here is part of the answer. Either the government have taken their eye off the ball or they have been too heavily influenced by a small group of companies and have ignored their own Advisory Committee. Those who have lost out are British workers whose opportunities have been diminished,” Lord Green of Deddington, the Chairman of Migration Watch UK, said.

The report underlines that exploitation of the ICT route by international companies leaves a negative impact on the work opportunities of British IT workers and computer science graduates. Also, it undercuts the British competitors of these firms as they hire the talent at low wages in comparison to the market rates in Britain.

This report recommends that ICT salary threshold should be increased to reflect the ongoing rate for IT workers in the UK labor market accurately. It also advocates for a Resident Labor Market Test to be conducted by third-party contractors, who should fill as many vacancies from that before taking the ICT route.

It also suggests that income tax and national insurance payments be made mandatory for ICT recipients, regardless of the period of their stay. Also, the company must prove that there is no capacity within its UK-based operation to perform the function before sponsoring an ICT.

TechUK, the IT industry representative body that forged the U.K.-India Tech Alliance with NASSCOM earlier this year, said it was wrong to suggest that international talent undercuts the domestic skilled workers from the United Kingdom, PTI reported.

“At a time when many tech firms are already concerned with changes to EU migration, the government should be looking to make it easier to secure international talent to support the needs of a growing digital economy, including by removing the arbitrary cap on Tier 2 visas. That is a far better way to help drive the competitiveness of the U.K. post-Brexit and create jobs,” the news agency quoted Antony Walker, Deputy CEO, TechUK, as saying.