Nasscom raises concerns about UK’s move to curb skilled visas

Bengaluru: India’s software trade lobby group National Association of Software and Services Companies (Nasscom) has submitted a memo to a UK panel of immigration advisors flagging concerns about the government’s proposed move to curb migration of skilled foreign workers into the country.

In the memo, submitted on 25 September in response to the Migration Advisory Committee’s call for comments from all stakeholders in the visa process, Nasscom argued any curbs will significantly increase the operating cost of businesses in the UK and force companies to export job overseas to stay competitive.

It also highlighted the limited impact skilled workers have on the country’s immigration problem and the repercussions of visa curbs on the country’s productivity, trade and competitiveness and cost of UK businesses.

The UK government had in June set up a committee of advisors to tighten the existing immigration rules, including provisions of the Tier 2 intra-company transfer, or skilled-worker, visas that allow multinational companies to transfer employees from one branch to another in the UK. Analysts say a large majority of these visas are being used by India’s information technology companies.

It also asked the panel to fix a skills tax on businesses that hire non-European employees and substantially increase the minimum wages paid to skilled foreign workers, possibly by up to 20,000 pounds.

The panel will send its recommendations to the UK government in December and a final policy is likely to be announced in January.

“Caps, quotas and increased salaries are all going to be counterproductive as it will create a distortion in the UK economy,” said Gagan Sabharwal, director for global trade development at Nasscom.

According to him, any curbs to the skilled-worker visas will hamper the growth of India’s outsourcing industry which sends thousands of employees to the UK as in the case of the US to work on the technology projects of clients. The UK accounts for a fifth of India’s roughly $100 billion software exports.

Top Indian outsourcing companies Tata Consultancy Services (TCS), Infosys and Wipro earn a bulk of their revenue from Europe, including the UK. Barring TCS which earned 17% of its $15.5 billion revenue in the last fiscal year ended March from the UK, most Indian outsourcing companies don’t disclose the share of revenue from the UK separately.

A spokeswoman for TCS didn’t immediately comment.

In the past, the US too has introduced a number of restrictions on its H-1B or skilled-worker visa programme that governs the movement of skilled foreign workers into the country, including levying additional fees and capping the number of visas.

“The move to increase minimum salaries for skilled workers is a concern for Indian businesses,” said Ian Robinson, a senior manager with immigration advisory firm Fragomen Worldwide. “I hope there is not an assumption that Indian assignees are paid below market rate,” Robinson said.

The law already insists that skilled foreign workers must be paid at least as much as British workers, he said, adding, other charges on visas will substantially increase costs.

The UK government’s move comes at a time when the country is going through one of its worst migrant crisis. A host of refugees and other migrants arriving in the country has thrown a major challenge to Prime Minister David Cameron’s stated goal of curbing migration to “tens of thousands.”

According to the Office of National Statistics in the UK, the net number of people who migrated to the country in the last fiscal year that ended in March stood at a record high of 330,000, a 30% jump over the previous year.

Nasscom’s Sabharwal said of the 330,000 immigrants, only around 13,000 were on long-term skilled foreign worker visas that allowed them to stay and work in the country up to five years. So, restricting skilled-worker visas will not have any “meaningful impact” on the government’s goal of bringing immigration to less than 100,000, he said.

“And if clients can’t find local people to do the work, jobs will be offshored,” Sabharwal said. In its memo, Nasscom has urged the UK government to address the problem of skills shortage by training more people in science, engineering and mathematics courses to make them employable. “Let’s together come up with a plan and address this root cause of shortage,” Sabharwal said.