UK Immigration Reforms to Help Indian Outsourcers

The U.K. government's decision to control the number of skilled non-E.U. workers that businesses can bring into the country has been welcomed by Indian outsourcers, as it does not cap intra-company transfers (ICTs), a route used by Indian companies to take staff to the U.K.

The U.K. government on Tuesday committed to introducing an annual limit of 21,700 for those coming into the U.K. under the skilled and highly skilled routes. Under the skilled route, 20,700 will be allowed, while another 1,000 are to be allowed under a new 'exceptional talent' route, the government said.

ICTs do not, however, fall under either of these categories, which are for migrants, said Ameet Nivsarkar, vice president for global trade development at India's National Association of Software and Service Companies (Nasscom), on Wednesday. There is also no cap on the number of staff that can be transferred by the ICT route, he added.

Indian outsourcers generally use the ICTs to send staff to the U.K. on client projects and other assignments, Nivsarkar said.

U.K. Home Secretary Theresa May told Parliament on Tuesday that the government had listened to businesses about ICTs and will therefore keep these transfers outside the limit.

The U.K will, however, place a new salary threshold of &#163;40,000 (US$63,611) for any ICTs of longer than 12 months, May added. A transcript of her speech is available on the U.K. Home Office [a href="http://www.homeoffice.gov.uk">website</a>]

The salary threshold for people on ICTs is currently &#163;24,000, which will continue to apply for staff that are on transfer for less than 12 months, Nivsarkar said.

Nasscom said it was assessing the impact of the new salary requirement on longer term visas, but felt that there may be a marginal cost impact both for the service providers and the customers.

Staff from Indian outsourcers in the U.K. were already being paid way beyond the &#163;24,000 threshold and this trend will continue, Nivsarkar said.

The unpredictability of the duration of assignments would also mean that staff who stay in the U.K. for less than 12 months and those who stay for more than 12 months will earn roughly the same salary, he added.

"Companies can't differentiate between staff salaries on the basis of expectations of the duration of their stay," Nivsarkar said.

Unite, a large trade union in the U.K., has accused the government of "squandering a golden opportunity to root out abuse and misuse by companies of the intra-company transfer route for skilled workers."

The new salary cap for intra-company transfers of longer than a year will lead to employers manipulating the system by transferring workers from outside the U.K. for less than a year, Unite said on Tuesday.

The U.K. is a key market after the U.S. for India's IT and business process outsourcing companies. Tata Consultancy Services, India's largest outsourcer, earned 16.5 percent of its revenue in the quarter ended Sept. 30 from the U.K. A number of Indian companies such as HCL Technologies and Tata Consultancy Services have set up services centers and acquired companies in the U.K.

The new U.K. government rules will take effect from April next year.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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