Further Tier 2 visa curbs will lead to a rise in operating costs for UK businesses, forcing them to send jobs overseas to remain competitive. That's the view of India's software trade lobby group the National Association of Software and Services Companies (Nasscom). On 25 September 2015, the group sent a memo to the panel of UK immigration advisers (Migration Advisory Committee) that advises the Government raising concerns over plans to impose yet further restrictions on tier 2 visas.
Responding to a request for comments from the Migration Advisory Committee (MAC), Nasscom joins a number of stakeholders concerned about the impact of further restrictions on tier 2 visas. Nasscom says that UK companies can expect to see operating costs rise sharply, leaving them with no choice but to export jobs overseas in order to remain competitive in the global market.
Tier 2 Skilled workers have a minimal impact on UK immigration numbers
In its memo, Nasscom stated that highly skilled workers entering the UK on tier 2 visas have a minimal impact on the country's overall immigration numbers. The group says that tightening the rules will have a detrimental effect on UK competitiveness, productivity and trade, and result in increased costs for businesses.
In June, the MAC was commissioned to find ways of further reducing immigration to the UK. As part of the mandate, the tier 2 intra-company transfer visa – that permits multinational organisations to transfer personnel from an office overseas to a base in the UK – is to be reviewed. According to analysts, a large number of tier 2 intra-company transfer visas are taken up by information technology companies transferring staff from India to the UK.
The MAC is due to submit its recommendations to the UK government in December 2015. It's expected that a final policy will be announced in January 2016.
The director of global trade development at Nasscom, Gagan Sabharwal, said: "Tier 2 visa caps and quotas are counterproductive measures that are harmful to the UK economy."
Sabharwal raised further concerns; in particular he mentioned the damage that tier 2 visa restrictions would cause to India's outsourcing industry, which sends thousands of its personnel to Britain to work on IT projects for its clients. It's understood that Britain accounts for one-fifth of India's estimated $100 billion software exports.
Indian companies – Significant earnings in Europe
Some of India's leading outsourcing firms, including Tata Consultancy Services (TCS), Infosys and Wipro generate a large percentage of their revenue in Europe, including in the UK. TCS, generated 17% of its $15.5 billion earnings from Britain during the last fiscal year [ending March 2015]. While the majority of Indian outsourcing firms don't reveal the share of total revenue that comes from the UK separately the amounts involved must be significant.
UK not the only country where Indian outsourcing firms face obstacles
It is also difficult obtaining skilled worker related visas for the US such as the H-1B visa for graduate level specialty workers. The US charges high fees for US H-1B visas and only allows entry of up to 85,000 people on the visa. This is far lower than the actual demand for these visas. The UK may have the highest Government visa fees in the World. If the UK increases visa fees yet again this will significantly increase operational costs for businesses.
UK government plans to reduce immigration levels come during a time that the country is experiencing increases in net migration to the UK. The current situation has severely derailed Prime Minister - David Cameron's – pledge to reduce net migration numbers to the 'tens of thousands.'
Figures published by the Office for National Statistics [ONS] show that the number of overseas nationals arriving in Britain, up to the end of the last fiscal year (March 2015), hit a record high of 330,000. Referring to the ONS figures, Sabharwal said: "Out of the 330,000 immigrants arriving in the UK, just 13,000 held long-term, skilled foreign worker visas that permitted them to remain in the country for up to five years."
Based on these numbers, Sabharwal says that tightening tier 2 visa rules will have no 'meaningful impact' on the UK government's goal of reducing immigration levels below 100,000.
"Clients unable to source local people to complete projects will send their jobs abroad. The UK government needs to address the current skill shortages by training more people in engineering, mathematics and science to make them employable. Let's come up with a strategy to tackle the root cause of shortages," Sabharwal said.
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