The Professional Contractors Group has found credible evidence
that firms are bending work permit regulations to undercut British
IT contractors' pay rates.
The government came under fire this week for failing to respond to
complaints of criminal breaches of UK immigration law for more than
two years after it was aware of the problems. IT industry groups
claim British employers and Indian outsourcing firms are bending
work permit regulations in a drive to push down IT development
costs.
The Professional Contractors Group, which represents self-employed
IT specialists, has been campaigning for almost two years against
what it claims are flagrant abuses of the government's fast-track
visa scheme, which gives overseas professionals the right to work
in the UK, provided they have skills that are genuinely in short
supply domestically.
Over the past 18 months, the contractors have filed a catalogue of
complaints against employers and Indian outsourcing companies to
the abuse team at Work Permit UK, which is responsible for issuing
the work permits. They have accused some of the UK's biggest firms
of using loopholes in the work permit system as an excuse to ditch
their British IT staff and replace them with lower-paid Indian
contractors.
"The majority of organisations currently using the work permit
scheme in IT are either abusing the system or using it in a manner
in which it was not originally intended," said Gurdial Rai, who
represents the PCG on the government's IT work permit panel.
Despite receiving hundreds of complaints of abuse, Work Permit
officials have yet to bring a prosecution in the IT sector.
The PCG began its campaign two years ago, collating a thick dossier
of complaints from contractors detailing misuse of the work permit
scheme. It blew the whistle on banks, insurance companies and IT
suppliers, accusing them of failing to pay Indian workers the
market rates, bringing in overseas contractors with skills that
were readily available in the UK, and using cheaper Indian staff to
replace British contract and permanent staff.
Six months later, no prosecutions had ensued. "Although some of the
cases were still under investigation, [Work Permit UK] felt there
was not sufficient evidence for the rest of them."
Rai and his colleagues, feeling they were going nowhere quickly,
changed tack, replacing the scatter-gun approach with a focused
attempt to gather good quality evidence on abuses by single
firms.
Their first target was the financial services company GE Insurance,
which had brought over Indian contractors to work in the UK through
its outsourcing partner Patni Computer Systems, as part of its
plans to migrate support services for the group's Delphi-based
systems to India.
Staff at GE Insurance said the contractors sent to provide support
services in the UK, far from having the company-specific skills
required by the work permit scheme, were clueless when it came to
GE's IT systems and required extensive training.
For Rai, it was an open-and-shut case. "Not only did they not have
company-specific skills, they had no skills full stop."
But Work Permit UK disagreed. Within a few days it reported back
that everything was in order and neither Patni nor GE Insurance had
a case to answer.
The PCG took its evidence to Southampton law firm Bond Pearce,
which concluded that potentially the transfers involved up to four
criminal breaches of immigration law.
After further investigation Work Permit UK decided that the case
was "border-line" and dismissed the idea of a prosecution. But
officials promised that future complaints would be taken more
seriously, said Rai.
"We were considering a private prosecution, but we decided that the
most constructive way forward was to work with the government. I
told them that we would be willing to drop this case as long as any
subsequent case is investigated seriously."
The PCG turned to energy supplier Transco. Rai's team collected
statements from eight witnesses, who claimed that the firm was
hiring Indian contractors even though it had no difficulty
recruiting IT staff with the same skills in the UK.
By November 2002, it emerged that Transco was employing over 130
Indian contractors, with skills in Oracle, Unix, Windows NT and
Lotus, at its Solihull and Hinckley sites. The firm's motivation,
the PCG claimed, was simple: Indian staff were paid £18,000-£22,000
a year compared to the UK staff who earned £30,000-£40,000.
The PCG surveyed large recruitment agencies in the area, asking
whether these skills were in short supply. The results showed that
rather than facing shortages, each vacancy for these skills in the
region was attracting 30-100 suitably-qualified applicants.
Transco said this week it was necessary for overseas IT staff to
work on site during the lifecycle of managed projects to ensure
effective delivery. "As an FT top 20 company, we work with high
standards of corporate and social responsibility."
Some four months after the complaint, it is unclear what, if any,
action Work Permit UK is taking to investigate Transco and other
companies featured in complaints from the PCG.
Work Permit UK has introduced a new policy, which means it now
refuses to provide feedback to complainants. "We know abuse is
going on but we don't know whether we need to escalate our
complaints. It puts us in an impossible situation," said Rai.
The Home Office insisted this week that it was keen to prosecute
breaches of the work permit scheme, but it said it needed strong
evidence to take action.
A variety of investigations are on-going and some people have been
charged with offences related to fraudulent work permit
applications, but not in the IT sector, a spokeswoman said.
The issue is likely to come to a head next month when the British
Computer Society, E-skills UK, the Recruitment Employers
Confederation, trade union Amicus and other groups meet with Work
Permit UK to discuss PCG proposals to tighten up the system.
These groups share the PCG's concerns that the number of work
permits being issued is continuing at record levels, despite the UK
facing its highest unemployment levels in the IT sector for years,
with many British IT workers struggling to find work.
Meanwhile, with the National Audit Office already showing an
interest, the PCG says it will press for a full public enquiry.
GE Insurance in work permit probe
The financial services company GE Insurance came under the
spotlight of work permit investigators in 2001, following
complaints from the Professional Contractors Group that it was
replacing British contractors with lower-paid Indian workers in
breach of work permit regulations.
In late 2000, IT staff at GE Insurance were told that they would
be expected to train groups of Indian contractors sent over by GE's
Indian partner, Patni Computer Systems, in the Delphi and Oracle
skills they needed to develop software for GE's computer systems.
The contractors were brought-in by Patni under the government's
intercompany transfer visa scheme, which offers fast-track visas to
workers with company-specific skills that would be difficult to
find in the UK.
Former IT staff at one GE Insurance branch, however, said that
not only were Delphi and Oracle skills not company-specific, the
new contractors' technical skills in these areas were startlingly
lacking.
"They did not understand Delphi properly and they were making
fundamental mistakes in the programming language and the
development environment. They did not understand source control, so
they ended up overwriting each other's changes. Bugs fixed in one
release, would reappear in a subsequent release. It caused a lot of
grief and embarrassment to the IT operation," said one former
employee.
"Eventually they were pulled off systems work and were just kept
to do the most basic and technical database support work. And two
UK Delphi contractors were brought in to take over the workload,
because the company just could not afford any more cock-ups," he
said.
"There wasn't a formal memo saying these guys are dirt cheap,
but you didn't need company policy to tell you that they brought
them from the other side of the world because they were extremely
cost-effective compared to UK staff."
Another former member of staff said he found the whole
experience of dealing with the Indian contractors exasperating. "A
lot of my time was devoted to basically getting them up to speed
with the systems and the technology. A problem I could solve in
five minutes would take me five hours to explain. Had the [Indian
contractors] not come in, would we have hired UK contractors? I
would say, yes, the work available for UK contractors was
restricted by their presence."
The PGC put these and other allegations to lawyers, who advised
that they could amount to potential criminal breaches of
immigration law. But following an inquiry, Work Permit UK concluded
that the case was "border-line" and a prosecution could not be
assured of success.
GE Insurance said this week the contractors concerned were
expected to return to Indian shortly, and had a wider range of
skills beyond the Delphi systems they had spend their time writing
on.
"Ultimately the requirements for the visa were down to Patni to
arrange. It had to make sure that any processes it went through
were adequate and robust and we are confident that it is done
that."
Patni said it had received a visit from Work Permit UK, and was
given a clean bill of health.
The company denied that its contractors were lacking in skills
or needed training, saying that if there were any problems, it
would have been an isolated case. "If we had these sorts of
problems, GE would not continue to employ us."