There are many benefits in using foreign IT workers, including
lower wages and filling skills shortages in key areas, but there
are drawbacks you must bear in mind.
The use of foreign IT workers by UK companies to plug skills gaps
is currently a red-hot issue. Later this month, leading IT industry
groups will meet government officials to discuss reforms to the
work permit system.
The meeting will examine allegations that UK firms and offshore
Indian companies are using loopholes in the government's fast-track
visa scheme to recruit cut-rate Indian contractors while UK IT
professionals are struggling to find work.
This leaves IT chiefs with some hard decisions to make. Given the
shortage of skills in some areas of the IT profession in the UK, is
drafting in foreign IT workers a valid and cost-effective option?
Or could companies using foreign nationals find themselves in a
legal minefield, facing accusations they are undermining UK
workers?
The main reasons for using foreign contractors is to fill skills
gaps - particularly for server and web-based technologies - and the
relatively low cost of overseas workers.
Unemployment levels are standing at record levels in the IT
workforce at about 46,000 for IT staff and 30,000 for self-employed
contractors, so why are UK employers looking overseas?
At first glance, the rules for hiring foreign workers appear
strict. The posts must be advertised comprehensively in the UK and
if a foreign national is hired, they must be the best applicant,
with qualifications as stated in the job description. Critically,
the salary must also be the equivalent amount a UK employee would
be paid for the same post.
"You have to pay the UK going rate, you cannot pay a foreign
national £20,000 to do a £50,000 job," said Paul Ferguson, director
of law firm Ferguson Snell, which specialises in work permits for
non-UK employees.
But professions appearing on the Home Office's official shortage
list allow employers to waive these obligations. Jobs in these
industries do not need to be extensively advertised and work
permits can be issued quickly.
However, according to the Home Office, there is no official
shortage of IT skills. The latest figures from the Home Office put
the number of IT workers brought in under the fast-track
highly-skilled migrant programme at about 100 - clearly not a prime
avenue for acquiring foreign IT skills.
What is a prime avenue is inter-company transfers, which allow
companies to import foreign contractors from outsourcing and IT
service companies. Although the Home Office can give no official
figures, according to IT union Amicus MSF, there are nearly 50,000
foreign IT workers in the UK out of a total 900,000 in the IT
industry.
With inter-company transfers, a foreign company with a UK
subsidiary can bring in staff to work at that subsidiary on a
fast-track basis. But this does not apply if the company is merely
a recruitment agency. To qualify, said Ferguson, there must be a
question of the company offering goods and services beyond just the
employee, such as skills in implementing a system.
The employee must also be paid the same rate as their UK
counterparts which, as Peter Skyte, national secretary of the IT
Professionals Association, part of Amicus MSF, said, can be a grey
area. Checking whether foreign nationals working for their
employer's UK subsidiary are being paid at the UK equivalent rate
can be a time-consuming process and may not be a high priority for
some companies.
In such circumstances, even with the cost of accommodation and
flights, using foreign nationals under transfer from outsourcing
companies who accept lower wages than their UK equivalents can
reduce the cost of such skills by about 20%.
So should UK IT directors take advantage of this saving? It may
look tempting but there are clear risks - the most severe is being
on the wrong side of the law, which can be expensive.
The Home Office warned that flouting regulations can lead to a fine
of £5,000 for every illegal employee. IT organisations such as
Amicus, the British Computer Society and the Institute for the
Management of IT Systems are concerned the work permit scheme is
being abused by inter-company transfers and are calling for
vigilance by the Home Office.
The effect is to undermine the work permit process and undercut UK
pay and conditions, said Skyte. He believes employers who flout
work permit rules should be named and shamed.
"The fast-track inter-company work permit scheme is easy to
manipulate and appears to be substantially abused to get around
work permit regulations and import people paid below their UK
equivalents," he said.
However, the Home Office does appear to getting more vigilant on
this issue.
"Until now the system has been based on honour, and spot checks
[going into companies and asking particular individuals what work
they do and what they are paid] did not happen at all. They are
just starting," said Ferguson.
The most far-reaching consequence of relying on foreign contractors
is the impact on the UK economy. The danger is that to solve a
short-term problem during a recession, foreign labour creates a
vulnerable culture of dependency on non-UK skills.
What will happen, ask the critics, when foreign IT skills have
driven out domestic IT skills just in time for the UK to come out
of recession? The UK will then bang into another IT skills
shortage, only to find that foreign skills are flocking away to
even richer markets, such as Silicon Valley. In the meantime, IT
managers have costs to cut and skills gaps to plug.
Summary
- IT industry groups and unions accuse UK companies of using
loopholes in the work permit scheme, sparking an illegal influx of
overseas contractors
- Inter-company transfers from outsourcing companies are one way
around tight work permit rules
- Foreign IT workers can be 20% cheaper than their UK
counterparts and plug skills gaps. The manufacturing, science and
finance section of IT union Amicus estimates there are about 50,000
foreign IT workers in the UK
- Under work permit rules, a post should be advertised
comprehensively in the UK (except if it is on the Home
Office-approved shortage list of professions), and any foreign
national must be the best applicant for the job and receive the
equivalent salary a UK employee would be paid for the same
post
- UK unemployment levels stand at a record 46,000 for IT staff
and 30,000 for self-employed contractors.