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."
This was first published in May 2003