UK tech startups face hiring roadblock due to immigration policy

The UK’s immigration policy is hindering the growth of London’s tech hub

The UK’s immigration policy is hindering the growth of London’s tech hub

Technology startup companies are finding it increasingly difficult to hire employees from outside the UK due to the lengthy and complicated visa application process.

Computer Weekly spoke to several startups who are struggling to find talented employees in the UK and are finding it equally difficult to jump through the hoops of hiring talent from abroad.

The skills shortage

The technology startup sector believes that it is crucial to attract the best talent to the UK because the pool of skilled workers in Britain is very limited.

“There’s a lot of competition and there’s not enough good people. We need to be attracting the best and the brightest from around the world,” said Alastair Paterson, CEO of startup Digital Shadows.

Sponsoring migrant workers: What are the tiers?

The points-based system consists of five tiers:

  • Tier 1 - for highly skilled workers, such as scientists and entrepreneurs
  • Tier 2 - for skilled workers with a job offer, such as teachers and nurses
  • Tier 4 - for students
  • Tier 5 - for temporary workers, such as musicians coming to play in a concert, and participants in the youth mobility scheme.
  • Tier 3 is currently suspended.

In his experience, hiring really high calibre tech people is extremely difficult. 

"There’s a huge skills shortage in tech and startups really struggle because we can’t afford the wages that the corporates can pay their employees," Paterson said. "There’s a shortage in an already limited pool - even in London - that everyone’s competing for.”

Ali Ahmed, CEO of startup Lutebox agrees. He said that it is crucial immigration policies for entrepreneurs should be as easy as possible to allow startups to access resources. 

While his Entrepeneur Visa was turned around in two weeks and was critical to growing the company, his co-founder is unable to join him in the UK. As a result, the co-founders make business decisions over the phone.

Andrew Humphries, dealmaker, global entrepreneur programme for the UKTI and co-founder of AdTech startup accelerator The Bakery, claims skills in areas like computer science are being hampered by the education system.

“There is a problem in the way we recognise qualifications that exist for young people in the tech space," Humphries said. "The graduates that we have here and in the EU, unfortunately, are just not as good as those from universities in countries like the US and India.” 

Humphries believes the skills shortage can be addressed in three ways: Through educating young people at school and university level in computer science skills; offering retraining facilities for those workers whose skills are out of date; and by having the correct “open door” policy to allow workers from abroad to fill the skills gap.

Complicated immigration rules

A closed door

Computer Weekly spoke to Oojal Jhutti, CEO of the startup iWazat, who has struggled to hire developers due to the UK skills shortage and also faced difficulties hiring from abroad. He wanted to hire an Indian student who had just finished his M.Eng course at Birmingham University at the end of last year. Jhutti wanted him to help build up the company and began the process of becoming a sponsor for his Tier 2 visa application, after failing to succeed with the entrepreneur visa and the Tier 1 visa.

“We wanted to employ him directly, but we weren’t mature enough to sponsor him as a company as our turnover was so low,” says Jhutti. “As a startup you don’t tick all the right boxes compared to corporates.”

The student was sent back to Indian within a few weeks of finishing his studies – a time period that Jhutti doesn’t believe is enough to apply for a visa.

“These guys are really smart – the top of their class. Why wouldn’t you want to keep them in the country after spending time educating them?” he says. Since returning to India, the former student has not been able to find an appropriate job, according to Jhutti.

Jhutti wants the government to change its immigration policy in regards to students. While he has been able to expand his business thanks to the Enterprise Investment Scheme (EIS), Jhutti admits he cannot afford to spend a significant amount of his investment competing with corporates on salaries.

Technology startups are calling out for the government to improve the visa application process. Paterson said the process needs to be made easier to “make London the international tech hub that it is trying to be.”

The UK has an “open door” policy to any European Economic Area (EEA) or Swiss national citizen who wishes to work in Britain. But countries from outside the EU face a much more challenging process to apply for work in the UK.

According to Humphries, the UK Border Agency faces a difficult job deciding who from overseas should stay and who should not.

“We need to make sure if somebody is coming to the UK to take a job available in a UK company, that there isn’t somebody here in the UK that can do that role,” he said.

The Border Agency website provides information on how to legally employ migrant workers.

For companies wishing to hire from abroad, the Border Agency website states: “Before you apply for a licence, you should check whether you are eligible to be a sponsor and ensure that you have the right human resource (HR) systems in place to comply with your sponsorship duties.”

But unlike large corporations, startups may not have a formal HR department or a fully-fledged HR system.

Victoria Sharkey, managing partner at the immigration law firm MediVisas, said that there are many hoops that companies have to jump through to be able to get a sponsorship licence. The startup has to collect and submit original documentation and if there is a problem and it is rejected, the employer has to start the process again.

Immigration struggles

Computer Weekly also spoke to a student from New York, who has struggled with UK’s immigration policies.

After her studies at LSE, the student, who wishes to remain anonymous, was offered a job by a high profile startup accelerator in London. She too found that once her student visa expired, she had no time to submit a change in visa and had to return to the US. She travelled back to the UK for short periods of time on her six-month work visa.

The startup accelerator sponsored her for a Tier 2 visa and it began the process of hire

Unfortunately during the travelling back and forth, she was found to be carrying a can of pepper spray (legal in the US, illegal in the UK) in her handbag at the airport. She was arrested and then cautioned in the UK, but told she would not need to put this on her visa application.

In April 2013, she received a letter from the UK embassy saying that her visa was denied and she was banned from visiting the UK for 10 years as punishment for provided false information. She is currently appealing and trying to get the ban lifted.

“This all takes time, even when no mistakes are made, and of course startups are subject to closer scrutiny,” Sharkey said. “We have seen companies apply for sponsor licences and wait for four, five, even six months to get the approval, and often by the time it comes the applicant has either had to leave the UK or has got fed up of waiting and has taken a different job.”

Eric van der Kleij, head of the L39 fintech accelerator, previously CEO of Tech City, believes the government should invest money into creating experts that can go and teach young companies how to hire people from outside the UK.

“You have to have a reasonably robust system so it’s not abused,” said van der Kleij. “That means it has to be of some substance that a young company is able to grip it and do it, yet it’s the same system that a major corporation with massive resources can use – it’s a bit unfair.

“You can’t change the robustness of the system or it will be abused, but you should spend the money on helping younger companies use the system.”




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