UK proposes increasing outsourced IT workers' minimum salaries
What's the story
UK's Migration Advisory Council (MAC) proposed that the minimum salary of IT professionals entering the UK on Tier-2 Intra Company Transfers (ICTs) be increased to £41,500. 90% of workers entering UK on ICTs are Indians. MAC's recommendations could lead to a £1,200 increase in the annual cost of outsourcing an employee, hitting Indian IT outsourcing firms like Wipro, Tata Consultancy Services and Infosys.
Tier-2 Visas
Tier-2 visas and their impact on Indian IT
Tier-2 visas are granted to skilled foreign nationals, enabling UK employers to sponsor them for working in the UK. Indian IT companies transfer employees to their offices in the UK, using Tier-2 Intra-Company Transfers which is also under the Tier-2 framework. Accounting to 18% or ~$19 billion of its total export revenue, UK is the second biggest market for the Indian IT sector.
Introduction
UK's crackdown on skilled foreign workers
During his first term as UK's PM, David Cameron resolved to bring down the net migration level down to 1,00,000 by 2015. Measures to check immigration would help improve employment opportunities for British nationals while employers, especially from the tech sector, would face barriers in employing skilled foreign workers. In 2014, skilled foreign workers accounted for 52,478 of the total migrants entering UK.
Aug 2015
Migration Advisory Committee to review Tier-2 system
British PM David Cameron and Home Minister Theresa May commissioned the Migration Advisory Committee ( MAC), an economists' group, to assess the Tier-2 framework in the light of the rising migrant population. Headed by Sir David Metcalfe, MAC needed to balance economic feasibility with the demand for reduced levels of migration. Historically, the MAC's proposals are usually accepted and incorporated by the British government.
Data
Foreign skilled workers drive record net migration level
UK's Office for National Statistics reported that the net migration in UK hit a 10 year high in 2015, shooting to 3,30,000 mainly due to an influx of foreign workers.
19 Jan 2016
Migration Advisory Committee publishes report, employers protest
MAC's recommendations to reduce migration through Tier-2 visas included increasing the overall financial costs of sponsoring Tier-2 workers. This would be done by increasing the minimum salaries of Tier-2 workers to £ 30,000 and imposing a £1,000 immigration skills charge to cover the cost of training local workers. While UK's Home Ministry welcomed the proposals, employers protested that the measures would hold businesses back.
Quote
Deloitte partner Julia MCKluskey on the MAC report
Deloitte partner, Julia McKluskey, said that "The burden of all of MAC's recommendations could just tip the scales for many companies, severely damaging their international reputations."