India upset over loss of IT jobs in UK on new immigration rules

Kamal Nath, Indian trade minister, has expressed concerns over Britain’s new points-based immigration system, apprehending risks that would make it harder for India and other developing countries to export information technology systems to the UK.

He feared that the new regime could make it harder for software and other IT executives to travel back and forth between India and the UK, imperiling their ability to fulfill service contracts.

“We are not asking for more permanent immigration,” Mr Nath said. “We are talking about people coming in for a month or so to integrate software systems.” An Indian software company that could not send executives or technical experts into the UK for short periods would be unable to service warranties or sell new systems that would require on-the-spot maintenance in the future, he said.

Mr Nath said that New Delhi was still studying the new system, but that it risked becoming a “retrograde step”. Under the old immigration regime, there was special provision for the temporary movement of workers to fulfil commitments under international trade deals. Such liberalisation is one of India’s key demands in international trade talks, such as the bilateral deal it is negotiating with the European Union.

Liam Byrne, the UK immigration minister, said: “Our points system is a big change and we are determined to get it right. I am listening intensively to communities all over the country to help understand where in our economy we need skills from abroad.”

The UK Home Office would create a special immigration category for temporary workers, details of which it said it would release shortly.

India’s IT exports have been one of the startling success stories of its economic performance in the past two decades. India’s software and business processing exports are valued at about $40bn (€26bn, £20bn) a year. Total UK imports of computer and information services were £2.7bn ($5.5bn, €3.5bn) in 2006, the latest full year for which figures are available, out of total annual UK services imports of £95.4bn.

Mr Nath said the new restrictions did not square with the UK’s claims to be in favour of promoting free trade in services. “In the liberalisation of services, the temporary movement of people is an important thing.”

Data obtained by the Association of Technology Staffing Companies, which represents British IT professionals, showed that 38,450 work permits for IT jobs were issued to non-EU residents in the UK last year – more than double the total five years ago – of which 82 per cent went to Indians. Most of these were intra-company transfers of permanent employees recruited outside the EU, a phenomenon that Atsco refers to as “onshore offshoring”.