Immigration cap won't hit foreign IT worker numbers

Salary levels will exempt techies from scheme to limit number of non-EU migrants

The government's planned cap on immigration is unlikely to affect the numbers of IT workers from outside the European Union taking up positions in the UK, according to industry groups.

The cap, announced by announced by Home Secretary Theresa May on Tuesday, will limit the number of non-EU staff who can come to the UK to work.

The proposed cap will not apply to skilled non-EU workers who enter the UK through intra-company transfers (ICTs) as long as they earn more than £40,000 a year if planning to stay more than 12 months. ICTs are the route most non-EU IT staff use to join the UK workforce - close to 10,000 such workers entered the country last year in that way.

According to Ameet Nivsarkar, VP for global trade development at Indian IT association Nasscom, most non-EU IT workers already earn close to the £40,000 threshold.

"We expect the impact to be marginal because most of the professionals that we use for IT are skilled professionals whose salary level is already high," he said.

"We did some research, and for the majority of them the salary was close to the £40,000 mark, just a shade below, so the effect [of increasing salaries to £40,000] will be marginal."

Consequently, for many UK businesses and IT services companies, a modest rise in the salaries of non-EU IT workers could provide a simple way of getting around the cap.

The government's cap on non-EU workers may lead to an increase in the cost of IT services
(Photo credit: Shutterstock)

And with the average IT project lasting at least 18 months, Carrie Hartnell, associate director of UK IT trade association Intellect, said bumping up the salaries of skilled non-EU ICT staff to £40,000 may be the easiest way for companies to ensure they have the skills they need.

"There is still a skills shortage in some areas of the IT industry and people will still need to bring over expertise on particular projects," she said.

"You may find that the cost of those individuals goes up to £40,000, so they can come in for two years or so. It may be that that is the easiest route for a lot of companies."

The burden of increasing salaries for non-EU ICT staff may not necessarily...

...lead to IT service providers and British companies employing UK staff instead, Intellect's Hartnell said, due to the shortage of certain tech skills in the UK.

"If [organisations] could find the skills in the UK they would use them," she told silicon.com, "because generally it is cheaper to use UK nationals because [organisations] can pay them a salary but they don't have to worry about allowances."

A survey of UK businesses by silicon.com last year found that one-third reported a shortage of IT skills. Skills identified as being in shortest supply were programming languages such as C, Java and Vb, along with web services, ERP and IT management.

Even without taking the IT skills shortage into account, Jean-Christophe Bodhuin, UK managing director for analysts Pierre Audoin Consultants, said the £40,000 annual salary threshold for ICTs lasting more than 12 months - along with the government's similar minimum limit of £24,000 for ICTs lasting less than a year - are not high enough to make it competitive to employ UK graduates rather than their offshore counterparts.

"Look at salary levels and you will see that £24,000 is roughly the salary that is the average offered to a graduate developer in the UK," he said.

"Companies will be able to choose between hiring a graduate developer in the UK or bringing an experienced developer from an offshore location to do a job.

"This looks like a political announcement with limited substance. A more interesting incentive would have been a tax relief for companies if they employed UK graduates."

A Home Office spokesman said the number of skilled non-EU workers coming to the UK under ICTs is unlikely to decrease significantly, noting that , the MAC report Limits on Migration, makes it clear that the number of skilled non-EU ICTs is likely remain the "broadly the same" after the cap is introduced.

The spokesman added that the MAC will review the cap and its exemptions annually and make recommendations to the government about how the cap is working and what, if anything, should be changed.

The cap is designed to reduce net migration to the UK from hundreds of thousands per year to tens of thousands, and is set to come into force from April 2011.

The annual limit on migrants coming to the UK under the skilled and highly skilled routes will be set at 21,700. Of those, 20,700 will be under the skilled route and 1,000 under a new "exceptional talent" route. The cap represents a reduction of about 23 per cent on last year's figures, when 28,000 non-EU migrants came to the UK to work by means other than an ICT.