The Hindu Business Line : New UK visa norm may hit IT sector’s ‘body shopping’ model

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New UK visa norm may hit IT sector’s ‘body shopping’ model

Students with good grades and workers with skill sets likely to gain

As ‘body shopping’ involves providing manpower resources to local markets, the UK Government feels the practice hampers job creation for natives.

Adith Charlie
Divya Trivedi

Mumbai, Dec 16 The recent move by UK Visas to introduce a point-based system for visa applicants will impact Indian IT companies with significant dependence on the ‘body shopping’ business model. The new system is also likely to disfavour applications from unskilled workers and students with average grades, IT and education industry insiders feel.

As ‘body shopping’ involves providing manpower resources to local markets, the UK Government feels the practice hampers job creation for natives, according to Mr Hanuman Tripathi, Managing Director, Infrasoft Technologies.

The UK Government has done away with the 70-80 criteria under which potential immigrants were able to obtain a UK visa. Under the new system, applicants have to fall under one of the five categories, namely, highly skilled individuals, skilled workers with a job offer to fill gaps in the UK labour force, low-skilled workers to fill specific temporary labour shortages, students and people going to the UK for primarily non-economic objectives.

Reduced flexibility

The reduction in the number of eligibility criteria will inherently limit the flexibility currently available to IT companies sending people for third-party onsite work.

‘Body shops’ operate either offshore or onshore and respond to client’s demands with less turnaround time by supplying people to work directly for the project management team.

All IT companies are in the business of body shopping, but in various proportions. Industry watchers estimate that 70 per cent of onsite revenues of large IT companies come from body shopping. Though this percentage has been dropping from what it used to be in the early days of outsourcing, many companies cover up their body export activity as projects or services.

Mr Nikhil Morsawala, Director, Core Projects & Technologies, believes the move will not hinder companies sending small teams for short-duration onsite IT projects, as they return to India on completion of the projects.

While revenues from the US have been flat or declining for most IT companies, the UK and Europe component of revenues has been rising steadily over the years, feel analysts. The points system is also beneficial for students with robust educational track record and for candidates with skill sets that help fill gaps in the local labour market.

It offers opportunities in hospitality and science-based vocations. However, the move will block workers whose skills are not required by the English economy, explained Mr Shiv Duggal, Chairman, Institute of Clinical Research (India).

For potential entrants into the UK on work-related purpose, the saving grace is the UK Government's recognition of the value that these individuals bring to the economy.

Migrants contributed around ?6 billion to the UK's output growth in 2006 alone and have become a very important growth engine for the UK economy, according to Mr Liam Byrne MP, Minister for Nationality, Citizenship and Immigration.

While I-flex and Mastek declined to comment on the implications the new system could have for them, repeated attempts to elicit responses from Tech Mahindra and Omnitech Infosolutions proved futile. Officials from TCS and Kale Consultants were not available for comment.

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UK introducing new point-based visa system

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