India’s IT services companies are set to get even more competitive as the UK’s trade deal with the country exempts Indian professionals from paying National Insurance.
With IT services companies such as Tata Consultancy Services (TCS), Infosys and Wipro already well embedded, smaller Indian players are also growing their UK operations.
Following a deal, described by the Indian government as its “most comprehensive free trade deal ever”, bilateral trade currently worth about $60bn is projected to double by 2030.
The Indian government described the exemption from National Insurance contributions for Indian staff in the UK as a “huge win” and “unprecedented achievement” that will “make Indian service providers significantly more competitive in the UK”.
A statement from India’s Ministry of Commerce and Industry said: “The exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions in the UK for a period of three years under the Double Contribution Convention will lead to significant financial gains for the Indian service providers and enhance their competitiveness in the UK market that would create new job opportunities, as well as benefit large number of Indians working in the UK.”
This comes at a time when Indian suppliers, already embedded in the UK’s private sector with deals with the UK’s biggest corporates, are targeting the relatively untouched public sector.
Speaking to Computer Weekly about TCS’s UK public sector plans last year, Amit Kapur, its UK country head, said there was “potential, paucity and action” with “good engagement”.
It’s not just Indian giants that see the UK public sector as an opportunity. Mumbai-headquartered Hexaware said IT suppliers that currently dominate the public sector are in its sights, with a changing appetite for tech in UK government departments and public sector bodies.
Large numbers of Indian IT professionals work in the UK on Intra Company Transfers (ICTs). These are visas used by businesses that have operations in the UK to bring staff from overseas. It was originally designed to enable large US companies to bring senior staff to the UK, but this has allegedly been abused by overseas companies to bring cheap labour in to enable them to offer cut-price services. UK workers, particularly in the IT sector, claim to be priced out of the market.
Mark Lewis, a specialist IT outsourcing lawyer at Stephenson Harwood, said: “The whole intention of exempting inter-company transferees from the likes of TCS from National Insurance for three years was specifically designed to benefit the Indian IT services companies or business process services companies very specifically.”
Indian IT providers have always been the biggest users of ICTs.
The UK public sector IT opportunity is huge, with about £28bn spent on IT a year, but Indian heritage suppliers have to date struggled to win a significant chunk of this. Since Indian IT service providers started winning significant business at the turn of the century, there have been fears over outsourcing public sector work to IT suppliers based in India. The perception was that confidential data would not be safe, and there were also concerns that jobs in the UK would be moved to India.
UK business and trade secretary Jonathan Reynolds said: “By striking a new trade deal with the fastest-growing economy in the world, we are delivering billions for the UK economy and wages every year, and unlocking growth in every corner of the country, from advanced manufacturing in the North East to whisky distilleries in Scotland.
“In times of global uncertainty, a pragmatic approach to global trade that provides businesses and consumers with stability is more important than ever,” he added.
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