The Public Accounts Committee has recently produced a report on the abuse of the system. They found that over 42,000 IT workers had been brought in up to September 2010, despite it being a tough period for UK workers looking for jobs. Chair of the Committee, Margaret Hodge MP, said that they were concerned, but hoping for an improved performance from the new immigration system.

“We are concerned at the lack of control of workers entering Britain through the intra-company transfer system. Most workers enter through this route and, for instance, tens of thousands of IT workers have been brought in through intra-company transfers at a time when UK residents with IT skills are struggling to find work.”

With IT contractors now experiencing from a rise in demand thanks to the planned reduction in immigration as well as an increase in spending in the market, there are a number of lucrative growing sectors; Cloud Computing being one. Subbu Iyer, a senior director at HP, believes that there are huge security concerns relation to cloud computing, which could lead to a rise in demand for highly skilled IT contractors.

Mr Iyer said; “There are two specific areas in which security is playing a big role in the new economy in both cloud and mobile computing. There are a lot of applications being purpose-built for mobile phones – how do you ensure that those are secure?”

The changes in the ICTs rules and opening such as these, through an uptake in cloud computing, means there could be a positive year ahead for UK IT contractors.

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The rules mean that highly skilled workers will be allowed to stay for up to five years as long as their salary exceeds £40,000, but employees earning less than £40,000 are prevented from working in the UK for more than 12 months.

Groups such as the PCG have been involved in campaigning against the level of the caps, in order to protect UK freelancers from being undercut by low paid workers from outside the EU. The REC have also shown concern, with Jeffs Brooks of REC Technology saying;

“The immigration system has to be flexible to the needs of business, including the ability to bring senior internal people across from other countries in order to lead projects and create more jobs. The exemption for ICTs is a sensible step in this regard, which the REC supports.”

“However, if the exemption is not properly policed and implemented there is the potential for abuse, particularly in the IT sector. The minimum salary of £40,000 must be rigorously enforced by the UK Borders Agency, to ensure companies do not use allowances and benefits to create a falsified salary that allows them to bring in an overseas worker to do a job for less money.”

He said that with the strong base of skilled IT contractors in the UK, as shown in recent figures, the government must ensure that workers are not disadvantaged by the ICT system; especially if they want to support UK job creation.

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The new rules will come in from 1^st April 2011, and will mean that employees earning less than £40,000 are prevented from working in the UK for more than 12 months. This is a positive announcement for UK workers; particularly IT Contractors who are already in high demand thanks to an increase in worldwide IT spending.

The PCG had been campaigning against the abuse of these transfers in support of the UKs freelance workers, who had previously been undermined by low paid workers from outside the EU. Simon McVicker, Head of Public Affairs at PCG, commented on the announcement, calling it “a huge step forward” in their campaign to regulate ICTs.

“We expected this major reform but are delighted that our recommendations to tackle ICT abuse through wage capping have been taken on board by the Government. The consensus is that from here onwards the rules are unlikely to get more liberal.”

“PCG feel this will ensure talented UK based workers are no longer side-stepped for UK jobs and bring regulation around ICTs in line with other working visas.”

He said that this ruling will help increase opportunities for skilled contractors and other workers in the UK, which will help fight the rising unemployment.

He ended by saying, “In future we hope that ICTs will be incorporated into the immigration cap which controls influx of workers depending on skills shortages in that sector, the only way to ensure that the country is at its optimum productivity.”

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The Association of Professional Staffing Companies were pleased to see the rules “tightened up” but were wary over the possible outcome for UK contractors. They said, “Whether the £40,000 minimum salary will reduce the number of intra-company transfers in the IT sector is debatable.  About 80% of non-EU IT workers come to the UK on intra-company transfers. These changes won’t significantly reduce that influx.”

They also believe that the changes will make little difference as, “The vast majority of foreign workers arriving in the UK are EU nationals who won’t be affected by the cap.”

Philip Trott, head of immigration department at Bates, Wells & Braithwaite, also believes that the changes to the cap will “result in lack of flexibility for business and possibly a lack of economic benefit”. He claimed that the implementation of a new cap is simply a vote-gaining exercise, and that “It will affect businesses because they won’t be able to hire people they want.”

The number of non-EU workers entering Britain on intra-company transfers has increased to over 8000 between July and September this year, according to official figures. Groups such as the REC and PCG have supported the improvement of the ICT permits, but some experts still believe that the system will still allow many low skilled non-EU workers will come in; taking jobs that could otherwise be filled by UK contractors.

The PCG acknowledges that the permits can be a useful tool for companies to have access to but they also believe that some firms are abusing the system in order to pay below the market rate.

They are concerned that lax rules and monitoring on this type of work permit lead to abuse of the rules surrounding Intra Company Transfers. The financial services institutions such as banks are the ones most commonly abusing the rules according to the PCG.

The PCG want to encourage contractors and freelancers to challenge parliamentary candidates on the issue ahead of the general election, to assess their party’s stance.

BBC Radio 5Live was told people are brought to the UK to work on government IT projects run by BT and Capgemini. Both firms say they are operating within the law. Intra-company transfer visas (ICT) mean an overseas employee can come to work for their company in the UK if they have six months’ experience, are paid an appropriate salary and do not take the job of a permanent UK worker. The government said it was tightening the rules on such visas. About 50,000 ICT visas are issued every year and two thirds of them go to employees in IT and telecommunications. About 70% are given to Indian nationals.

British IT worker Anil Verma has been out of work for two years and said;

“A lot of the IT contractors – they’re very very bitter about it. The government’s issued too many intra-company transfer visas and a lot of these guys have come over from India and flooded the IT industry. There are not enough jobs to go round.”

A contractor whose contract was not renewed by Capgemini believed talented Britons were gradually being replaced by Indian workers brought over on ICTs and he, like other IT contractors, feels that they are being undercut by cheaper overseas labour.

The UK Border Agency said there were strict rules on what ICT visa workers should be paid and any allegations of abuse would be investigated. The rules regarding ICTs will be tightened next year but it is not enough according to the Professional Contractors Group (PCG) and Association of Professional Staffing Companies (APSCo) who both believe the rules need to be tightened much more.

They were however disappointed with findings from the Migration Advisory Committee’s (MAC) Report on the abuse of the Work Permit system. The committee were tasked to advise ministers on immigration policies. Instead of tightening the rules to limit the use of ICT permits in the recession, the MAC called for stronger enforcement of the current rules. However the Government decided to go one step further.

Intra Company Tranfers (ICTs) were designed to allow movement of specialist staff between global offices of multinational companies without the need to go through the lengthy immigration process. It was reported that companies were exploited this loophole and contractors, particularly in the IT sector were being replaced. Though the MAC failed to recommend a significant tightening of the ICT rules, the body did express concern at abuses. Mr Brazier finally commented, “These additional changes, though welcome, simply do not go far enough. It is certainly true that the Government needs to take a harder line on enforcement, and we strongly urge they do so, but we wanted to see the MAC come up with more specific measures to protect the UK’s freelance workforce. Freelancers are key to the UK’s future economic recovery, and we will continue to campaign hard for more stringent ICT rules.”