Strict UK IT visa laws boost offshore outsourcing

The massive rise in European firms outsourcing IT and call centres offshore to India will only increase unless governments relax visa and work permit restrictions for Indian IT professionals, according to India's Prime Minister Atal Behari Vajpayee.

Vajpayee, who made the top ten in silcon.com's Agenda Setters 2003 poll earlier this year, said in newspaper reports that visa restrictions stop the free movement of affordable and qualified workers.

"The demographic profile of Europe and America necessarily means that these countries will need the induction of a younger work force from outside in the coming decades," he said at an EU business summit meeting in Delhi at the weekend. "If there is a more liberal regime of free movement of businessmen and professionals between India and Europe, this demand can be met within your countries.

But Vajpayee said the absence of a liberal employment regime only makes more offshore outsourcing inevitable.

"If people cannot go to where the business is, business will eventually come to where the people are," he said.

Vajpayee also said union concerns about jobs being 'lost' overseas were unfounded and that the cost savings and productivity gains as a result of firms moving operations offshore benefit western countries the most.

"The emotive arguments about the migration of jobs to countries such as India have missed two basic points," he said. "The first is that outsourcing is increasing the competitiveness and global reach of European and American companies. The resultant boost to the balance sheets and increased dividend payouts are very much in these countries."

The trend for offshore outsourcing has continued unabated recently with firms such as Lloyds TSB, BT and Prudential all moving some operations to India. Analyst firm Gartner estimates that a quarter of all tech jobs will be based in low-cost overseas countries such as India by 2008.