Why is this allowed?

[Old Greg]

A large UK consultancy sets up an office in India (when I say India, please read any another country with a wildly different economy), hires natives there, pays them peanuts and places them in the UK with UK companies via intra-company transfer.

How is this in the best interests of the UK given that:

1. the rate UK companies are paying the consultancy are greater than or equal to the price of a British contract developer?

2. the UK jobs market is currently in poor health

3. non-British workers will frequently send remittances home, moving wealth out of the country

If I am correct in my hunch that this is not in the UK's best interests, why does the government allow it?

Don't understand number 1. Why would businesses do this if didn't make business sense? There is no single national interest. Large businesses, small businesses, rich people, people while have to work hard for a crap living, benefit recipients all have different interests.

So just look at whose interests the country is being run in and then ask why.

[Paddy]

I think that they lie and say they are, but they pretend its all about GDP and "growth"...
when in fact ministers take huge back handers from IT suppliers at the expense of UK employment is just silly.

Not so silly when you're in GVT running a party that gets funded by the upper 10% earners of the country though.

FTFY

[Peoplesoft bloke]

OK, fair enough. Sounds like you're even more cynical than I am.

Am I labouring under a misapprehension that the UK government acts (on balance) in the best interests of the nation?

Yes you are. They don't give a **** about us.

[BlasterBates]

If you stopped anyone coming in on short-term visas and force companies to use British IT contractors, you will find that IT costs for UK companies will go up, they will start to become uncompetitive, then save money elsewhere probably by outsourcing even more or shifting to somewhere like Ireland where they can bring in Indian IT workers.

In the end you won't save jobs, you need to compete by providing skills that someone somewhere can't do cheaper than you can.

There really is no alternative. George Bush did temporarily try to introduce steel tariffs to protect steel workers only to discover there would have been far more job losses in all the industries that use steel, so he repealed it.

You can go anywhere in the world and work on short term visas, it's a necessary prerequiste to do business in a globalised world.

[TimberWolf]

If you stopped anyone coming in on short-term visas and force companies to use British IT contractors, you will find that IT costs for UK companies will go up...

What happened to the laws of supply and demand? If demand is high, won't supply increase?

[BlasterBates]

What happened to the laws of supply and demand? If demand is high, won't supply increase?

The point is it will drive costs up, if was cheaper to use UK based contractors, they would. Of course short term visas aren't only used for IT there are all sorts of industries services using them.

You make business harder, business disappears, it's a simple rule. The government doesn't get a back-hander because it lets some foreign workers in, it lets them in because businesses lobby them to do it.

If the textile industry had successfully lobbied to stop Chinese imports you'd be paying £50 for a shirt instead getting one for a £5. In the end that's money out of everyone's pocket because your annual bill for textiles would 10 times what is unless you allow imports in. Translate that accross the board you can imagine what a completely protected economy means. Yeah you can pay yourself well but then you end up poor because everything is so expensive....and of course industry wouldn't be able to export anything because they couldn't import cheap enough parts. You'd end up far worse off if you have wholescale protection.

Of course when people argue protectionism, they mean their little niche, they want their market to be easier but they still want to pay £5 for their shirt. But that isn't realistic.

[darrenb]

What happened to the laws of supply and demand? If demand is high, won't supply increase?

Yes it will, because more people will be encouraged to study IT in the universities. With the current situation, the (real) supply is rapidly falling as students see the profession being one of 3rd world pay and status.

That falling supply is still being hidden, but with wages rising 20% each year in developing nations, there will be a rude awakening when all the immigrants return home to much better, less marginalised lives in their own cultures.