Double Contribution Convention With UK To Boost IT Sector

The United States, European Union, South Korea, etc., are among the others with whom the UK already has the DCC mechanism.

Under the DCC, which India has termed an “unprecedented achievement”, an exemption has been secured for Indian workers — who are temporarily placed in the UK and their employers — from paying social security contributions in the UK for a period of three years. A government statement said, “This will make Indian service providers significantly more competitive in the UK.”

For the year 2025-26, the national insurance payable by employers in the UK has been fixed at 15 per cent, and the yearly threshold at which employers start paying it is £ 5,004. For 2024-25, the threshold for employers was £ 9,096. The monthly “primary threshold” when employees start paying national insurance continues to be £ 1,048.

Following the DCC agreement between India and the UK, Indian employers can enjoy considerable cost savings on employee-related expenses. It will also provide them with the opportunity to deploy the money saved on wage bills for other important purposes such as infrastructure development, marketing etc. For Indian workers in the UK, the DCC will mean they will have more money in their hands to spend as they deem fit.   

For the year ending December 2024, the UK had said it had granted 3,69,419 work visas in total, in which the numbers from India stood at 81,463, which translates to 22 per cent of the total number of work visas granted by the UK.

A CII-Grant Thornton report, titled India meets Britain Tracker 2024, identified 971 Indian-owned companies operating in the UK, up from 954 in 2023. The combined revenues of these companies stood at £ 68.09 billion (£ 50.5 billion in 2023). The report said that these 971 companies employed 1,18,430 people (1,05,931 in 2023) and paid £ 1.17 billion in corporation tax, compared to £ 944 million in 2023.

The CII-Grant Thornton study listed companies like Tata Motors’ Jaguar Land Rover Automotive plc, Tata Steel Europe, Firstsource Solutions UK (part of RPSG Group), HCL Technologies UK, Hinduja Global Solutions UK, Airtel Africa plc, Target Group (owned by Tech Mahindra), among others, as “major Indian employers in the UK”. However, the report did not specify the number of Indian passport holders working at these UK-based entities.

Implications For India’s IT Sector

So what does the DCC mean for the likes of TCS, Infosys, HCL Technologies, Wipro, etc.?

It comes as a breath of fresh air for the Indian IT sector, which has been under the cosh ever since the US tariffs issue became the biggest risk factor in the global business landscape. Almost 60 per cent of the nearly US$ 225 billion export revenue earned by India’s tech sector comes from the US.

In such stressful times, the DCC is just the sort of good news that was necessary to induce a spring in the step of Indian software companies, since the UK is by far the most significant market for them in Europe. For TCS, India’s biggest IT company, the UK was the second-biggest source of revenue for the company in 2024-25. 

Although other top guns of the Indian IT arena like Infosys, Wipro, HCL Technologies, and Tech Mahindra did not specify their UK revenues in the last financial year, all these entities have in the past underlined how important the UK is in their scheme of things.

It is likely that local IT majors would use the money that they would now not have to pay for social security contributions in the UK to establish a bigger presence in that country, and also, on marketing, brand building, R&D, and skill development activities. These companies would also be hopeful that their ability to play the price game better to attract new clients in the UK would be further enhanced through the DCC arrangement.

Software industry body Nasscom’s statement is reflective of this. 

In an X post, Nasscom said: “Securing the DCC within the India-UK FTA is a crucial step and a BIG win for the Indian IT industry and Nasscom. It will significantly boost opportunities, making the UK a more competitive and attractive destination for investments. This has been a long-standing demand of the Indian technology and services industry, and Nasscom has consistently advocated for its inclusion in bilateral negotiations.”

Concluding Thoughts

However, for all the excitement surrounding the DCC, it will be worthwhile to keep in mind that the current UK government could come under a lot of pressure from opposition parties in that country to ensure that this arrangement does not open the floodgates of immigration and, also, works in the best interests of the United Kingdom. There could also be calls for closer scrutiny of the work visa applications being made from India. 

It could, thus, be in the best interests of India’s industry bigwigs, including those from the IT sector, to proactively engage with key stakeholders in the UK, including local communities, to send across a strong message that Indian companies are more than willing to invest big money in the United Kingdom.

For, after all, more than what you say, it is what you do that matters.         

(The writer is a current affairs commentator. Views are personal)