International Trade in Services.pdf - DSpace at Khazar University

238 International Trade in Services
Figure 7.3. Indian IT Workers in the United Kingdom
25
20
workers, thousands
15
10
5
0
2000 2001 2002 2003 2004 2005 2006 2007
external transferee
intracompany transferee
Source: U.K. Border Agency, cited in Engman (2009).
collaborate with colleagues at foreign client sites (onsite). The Indian professionals
at the client site define project requirements, transfer knowledge and information,
coordinate and monitor work, implement new software and solutions, train client
staff, and provide rapid-reaction maintenance services. Their colleagues in India
and elsewhere provide technical and database design, software programming,
testing, documentation, and long-term maintenance services. It is a complex
process, and the level of sophistication required to manage and execute these projects
effectively has acted as an entry barrier to prospective competitors in many
developing countries.
The Indian IT service sector exports IT services worth several billion U.S. dollars
and annually applies for many thousands of business visas and work permits
in core client countries; for example, figure 7.3 illustrates the growing stock of
Indian IT workers based temporarily in the United Kingdom. According to the
National Association of Software and Services Companies, the United Kingdom
imports around one-fifth of Indian IT services (Nasscom 2009).
The process of applying for work permits in foreign markets is often a major
impediment. At the heart of the problem is the fact that Mode 4 trade is affected
more by immigration and labor market policies than by trade policy. And impediments
to Mode 4 trade, by extension, reduce Mode 1 trade, given their complementary
relationship. The regulatory restrictions and issues affecting Mode 4
trade in IT services can be divided into three distinctive groups, as follows:
• Quantitative restrictions and prohibitions include work permit quotas and economic
needs test requirements.