The UK-India trade deal’s exemption from national insurance creates a competitive cost advantage for Indian IT firms
India’s tech giants just got a powerful leg up in the UK. As part of the newly signed free trade deal, India’s most comprehensive to date, Indian IT professionals temporarily posted in the UK will now be exempt from paying National Insurance for up to three years. Their employers, in turn, avoid the matching contribution. For companies like Tata Consultancy Services (TCS), Infosys, and Wipro, already operating at scale in the UK, this change lowers employment costs and sharpens their pricing without cutting corners on talent.
Mark Lewis, a highly respected IT outsourcing lawyer at Stephenson Harwood, confirmed what many suspected, the rule was designed specifically to benefit Indian IT and business process providers. The structure is clear: reduce entry and operating costs for select firms and let them compete harder and faster in a high-value market. That kind of precision in policy planning reflects where international trade is heading, toward more tailored bilateral wins.
For C-suite leaders in IT and procurement, this move should raise eyebrows for two reasons. First, it alters pricing dynamics. UK firms bidding for IT contracts will now be competing against Indian providers with structurally lower costs. Second, it could redefine how global talent is deployed across regions. These exemptions allow strategic fluidity in building overseas delivery teams without the typical payroll tax load. Applied right, that’s a strong lever. Ignore it, and you’re leaving efficiency on the table.
India’s Ministry of Commerce and Industry called this “a huge win.” It is. It transforms Indian service providers’ margins and gives them time to scale UK-facing operations before the exemption term ends. Leadership teams should track whether similar policies emerge in other trade corridors and how this innovation might shake up service models beyond IT.
The trade deal is projected to double bilateral trade between the UK and India by 2030
Right now, UK-India trade sits at $60 billion. This trade deal aims to double it by 2030. That’s momentum being built with intent.
For executives managing risk and growth, a few things stand out. This agreement simplifies market access, reduces duplication in social tax burdens, and makes it easier for companies on both sides to move resources into valuable projects. For India, this unleashes global expansion at scale, particularly through tech-enabled exports. For the UK, it unlocks access to a tech-savvy workforce and a rapidly growing demand-driven market without added friction.
Understanding trade volume is important, but speed matters more. Doubling trade in under a decade in today’s geopolitical climate takes more than good forecasting, it takes alignment. So this marks a new baseline for executives operating across borders. It hints at easing future barriers related to compliance, mobility, and services.
For business leaders, the call here is straightforward: revisit your UK-India strategy. If it’s already in motion, it just got cheaper and faster. If it’s not on your radar, it should be. Waiting for market certainty means getting priced out. Governments are reducing friction. That’s the signal. Companies that respond align with growth. Those that don’t, compete with cost disadvantages their competitors have already eliminated.
Indian IT firms are expanding into the UK public sector, tapping into a major growth market
The UK public sector spends about £28 billion every year on IT. That’s a massive space that remains under-indexed when it comes to Indian IT providers. Until recently, Indian firms were strong in the UK private sector but hadn’t cracked into the public market in any meaningful way. That’s starting to change.
Companies like Tata Consultancy Services (TCS), Infosys, Wipro, and now Hexaware, are entering this space with clear intent. Amit Kapur, UK Country Head at TCS, captured the sentiment candidly by pointing to “potential, paucity and action” in the UK’s public sector. Good engagement is happening. That’s not soft optimism, it signals that agencies and departments are beginning to move beyond outdated concerns around outsourcing and data management.
Indian IT capabilities have scaled fast. The public sector’s past hesitation, driven by concerns over data sovereignty, job displacement, and risk, no longer align with current capacity and need. With increasing demand for digital modernization in government departments, barriers are being removed through clear incentives like cost savings, speed of delivery, and access to deep technical expertise.
C-suite leaders working in, or contracting with, UK public sector institutions should take serious note of this shift. Indian IT services are entering a space that has long been protected, and they are doing so with more than legacy brand strength, this time, they have alignment from both governments and the operational model to execute. Waiting for adoption to mature could mean missing the proactive phase where collaboration terms are most favorable.
Intra company transfers (ICTs) remain pivotal in Indian IT firms’ staffing strategies
The use of Intra Company Transfers (ICTs) has been a foundation of Indian IT firms’ UK strategy for decades. The visa route allows firms to bring in overseas employees, often at lower cost than hiring locally, without violating employment laws. Initially designed for senior or specialist staff within multinational firms, the system is now widely used for large-scale staff relocations.
Firms like TCS, Infosys, and Wipro have become the biggest users of ICTs. These mechanisms align neatly with global delivery models, they allow for cost control, skill alignment, and rapid ramp-up on UK contracts. With the new trade deal providing a three-year National Insurance exemption for these transfers, the structural labor cost advantage just widened.
Mark Lewis, a senior outsourcing lawyer at law firm Stephenson Harwood, confirmed that the exemption was tailored specifically to bolster Indian IT and business process firms. That kind of direct policy targeting doesn’t happen by accident, it signals intent to foster deeper economic integration through labor flexibility.
But this raises pressure on the domestic workforce in the UK. Local tech professionals see themselves priced out by lower-cost competitors. While the Indian firms’ approach is completely legal, it introduces a real trade-off between national employment goals and global service optimization.
For executives running strategic workforce planning in the UK, there’s a calculation to be made: optimize short-term delivery cost using ICT policies, or invest in long-term domestic workforce development. The new trade deal tilts incentives toward the first path. Business leaders need to ask whether that’s the right balance for their brand and their long-term competitiveness.
Smaller Indian IT firms are emerging alongside established giants
The conversation around Indian IT expansion in the UK often centers on enterprise-level players, TCS, Infosys, Wipro. But that lens is narrowing. Mid-size firms like Hexaware are accelerating their market push, especially into sectors previously dominated by domestic or US-based providers. The timing is deliberate and strategic.
This expansion comes as the UK’s tech demand increases across both private and public sectors. With the new trade agreement unlocking financial and regulatory efficiency, barriers that once protected incumbents are eroding. Smaller firms now compete on price, agility and niche capability, assets that carry weight with procurement teams focused on digital transformation speed and flexibility.
Hexaware, headquartered in Mumbai, publicly stated its intent to scale into the UK public sector. This reflects a read of the opportunity environment: changing buyer appetite, regulatory alignment, reduced social security costs for short-term secondments, and rising comfort with geographically distributed service delivery.
Decision-makers across industries should understand what this shift signals. A broader mix of IT service providers means more options, but also more noise. It also means large, previously dominant suppliers will need to move faster. Quality, delivery timelines, and technical fit, not brand reputation, will increasingly drive selection. Mid-tier entrants are not underdogs anymore. They’re moving in fast with leaner models and sharper value propositions.
UK stakeholders are concerned about job displacement
While the trade deal introduces clear financial and operational benefits, it also heightens domestic labor market concerns. UK-based IT professionals have long voiced frustration over being undercut by foreign workers brought in through ICTs or other legal-but-advantaged routes. That pressure just increased.
The combination of generous intra-company mobility and temporary National Insurance exemption gives firms that offshore talent an even more pronounced cost edge. It’s entirely legal, and in many ways logical from a business standpoint. But the perception, and in some cases, the real impact, is that local talent is being priced out of roles they are qualified to perform.
This concern isn’t new, but the updated agreement legitimizes and expands the scope of use. For local staff, this can erode confidence in employment stability, especially in high-demand fields like software development, data infrastructure, and cybersecurity. Many recruitment and policy analysts argue that without stronger safeguards or transparency measures, the talent pipeline from UK universities will begin to lose relevance in key digital sectors.
Executives need to consider this internal pressure when planning IT workforce strategy in the UK. Leaning too heavily on external mobility schemes may deliver efficiency but create long-term reputational risk or friction with industry and community stakeholders. Balanced hiring models, blending international expertise with strategic domestic investment, are likely to generate stronger brand resilience and regulatory alignment.
The UK government views the trade deal as a growth catalyst
The UK’s new trade agreement with India isn’t just about IT or professional services, it’s a multipurpose instrument aimed at driving growth across several key sectors. Jonathan Reynolds, the UK Secretary for Business and Trade, spoke clearly about the intended reach: from manufacturing in the North East to Scotland’s whisky distilleries, this deal is designed to deliver economic lift well beyond London-based finance and tech.
That kind of clarity from leadership matters. It tells global firms watching from the outside that the UK is prioritizing stable, growth-oriented external partnerships and that its government is ready to compete for global capital and talent. India, as one of the world’s fastest-growing economies, brings volume, velocity, and demand. Pairing the UK’s innovation and services economy with India’s scale and workforce can build durable bilateral capacity, not just short-term spikes in trade.
For C-suite executives, especially those in multinationals with operations in both countries, this deal sends a clear message: rules are shifting in a way that supports resource flow, regulatory alignment, and reduced friction in talent and service movement. These are structural advantages, not campaign claims. Access to a market that prioritizes ease-of-doing-business matters when you’re looking at decade-long planning cycles.
Leadership should also recognize that this isn’t a one-off. It’s part of a larger policy trend where resilient, bilateral trade deals are replacing slowed-down multilateral mechanisms. If India and the UK can demonstrate fast ROI from this agreement, expect a sequence of similar alignments with other economies. Businesses that internalize this shift early, adjusting supply chains, workforce models, or client delivery targets, are going to run leaner and faster while others stay stuck in legacy alignment.
Jonathan Reynolds summed it up simply: this deal will deliver billions annually for the UK and create wage growth across sectors. It offers predictability and a pathway forward in a time when global market dynamics remain unstable. That’s the kind of foundation executive teams should align with, clear, actionable, institutionally supported growth.
In conclusion
This trade agreement is a strategic shift with clear commercial implications. For Indian IT firms, it delivers a structural cost advantage that directly impacts how services are priced, staffed, and scaled in the UK. For British industries and government buyers, it opens the door to more competitive sourcing, faster timelines, lower costs, and a wider vendor pool.
But with that comes pressure. UK-based providers and local talent must reassess their positioning. Cost models will need adjusting. Talent strategies will need rethinking. And procurement leaders in the public sector must now consider Indian firms that weren’t on shortlists before.
Decision-makers should treat this as a reset point. It presents an opportunity to modernize vendor strategies, embrace more agile delivery models, and rethink how global talent is integrated without losing sight of domestic capability. The firms that move decisively, without waiting for broader market adoption, are going to lock in advantages while others are still adjusting.
This deal turns political intent into commercial opportunity. Now it’s on executive teams to use it, intentionally and at speed.
