The Public Accounts Committee of the House of Commons on Tuesday expressed concern over immigration officials' alleged "lack of control" over Indian and other non-European Union workers entering Britain through the Inter-Company Transfer (ICT) route.
Many Indian IT companies use this route to transfer staff to offices in Britain.
Since this route is not subject to the annual cap on the number of non- EU migrants, tens of thousands of IT workers have migrated to Britain through this route.
Margaret Hodge, chairperson of the committee, said: "Most workers enter through this route and, for instance, tens of thousands of IT workers have been brought in through intra-company transfers at a time when UK residents with IT skills are struggling to find work".
Several Indian IT companies figure in the list of top 10 companies that use the ICT route to post employees in Britain.
According to the home office, Tata Consultancy Services ( TCS) tops the list, while others are Indian companies or those in the US or elsewhere with significant presence in India.
The list includes Congnizant Technology Solutions (which has operations in India), Wipro Technologies, Tech Mahindra, HCL Great Britain and the French company Steria, which has operations in India.
The committee said in its latest report that the UK Border Agency was "not doing enough to protect resident workers and ensure that migrant workers and sponsoring employers comply with immigration rules".
It also criticised the agency for not monitoring migrants' right to remain in the UK and ensuring that they left when their visas ran out.
The committee said in its report: "A lack of exit controls makes this more difficult. The agency estimates there may be 181,000 migrants still in the UK whose permission to remain has expired since December 2008".
Focusing on the ICT route, the committee noted that over half of all skilled workers entering the UK with a specific job offer use the Intra-Company Transfer route, where checks are limited, since it is not included in the immigration cap.
It said: "Some two-thirds of the migrants using this route work in IT, and are potentially displacing resident workers with IT skills...The Home Office has now set a minimum salary requirement for this route of £40,000 (and £24,000 for those in the UK for less than a year), to better protect the interests of resident workers".
It added: "However, this minimum salary includes living allowances and therefore does not accurately reflect salary levels".
In the circumstances, it added that some companies may use cheaper workers from outside the EU than UK resident workers.
Responding to the committee's criticism, immigration minister Damian Green said: "This report demonstrates why the immigration system needs radical reform. I want enforcement and compliance to be the cornerstone of our immigration system and we are making it more difficult for people to live in the UK illegally by taking action against employers that flout our rules".
He added: "Any employers found to be abusing our immigration system risk losing their licence to sponsor any migrant workers. This government has already introduced an annual limit on economic migrants, including a significant tightening of the ICT rules, and sweeping changes to the student visa system."