Contractors are challenging the government's decision to give Indian software firms a key role in advising the Home Office on IT work permit policy.
The Professional Contractors Group said the move by Home Office to appoint the India Business Group to the Work Permit UK's IT sector panel, which advises the government on skills shortages in the UK, would have adverse consequences for the UK economy.
The India Business Group, a trade body supported by the Indian High Commission, represents large Indian IT services companies.
News of the group's appointment comes at a sensitive time for contractors, who are facing record levels of unemployment at a time when significant number of work permits are being awarded to overseas IT contractors.
The IBG's appointment will bring balance to the panel by giving companies that use work permits a stronger voice in its decision making, say government officials.
But the move has come under fire from many of the other IT bodies represented by the panel, which includes the British Computer Society, the Association of Technology Staffing Companies, and trade union Amicus.
Panel members said they were concerned over the conflict of interest in having Indian firms represented on a group that should act to safeguard the economic interests of the UK.
The PCG said the was appointment "inadvisable" for the government. The panel should represent UK economic interests, not the interests of Indian software and service companies.
Peter Skyte, secretary general of Amicus, said that he would be raising the appointment with government ministers.
Amicus was most surprised by the move, given the wide opposition to it from existing panel members representing a wide range of IT interests, he said.
The appointment follows lobbying by Indian software and services companies, who have expressed concerns over the backlash against work permits in the UK and the USA.
A delegation from the Indian software and services organisation, Nasscom met with DTI and Home Office officials in early July to discuss plans for an independent review of the work permit system.
The India Business Group has recently held meetings with officials from Work Permit UK and the DTI.