Yes indeed. I would report a company using illegal workers because you have no idea what other illegal practices they are involved in. Perhaps if someone had reported the company using Chinese cockle pickers in Morecambe, perhaps 18 of them wouldn't have died on the beach that night.
Not to mention they are almost certainly being paid cash in hand and below NMW, which means the company and employees aren't paying their fair shar of taxes.
Furthermore, the more companies that are allowed to get away with this sort of thing means that there are more companies out there likely to be treating their legal employees like crap.
Marcus