India’s Information Technology industry especially the ITeS segment is in turmoil due to a number of factors – Margins, changing technology, changing market and labour regulations across the world and a few others. This turmoil is telling on the job security of IT professionals across the country layoffs are becoming common. Karnataka employs a significant number of IT professionals and has to deal with the fall out. The techie’s themselves are feeling the bite of the employment frost and woken up to the fact that there is strength in numbers and are organizing themselves to fight their cause more effectively. Team 101Reporters examined this phenomenon for Karnataka Today and filed this report.
When India’s $160 billion Information Technology industry laid off 56,000 employees by end of last year and hiring rates fell down, experts predicted that this might just be a start to the disruption brought about to the traditional roles by digitisation and automation of processes in the industry.
Amid rising insecurity among IT and ITeS (IT-enabled Services) workers in the face of layoffs, the industry in Karnataka witnessed coming together of workers to form the Karnataka IT/ITeS Trade Union (KITU) to advocate and safeguard their rights. KITU believes that IT employees could hope to have any say in the employment policies of IT firms only by organizing. The union will also offer legal support to those laid off.
Suhail Siddiqui, 31, was a database administrator at Tech Mahindra, an IT outsourcing and consulting group, for the last four years, until he was asked to leave last April. “I had to put in my papers,” he said. Tech Mahindra reportedly laid off 1,000 employees in May 2017.
Siddiqui was one among the hundreds of other IT employees in Bengaluru who got together on August 20 to form KITU. He believes joining the Union will help him get compensation and find a new job. Such moves mark the beginning of unionization in the sector, which employs 3.9 million people, and has become a mainstay of India’s economy.
Thousands of IT engineers have lost their jobs in the last one year. Major IT companies like Tech Mahindra, Wipro, Cognizant, Infosys and Capgemini have downsized staff. Wipro is said to have laid off nearly 500 employees. These are numbers reported in the media but the companies declined to give exact figures.
VJK Nair, a Communist ideologue belonging to the Centre of Indian Trade Unions (CITU), also the president of KITU, cites bad service conditions and unregulated market as the source of the problem. “We are fighting against illegal practices enforced by some of the IT managements. KITU has about 1,000 members registered so far and we are demanding that democratic and constitutional rights be enforced. IT companies do not have proper retrenchment policies. We cannot simply resign when they ask us to. There has to be an organised way.”
It is mainly because of the industry’s “under-preparedness” in adapting to new technologies that the IT sector in India may witness job cuts at between 175,000 and 200,000 a year for the next three years, executive-search firm Head Hunters (India) had estimated in May 2017. Their figures were based on a report released by global advisory firm McKinsey & Company, which said nearly half the workforce in IT services firms could be made redundant over the next three-four years.
In June 2017, the National Association of Software and Services Companies (Nasscom) forecast growth of the Indian software-services industry would slow down on account of both technological change and regulatory uncertainties in key international markets, including tightening immigration rules in the US and Brexit. But, members of the Union believe it is not just new technology that is responsible for jobs lost. They say managements are trying to increase their margins by hiring freshers at lower costs, while the bulk of those being laid off are between 8 and 18 years of experience.
Dhiman Sau of KITU also feels layoffs are primarily intended to cut costs. Nasscom, however, claimed “workforce realignment” in IT services linked to performance appraisal processes is a regular feature. “Skilling and workforce realignment are essential to remain competitive in international markets. It needs to be appreciated that such workforce realignment is a normal part of the internal process of companies based on their operational imperatives,” Nasscom said in a statement on May 12 last year.
Managements say Union redundant
According to former Infosys CFO V Balakrishnan, a five percent layoff of non-performers was usual every year. “Other than that I don’t see any big job loss happening in the industry,” he said. Mohandas Pai, another former Infosys CFO, denied there were large-scale layoffs in the IT industry. “Some people are trying to create a scare by forming unions even without much support,” he said.
Balakrishnan said unions have never succeeded in the IT industry. Past efforts have fallen flat mainly because of the high employee turnover rate. Unions cite other reasons for low union penetration other than the attrition rate.
Fear of losing jobs or not getting another one prevents many employees from joining a union or even challenging layoffs, when they have the legal right to do so. Some of their legal challenges have resulted in initiation of conciliation meetings between sacked employees and managements of IT companies, claims Chennai-based Forum for Information Technology Employees (FITE).
KITU chief Nair says the workers do not fear the management when they think of joining the Union, but are concerned if the Union will be able to advocate their concerns. “We haven’t reached that stage where we can sit and negotiate with the management and it will take time,” he says. The government should intervene with some sort of regulation on the illegal practices followed by IT companies, so that workers are protected, Nair adds.
Government seeks time to regulate
While maintaining that the government can’t take sides, Karnataka IT-BT and tourism minister, Priyank Kharge, said, “IT layoffs are a cause for concern. We’re looking at how we can help both employees and employers.”
“It’s the job of the government to create employment and also ensure future investments by providing a conducive environment to companies. I have a very difficult job to do, so I am trying my best to see how I can bridge the gap,” he said. Jeetendra Singh, Officer on Special Duty (OSD), department of IT, BT and ST, Karnataka, believes bringing regulations to secure IT workers’ rights cannot be achieved in a short span. He suggests the workers’ unions should get registered and utilise the complaint mechanism in place until deliberations are held to regulate the sector. “They (IT and ITeS unions) should approach the labour ministry since their issue is related to labour,” he added.
Meanwhile, Karnataka labour minister Santosh Lad has expressed support, saying IT employees can raise their concerns with his department and he will take suitable action if required.
McKinsey said the bigger challenge for the industry would be to retrain 50-60% of the workforce whose jobs are vulnerable due to significant shifts in technology. Karthik Shekhar, general secretary of Unites Professionals, an attempt to unite IT & ITeS professionals in India, said trade unions should encourage their members to adapt to changes in the industry and reskill themselves to meet evolving job demands.
With inputs from Kavita Patil, a freelance journalist from Bengaluru.