September 14, 2017 7:08 pm JST

India's technology workers look to unions to stem job losses

Software engineers band together to seek more say on lay-offs and wages

KAVITA PATIL, Contributing writer

V.J.K. Nair speaks at the first meeting of the Karnataka State IT/ITeS Employees Union in Bangalore on Aug. 20. (Photo by 101Reporters.com)

BANGALORE -- Recent layoffs across India's $150 billion information technology industry have left software engineers feeling insecure and looking at ways to protect their jobs.

On Aug. 20, hundreds of IT employees in Bangalore got together to form the Karnataka State IT/ITeS Employees Union, or KITU. ITeS stands for information technology-enabled services.

The foundation of KITU is one of a number of developments that mark the beginning of unionization in the sector, which employs 3.9 million people and has become a mainstay of India's economy. KITU said that only by organizing could employees hope to have any say in the employment policies of IT companies. The union will also offer legal support to dismissed workers.

V.J.K. Nair, vice president of the Karnataka state committee of the Centre of Indian Trade Unions, to which KITU is affiliated, said that mobilizing employees would put pressure on the government to frame fresh policies on job losses, and enable wage negotiations with industry representatives. "Negotiations are possible only when there is a trade union," said Nair.

In May 2017, Indian media reports stated that the top seven companies in the sector would lay off about 56,000 engineers this year. Head Hunters (India), an executive-search group, said it expected job cuts of between 175,000 and 200,000 a year for the next three years in the IT sector, mainly because of the industry's "under-preparedness" for new technologies. Its figures were based on a report by McKinsey & Company, a business advisory company, which said that nearly half of India's workforce in IT services groups could be made redundant over the next three to four years.

Sunil Kumar, 38, who worked in Tech Mahindra's Bangalore office for nine years, was asked to leave in June after being promoted to tech manager a month earlier. On June 1, he said, he was told by management to resign because the company was "not performing well." He then had a meeting with his project manager on June 2.

"In the meeting, they tried to convince me to resign but I refused. June 14th I got termination mail from the office," he said. With 17 years of experience in hand, he is currently looking for a new job. Tech Mahindra did not respond to queries from the Nikkei Asian Review. The group reportedly laid off 1,000 employees in May this year.

Blacklisting

KITU is not alone. In December 2014, a group of employees in Chennai formed an association called the Forum for Information Technology Employees, or FITE. Although they fear being blacklisted by the industry, more than 2,000 professionals have joined FITE, said Rajesh Natarajan, coordinator of the union's Karnataka branch.

The union said it has members in nearly 50 companies in eight major cities, and claimed to have received an average 400 phone calls and messages a day from distressed employees during May and June this year.

FITE said it has filed more than 85 petitions against leading companies, including Wipro, Cognizant and Tech Mahindra, in the labor courts of six cities, including Bangalore, Hyderabad and Noida. Indian labor courts on average receive nearly 2,000 petitions a year, sometimes leading to conciliation or compensation for dismissed employees. The petitions can create unwelcome publicity for the companies involved, and make staff recruitment more difficult.

Many workers are reluctant to join unions or challenge redundancy decisions, in spite of their legal rights, because of fears about job security and future employment opportunities. However, some legal challenges have resulted in conciliation meetings between sacked employees and company managements, FITE claimed.

In May this year, the Hyderabad city labor department asked Cognizant to retain eight laid-off employees and hold one-on-one discussions to resolve performances issues cited by the company as reasons for the lay-offs. The employees had filed petitions with the department complaining of forced resignations.

Manjunath Kumar, 42, a software engineer who has worked at Wipro for seven years, claimed he is under pressure to resign. "They threatened me that if I refused to resign, I'll not receive any compensation," he said. Kumar did not succumb to pressure, but is now on medical leave.

Wipro said that it undertakes rigorous performance appraisals on a regular basis, which "may also lead to the separation of some employees from the company."

In June, the National Association of Software and Services Companies (Nasscom), an industry organization, forecast that the growth of the software-services industry would slow because of technological changes and regulatory uncertainties in key international markets, including tightening immigration rules in the U.S. and the U.K.'s planned departure from the European Union.

Lower salaries

But Rajesh said managements were also trying to increase margins by hiring "freshers" at lower salaries than existing staff. "The bulk of people laid off have between eight and 18 years of experience," he said. Dhiman Sau, a KITU official, also said lay-offs were primarily intended to cut costs.

However, Nasscom insists that "workforce realignment" is essential for companies 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.

V. Balakrishnan, a former chief financial officer of Infosys, one of India's biggest technology companies, said that a 5% a year lay-off rate for under-performing staff was normal for the industry. "Other than that, I don't see any big job loss happening in the industry," he said. Balakrishnan said unions had never succeeded in the industry, adding that previous attempts at unionization had fallen flat mainly because of a high employee turnover rate.

Trade unions say there are other reasons for the low rate of union penetration, including a decline in the size of the public sector and a decrease in permanent employment, which is being replaced by contract workers. Group negotiations have not become established in the private sector, except in the coal and ports industries, according to D.D. Ramanandan, general secretary of the CITU-affiliated All India Coal Workers Federation.

Priyank Kharge, Karnataka's IT, bio-technology and tourism minister, said: "IT lay-offs are a cause for concern. We're looking at how we can help both employees and employer." He added, however, that the government could not take sides.

"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.

Karthik Shekhar, an independent IT consultant who made one of the first attempts to unionize IT and related services professionals in India, said that trade unions should try to anticipate changes in the industry and encourage their members to reskill and adapt to changing job demands.

Karnataka will hold state elections next year, but trade unions are not a factor in party calculations, in part because many workers hail from other states. However, Prakash Karat, leader of the opposition Communist Party of India (Marxist), said IT unions could achieve political importance if they gain momentum.

Tech Mahindra Ltd.

India

Market(Ticker): BOM(532755)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 6,905.35M
Shares: 975.89M
Asia300

Wipro Ltd.

India

Market(Ticker): BOM(507685)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 22,087.5M
Shares: 4,866.69M
Asia300

Infosys Ltd.

India

Market(Ticker): BOM(500209)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 31,838.2M
Shares: 2,296.97M

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