As lay-offs loom, IT sector tries to overcome aversion to unions

While the manufacturing sector and traditional industries have unions, the IT industry has resisted unionisation

Chennai, May 24

Recent employee lay-offs by major software companies, including Cognizant, Infosys, Tech Mahindra and Wipro, have once again sparked a debate on the need for unionisation to represent employees.

Cheap labour

Since 1990s, large IT vendors have been winning clients by providing cheap labour to support their IT needs on-site. However, with the advent of Cloud, and the impact of Software as-a-Service-based delivery and automation, demand for a large number of cheap labour has declined. While retraining of workers is the norm, those who could not cope were dubbed non-performers and asked to leave. The worst affected are mid-level management, sources said.

While the manufacturing sector and traditional industries have unions, the IT industry has resisted unionisation. There is a well-structured grievance cell for employees to follow up any issue they may have, said an official of a top IT company, presenting his case against unionisation.

In May, the Tamil Nadu Labour and Employment Department clarified that IT employees are free to form trade unions and seek redressal of work-related problems. But employees are hesitant.

“I am 35 years old. If I lose my job and indulge in union activities, my chance of getting a job in another company will be slim,” said a TCS employee.

Chennai-based Forum for IT Employees (FITE), which claims to be run by IT professionals, says it has been speaking for the welfare of IT and ITeS employees for the past couple of years. The forum on Tuesday said it will be forming a union. FITE claims to have members from around 50 IT/ITeS companies, including Accenture, Cognizant, HCL, IBM, Infosys, TCS and Wipro.

The average annual employee attrition is over 10 per cent for all top IT companies, with 2-3 per cent of that being lay-offs for non-performance.

Last November, L&T Infotech had recalled nearly 1,500 job offer letters. In January 2015, the FITE claimed that TCS had plans to lay off over 25,000 IT employees who had 8-20 years of experience in the company.

In March, over 6,000 employees or 2-3 per cent of the total workforce at Cognizant faced lay-offs.

The FITE has taken up this issue with the Tamil Nadu Labour Department, saying the company is forcing workers to resign in the name of poor performance. However, Cognizant has refuted claims of forced resignation in meetings with the State Labour Department.

‘Voluntary observance’

S Subramanyam, CEO of Ascent HR, a recruitment firm, said several industries, including IT, retail and healthcare, have proved that voluntary observance of best practices has facilitated a better industrial relationship between employers and employees, and have served economic and social objectives.

Subramanya Sirish Tamvada, Dean, IFIM Law College, Bengaluru, said sometimes companies need to retrench their workforce to cut costs. “We should be cautious in our approach and see whether there are genuine reasons for corporate actions.” he said.

He said trade unions will be in a better position to negotiate on behalf of employees. “I would like to know what the government is doing to combat the situation?” he asked.

Published on May 24, 2017

MORE FROM BUSINESSLINE


 Getting recommendations just for you...
This article is closed for comments.
Please Email the Editor