It’s best to leave the IT sector alone

While the election manifestos of most political parties were on expected lines — replete with populist measures with very little details on how they will fund the schemes once voted to power — the Dravida Munnetra Kazhagam (DMK) in Tamil Nadu created a flutter by seeking labour unions in India’s information technology (IT) sector.

In the last three decades, the industry, which proved to the world that ‘Made in India’ is not bad after all, has grown exponentially.

Today, it is a $200-billion industry that is growing at 10-15 per cent per annum, employs 4.5 million people, and accounts for 7.5 per cent of the country’s GDP. It has achieved all this without a labour union.

Demands for a labour union have come before, mostly from outside the sector. Typically they have manifested whenever there is a major crisis like the 2008 global financial meltdown or a few years later when the world economy threatened to slip into a recession. These are times when companies across the globe are cutting back on their IT spends and Indian software players are responding with lower than usual hike in salaries, a freeze on recruitment, and, in some cases, even retrenchment to reduce the high bench strength.

Technological obsolescence is also another factor that is forcing these companies to ease out people. But this is probably the first time that the need for labour union has found a mention in the manifesto of a major political party.

Ask the people who have been working to unionise the IT workforce, and they say the demand is justified. They point out to large-scale discrimination in the sector (particularly between IT and ITES), lack of job security, and extended working hours — factors, which in their opinion, have led to high suicide rates and early deaths among employees. There is, however, no data to back these claims.

And if the ‘exploitation’ is indeed as severe as they claim, the Forum for IT Employees (FITE) — an organisation that is a pioneer in trying to organise the IT workforce across the country — would not have just 500 registered members.

Nasscom, the apex body that represents IT companies, on its part, has maintained that the employees have the right to organise themselves. Senior leaders in the industry have, however, voiced their concerns about possible involvement of political parties in the unions as is the case in other sectors. Many State governments have recognised organisations such as FITE.

Employees in the sector have, however, continued to remain cold to the idea. The reason could well be the nature of the industry itself. Unlike other industries, the IT sector is people-centric. Its employees are well educated. Though automation has crept into the sector for low level repetitive coding, as the industry moves up the value chain people will remain at the core of its operations.

Today if IT companies are able to deliver large time-bound projects for Fortune 500 companies across the world, it is because of the work put in by their employees. They also manage critical 24x7 services, which, if disrupted, could create havoc. It is clear that the IT companies cannot deliver quality service unless they keep their employees, both in India and at clients’ site, happy. This is particularly important as the sector is highly competitive and an unhappy client can find a new service provider in no time.

Attrition levels

Also, even if a company treats an employee badly, he/she has enough options to switch jobs. Even otherwise, the young IT workforce has set a new benchmark when it comes to attrition.

The average attrition level in an IT company is as much as 20 per cent. And a higher than industry attrition level sends investors into panic mode and this inevitably hurts the IT company’s valuation.

It is this drive to keep the employees happy that forced the sector to come out with many pioneering policies — such as large-scale transportation of employees, flexible working hours, work from home, quarterly appraisals and many more — which have since been imbibed by other sectors. It is not surprising that the concept ‘Employee First, Customer Second’ emanated from the IT sector.

Having said this, no IT company can put up with mediocre talent. It will badly affect their business where quality and timeliness are paramount. It is for this reason that most IT companies periodically weed out non-performers. They call them the ‘bottom 2 per cent’ — people who are unproductive because they happen to be in the wrong job or have become victims of technological changes.

This sector is dynamic and rapid technological changes like digitalisation or emergence of new tools call for constant re-skilling, and people who do not scale up pro-actively tend to suffer. And when they are shown the door, it creates heartburn. Labour unions and political parties smell opportunity here.

One of the reasons the sector has seen tremendous growth is its insulation from government interference and political parties.

As mentioned, it is in the industry’s own interest to take care of its employees. For their part, IT companies and Nasscom should look deeper to understand why this demand comes up periodically.

They should redouble efforts to ensure new benchmarks are set when it comes to working conditions and in instances where they have to let go of people, they do so in the most humane manner. Otherwise, demand for unions will start coming from within the sector itself. If that happens, its operations will become complicated.

The sector cannot claim that its work is all-pervasive and unionisation will lead to disruption of critical services. It should be remembered that the right to unionise is available to all sectors. But to allow unions, who will inevitably have political affiliation, now on the basis of infrequent demands from outside the sector is the last thing the IT industry needs as it battles rapid transformation in the way it operates.

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