Already grappling with automation & protectionism, IT sector has a new threat – unions – Economic Times

In a country that celebrates startups, S Thirumalai Shelvan cannot but rue the cruel irony of being pushed down the path of striking out on his own after a software exporter judged him to be below par before ousting him. After multiple attempts at finding a job post layoff, he decided the bread and butter would come only if he parlayed his experience into a new business of writing and selling software to small enterprises that needed to go digital.

Every morning, he would visit the offices of potential clients in Chennai to sell his billing and accounting software, web development codes, and a ready-to-deploy inventory monitoring package. His companys revenue is not what he earned as a salaried employee. But life ploughs on.

The evenings are more purposeful: gathering evidence of his good work, consulting with lawyers and activists, and multiple trips to the Madras High Court. His two-year case insisting that he was fired illegally and had legal remedy under the Industrial Disputes Act is ambling on through affidavits and counter-affidavits in laws due course.

It has not been a smooth ride. I have asked myself why do I need to take up a legal struggle? For some strange reason I have kept it up, said Shelvan. Not just Shelvan. A small but growing number of aggrieved IT employees is turning to the courts seeking redress of grievances including indiscriminate layoffs and long work hours. Often, they are supported by external representative groups because they and their colleagues havent been able to muster courage or strength to form unions within their companies.

Setting a landmark precedent for those wanting to fight it out, in January 2015, Sasirekha Thangavel Natarajan had her termination revoked by Tata Consultancy Services after she petitioned the Madras High Court. Natarajans successful challenge potentially set the stage for Tamil Nadu to become a hotbed for IT employees seeking to unionize. Unionists and members of the IT industry say that the sheer strength in numbers well over 300,000 IT employees work out of Chennai alone lend the state a critical mass for mobilization.

For over three years now, technologists are taking the help of pressure groups such as the Forum For IT Employees (FITE) to demand answers for involuntary exits of employees from IT firms. Many of them waging legal battles are still unemployed. Some of the retrenched have dropped their litigation halfway after finding employment in other firms.

WHEN IT FIRMS TURNED FACTORIES Indias IT sector and unions or pressure groups have rarely appeared on the same page. Unionisation of the workforce is usually associated with the manufacturing industry, where labour unions have helped factory workers fight for higher wages, job security, and better working conditions.

On the contrary, IT employees for decades have enjoyed double-digit pay hikes, comfortable work conditions, established redressal mechanisms and lavish perks. Given this, one might wonder if there was a transition afoot to seek the security of a union to guard against the layoff bogeyman.

Experts believe this was bound to happen. Workers reach out to unions when they feel insecure about their employment, when they feel under-compensated for their work, and when they feel working conditions need improvement. In the export IT industry only the first of these conditions is starting to occur, said Peter Bendor-Samuel, chief executive at consulting firm Everest Group.

During the heyday of the Indian IT outsourcing boom in the post-liberalisation era, the workforce constituted the creamof-the-crop techies who did bespoke application development high-skilled and customised work for clients. In the years following 2005, companies started winning large outsourcing deals resulting in explosive growth in the subsequent years. The large deals meant a shift to managed services, which are repetitive in nature.

This is when the IT requirement changed from a creative, thought-process oriented, cream-of-the-crop sort of employment to a factory-type employment post-2005, said Siddarth Pai, a technology strategy expert. The move from differentiated work to a repetitive factory-oriented work was the perfect setting for employees to think about the potential of unionisation. When you have an undifferentiated (factory like) workforce, this leads to unionisation much more easily.

Since 2008, the Indian IT Industry has seen multiple attempts at unionisation.

BIRTHED IN REVOLUTION FITE traces its origins to the Sri Lankan strife. When the civil war ended, Young Tamils Movement, of which FITE is an off-shoot, shifted attention to the need for proper rehabilitation of displaced ethnic minorities in Sri Lanka. Afterward, members of the forum asked for action on issues closer home: a police firing on Dalit protesters in a Tamil Nadu village; the apprehension of fishermen from Rameshwaram by the Sri Lankan Navy.

As they progressed from one social crisis to another, the group staged a demonstration for safer working conditions for women after the brutal murder of a female employee along Chennais IT corridor. In late 2014, FITE leveraged the huge presence of technology workers in its membership to catapult into public conscious the issue of retrenchments by IT companies.

Nearly two years after, another spate of involuntary exits by IT employees emerged, and FITE and another grouping, the National Democratic Labour Front-IT, acted as facilitators for the employees. In February 2015, NDLF-IT filed a public interest litigation seeking directions for the TN government to ascertain if labour protection laws applied to the IT sector. Well over a year and a notice to the government threatening a contempt petition, the state responded that the industry had all along been under the purview of the labour laws.

The Trade Union Act, 1926 guarantees the right to form unions in any industry.

The provisions in the Industrial Dispute Act, 1947 provides immunity for factory workers or workmen. Whether or not IT employees can be classified as workmen is still being contested and the law is somewhat ambiguous.

IT employees are knowledge workers, who are deemed as Executive class, said V Nagaraj, Professor of Law at the National Law School of India University, Bengaluru. Only workmen have some protection under the Industrial Disputes Act, 1947. IT employees, are not workmen and come under contractual relations.

WHAT PRICE UNIONS? Experts are divided on the longevity of the unions and any potential negative impact they might have on the IT sector but they agree that the attempts at unionisation can no longer be ignored. India is the worlds largest sourcing destination for the information technology (IT) industry, accounting for about 67% of the $124 billion-$130 billion export market.

In the unlikely event that widespread unionisation did occur in a firm, it would be a significant setback for the firm.

Clients would likely react negatively and quickly move their work to non-unionized firms, Everest Groups Bendor-Samuel said. Unionised workforces are typically significantly less productive than their nonunionized competitors and unionisation is also viewed as a constraint to implementing automation or other new technologies.

IT industry veterans are positive the unions are temporary. IT is an industry where the employees are paid well and even today the attrition is high. I dont think unionisation as a concept would work. There will be noises whenever there is a job loss or a downturn, but it cannot sustain, said V Balakrishnan, former chief financial officer at Infosys.

Historically, unions have created a difficult work culture and companies tend to avoid countries they consider to be having adverse labour policies. At the start of the labour arbitrage movement, Eastern Caribbean Island, Barbados tried to position itself as a nearshore destination. Several IT firms set up offices there, but the unions, backed by the government, intervened and all the firms immediately left. Another example is France, where labour laws and unions resulted in French companies moving work out.

DUAL WORKFORCES Government intervention will be the tipping point in the on-going episode of the alleged unfair termination versus routine performance-based appraisal claims by the employees and the employers, respectively. Indian government legislation has been friendly towards the IT sector, which proved to be the backbone for employment in India for over two decades now.

This is where unions are trying to get a foothold. They are trying to augur support from employees and approaching labour commissions seeking government intervention.

The insecurity starting to creep into the industry due to job loss is nascent. Though work conditions and wages are good, the future of the IT industry and the role of employees in it are changing.

What we will be striking at in the future is carving out internal unions in these companies, said S Kumar, a member of NDLF-IT. The purpose is to have a toehold in managerial policy-making that relates to employee rights and protection, in which external unions do not have a say. NDLF-IT also plans to lobby with the Union and state governments to have a proactive role in policy-making.

Indian IT employees have come to expect long-term employment from their employers.

The prospect that relatively fewer jobs will be required after the digital automation coupled with the slowing growth of the sectors is an abrupt change in climate for employees of these firms and is causing increasing concern to some tech employees, Bendor-Samuel said.

Worker unions had not made much of an impression on IT-employees all these years, but now, with the current string of events, these seem to take significance.

If this problem really ends up going down the unionisation path companies should look at a two-pronged enterprise, said technology strategist Pai. A lot of companies in the manufacturing sector today have a portion of the workforce that is unionised and a portion that is not. This might be the first instance of a dual workforce in IT. There could be people who are a part of the union who do repetitive work, and the others who are not part of the union since they do non-monotonous, differentiated work.

The IT industry is going through a unique phase of huge uncertainty, said a veteran IT executive. Given this, its crucial that progressive companies offer clear roadmaps to their employees. For instance, if a lot of infrastructure services are moving to the cloud, can an employee working in this be offered training in security?

Thats because security will be a key component as things move to the cloud.

WARY COMRADES For close to two decades, unions have been trying to make inroads into India.

Eighteen years ago, a UK-based union tried to come in. They spent over 1 million to mobilise employees; they failed, said Raman Roy, Chairman of industry body Nasscom. There is no need for collective bargaining in our industry. We are the best paymasters in the country.

Employees, too, are not comfortable coming out openly in support of unions. There are whispered stories of a blacklist of socalled troublemakers, which would pull down their chances of landing another job. Its a vague rumour which no one can confirm or deny. But everyone is wary of the possibility, an IT employee said.

Even if more IT unions were to emerge, these will likely be extraneous bodies.

IT employees themselves havent made any effort to form an internal union, said the National Law School professor Nagaraj. In the wake of the recent events, outsiders are trying to unionise, which brings in political affiliation into IT campuses. There might be vested interests in the way these external unions act. This is neither good for the employer nor the employees.

With Inputs from Ashish Kulshreshtha

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Already grappling with automation & protectionism, IT sector has a new threat - unions - Economic Times