Whenever there is a talk of the IT sector employees getting together into an organisation, the entire employers’ class gets into frenzy. Articles are written in the newspapers, media is agog with debates and condemnations that any such attempt would ruin the industry; it would be a disaster to the economy. That was the attitude when the IT employees began to feel the need for an organisation after the rape and murder of Pratibha, an employee of HP in Bengaluru in 2005; that continues to be the attitude now when even more employees not only feel the need but in fact have started to get organised after the mass retrenchments in the industry that started in 2016 and continues till today.

The employers want the IT industry to be ‘trade union free’. For that matter, not only in IT industry, employers in any industry, employers in general want their establishments to be ‘trade union free’. This attitude is nothing but a reflection of their intention to deny the basic rights of the employees in the Information Technology and IT Enabled Services sector – their basic rights to association, which is a fundamental right guaranteed under our Constitution. The right to association and right to collective bargaining constitute the core conventions of the International Labour Organisation (ILO). There is no evidence that unionisation is responsible for closures or industrial slow down. There is no empirical evidence that foreign companies make absence of unions a precondition to award contracts. Unions do exist in the IT industry in several developed countries. The only reason for the employers opposing unionisation in the IT industry in our country could be their fear that, once unionised, the employees might demand a larger share of the pie that the employers take away today.

IT and ITES Sector In India

The growth of the IT sector in India coincided with the advent of neoliberalism in the country. Commercialisation of the internet in the 1990s and the growing demand for Indian IT engineers in the field of customised software development and repair and maintenance of computing machines helped in the growth of the industry. Availability of low wage skilled English speaking workforce made India a favoured destination for Business Process Outsourcing in the world.

The government started providing many incentives and attractive fiscal sops for IT firms for promoting the industry. Many software technology parks were established in several parts of the country in the late 1990s and early 2000s. Several state governments have created IT clusters. Today, IT clusters are mostly concentrated in states like Karnataka, Maharashtra, Telangana (part of the then united Andhra Pradesh) and Tamil Nadu.

Between 2000 and 2008 the IT sector generated 1.7 million jobs. A job in the IT sector had become the dream of many young boys and girls. Parents, both in the urban and rural areas, aspired for IT jobs for their children. They spent huge amounts of money, often borrowing it, for their children to become engineers – tuitions, coaching, fees, hostels etc. Thousands of engineering colleges sprang across the country. 11208 engineering colleges opened between 2003 and 2009. Indian IT companies were able to attract most of the outsourcing work; their revenue increased by 25%- 40% during this period. There was a time when many multinational corporations (MNCs) recruited people in advance and paid them, keeping them ‘on the bench’, to be ready to take up projects as they come.

The IT/ITES companies made the best use of the UPA I government’s policy on Special Economic Zones (SEZs) that extended bonanzas like subsidies, tax exemptions etc to promote exports. There are 274 IT/ITES companies in the SEZs today, the largest for any sector. Though the SEZ Act does not exempt labour laws, some state governments made rules that exempt labour laws in the SEZs. The Development Commissioners sought to create an impression that labour laws are exempted in the SEZs, to attract investment.

Except for the comparatively attractive salaries, the IT employees face the same conditions as any other employees, who are not unionised. Their working hours are often said to be ‘flexible’; but they have to work for long hours to complete the tasks, often 12 hours or more in a day. They have to work under severe pressure of meeting targets and deadlines. The option for IT employees offered by some companies to ‘work from home’ sounds attractive. It may be suitable for some employees on some occasions. But the work load and targets are so high that in effect, ‘working from home’, for most of the employees means having no leisure or rest even at home and sacrificing their family life. They are compelled to work for the company throughout the day. This also leads to tensions within the family. IT employees often face harassment. There is no job security.

Large numbers of women work in the IT sector. Women comprise 36% of the workforce. Though 51% of the new entrants are women, soon many of them drop out because of work pressure, low skill levels, lack of maternity protection etc. Gender discrimination is rampant in the sector. The gender wage gap stands at 38.2%. Pregnancy means loss of job for many women employees. Even when they are granted paid maternity leave as per the Maternity Benefit Act, that period is considered non productive time for which women employees are given low ratings, least hike and promotion is denied.

Women employees have to work night shifts without any protection. In 2017, IT companies accounted for over 65% of reported cases of sexual harassment. Incidents of sexual harassment were reported in 3 out of the 5 top IT companies, TCS, Wipro and Infosys. But, many companies deny even cabs for night shift employees. Complaints committees against sexual harassment are not constituted in most of the middle and small level companies.

The recent notification of the BJP government, extending fixed term contracts to all sectors, will definitely worsen the conditions of the IT employees. Many IT companies use fixed price contract (55% of contract) for customer agreements. Now, the IT companies will be able to terminate the service of their employees once the contract with their customers ends.

The conditions of employees in the ITES sector were far worse. Their wages are low. They are not given proper pay slips; they are not provided statutory benefits like PF, ESI, gratuity etc. Social security is an option for employees who are in a position to negotiate for a higher take home pay. Even Some mandatory provisions like canteen facilities, ambulances, toilets, medical aid etc are not provided by many companies in the ITES sector

In the early period, before 2008, attrition rate among IT employees was high. They were often in search for better opportunities and left the existing job once they were able to negotiate better terms in another firm.

But, things changed to the worse with the global economic crisis of 2008. The aftershocks of the recession were felt in the Indian IT sector. 75% of IT companies in India are dependent on outsourcing market, especially on the USA, UK and European Union markets. Protectionist measures across the globe first hit the visa policies of these countries. Majority of the Indian companies faced reductions in outsourcing projects from the developed countries. Existing projects are undergoing closure. Many developed country customers have reduced there IT spending.

USA under the Trump administration made the policy for H1B visas stringent. There has been a fall of around 43% in the H1B visas during the last two years. Visa policy changes in the US, Singapore, Australia badly affected Indian IT employees. As a result, there is a change in the two decade old onsite offshore model of Indian IT companies. They started to recruit more local employees in the last couple of years. Many Indian corporations in the US started to reduce the number of employees in India with the clear purpose of increasing their American employees. Recently CTS reduced the number of employees in India by 8000 and increased their employees in the US by the same number.

Since 2008, many IT employees started to face new challenges of the pink slip, retrenchment, hire & fire, contract labour, layoff etc. The entry-level salary of the new employees started to stagnate at Rs 2.25-3 lakhs per year. Many IT companies have stopped recruitment. They stopped replacement of attrition of employees. Employees who were working in foreign countries are being asked to come back. The employees who are retained are being asked to work for lower pay. Now, employees are kept ‘on the bench’, not awaiting projects, but to be sent out. In addition, many are silently sending out employees through forced resignations.

The employees who joined in the early 2000s reached midlevel management by around 2012. They were getting higher salary. They were the first targets for retrenchment by the companies who wanted to cut down their wage bills. The midlevel employees were replaced by new employees with low wages. Between 2012 and 2016, the IT industry saw mass retrenchments – TCS – 25000, CTS 8000 Wipro – 12000, Infosys – 7000 etc. New job creation during the period 2008 – 13 dropped to 9%. With the advances in technology, cloud technology, machine learning, artificial intelligence etc, the IT sector faced the challenges of adopting the new technologies and re skilling the existing employees. This again led to a new wave of retrenchments. Instead of re skilling their employees several companies found a chance in this to throw their employees out. Companies like CTS, Wipro, Tech Mahindra, HCL, Verizon, Capgemini etc went for mass retrenchment. During this period there have been many incidents of IT employees committing suicide, across the country, over job losses.

What needs to be noted here is that none of these IT companies made any losses. They still maintain double digit profit margins of 25%-30%. Indian IT sector continues to have 55% of the global market share.

The employment generation in the sector now is not like it used to be earlier. Every year, around a million graduates come out of engineering colleges in our country. But new jobs in the IT sector have become sparse. This year only 1.05 lakh jobs have been created in the sector, the lowest in the last 18 years. The old methods of recruiting and maintaining bench strength have come to an end. Instead, IT companies have now increased utilisation rates of employees, i.e. they are increasing the work load on the employees, getting more work from the same number of employees. Salary hikes have become meagre. Recently Capgemini offered 0% hike! Promotions have become meagre and are based on digital skills. But out of the around 4 million employees only half a million were re skilled to digital skills.  Variable components in the salary are being increased instead of the basic component. Some companies have started to remodel their performance appraisals.

The existing employees are under severe stress due to changing technology, working methodology, lack of proper hike in salaries, promotion etc.

The BJP government under Prime Minister Modi gave several popular slogans like ‘Digital India’, ‘Start Up India’, ‘Trillion Digital Economy and 3 million jobs by 2025’ etc. But these could not create any impact on the domestic market for the Indian IT sector. India’s domestic IT – BPM market is even today growing at a slow pace. As a result, there is no employment growth. Besides, lack of infrastructure outside tier 1 and 2 cities, lower internet penetration etc are adversely impacting the growth of domestic IT industry.

The onslaught on their working conditions and declining opportunities in the sector made many of IT employees come out of the carefully cultivated illusions that they were not employees, but professionals who can deal with their situations by themselves, individually and independent of any organisation; there was no need for any collective effort to redress their grievances. They are gradually realising that they are employees working for the IT firms who employ them; that through their labour they have been helping the IT companies reap huge profits. Capital investment in the IT sector is very low; it is the employees who generate the immense wealth for the IT companies, of which they are paid a pittance. They have started to think about getting organised. They started to raise disputes over retrenchment, maternity leave and other working conditions with the labour departments in different states. In several states they have registered unions to fight for their genuine demands.

This is a welcome feature. CITU stands in solidarity with the IT employees and supports their demands that the IT sector must be rescued from the impact of the global developments by developing a domestic market; that all labour laws should be strictly implemented in the IT sector, and the trade union rights of IT employees must be recognised.

2018

Published by Centre of Indian Trade Unions