IT Unions : Corporate Deception and Employees Distress – Q&A

1. Why is forming a trade union important for IT employees?

Even though only the current layoffs issue has become a talking point in media, work condition of IT/ITES employees in India has long been a serious concern. Long working hours, non-transparent and arbitrary appraisal system, unfair dismissals are some of the issues plaguing the industry covered up the relatively higher salary and overseas opportunities.

Forming a strong Trade Union is necessary to address all these issues.

2. Is it quite uncommon for professionals like IT workers to be in unions? Have there been formal collective bargaining processes?

It is quite uncommon.

There was a deliberate and sustained misinformation campaign by the companies in IT sector that Indian labour laws are not applicable to IT companies and Trade Unions can not be formed by IT Employees.

The employees also did not go for unionisation due to the relatively higher salary, overseas opportunities and work in relatively comfortable modern offices. Hence, there was no formal (or informal) collective bargaining. Compensation, promotions, increments were decided by an extremely arbitrary appraisal process.

In 2015, NDLF approached Madras High Court to clarify this issue. The court directed the Tamil Nadu government to decide.  After repeated reminders, in 2016, Tamil Nadu government categorically stated that no such exemption was given to IT sector, IT employees are free to form unions and bring grievances to the labour department.

With the current layoffs, various state governments have endorsed the stand and even the corporate honchos reluctantly acknowledge this.

3. Does Trump’s election energize the movement as people grow fearful that foreign contracting and investment will decline?

It goes much deeper than Trump’s election which is an effect not the cause of this downturn.

a. Indian IT outsourcing industry relied on wage difference between India and US. The companies succeeded in scaling up the processes and employed millions of employees.

b. As the jobs moved out of western countries, IT became the aspirational destination for tens of millions of Indian youth. Hundreds of private Engineering colleges came up in states like Tamil Nadu, Karnataka and Andhra Pradesh. Currently 1.2 million engineering graduates come out every year while the IT sector adds not more than 150,000 jobs every year.

H1B visa program was misused by Indian outsourcers to take away American jobs and replace them with Indian labour who work longer hours for less pay. Both US politicians and corporations looked the other way.

c. When the 2008 financial meltdown happened there was pressure on Indian outsourcing providers to cut costs. Clients started moving from time and material costing to fixed cost for projects.

IT companies started by bringing in automation, cutting employee benefits, increasing work load of employees and hiring fresh graduates (remember the point b above) at lower salary as contract employees replacing senior employees.

Now it becomes cheaper to replace higher paid senior employees with automated processes and lower paid employees.

d. In US also the employment problem could not be addressed during 8 years of Obama administration (“Hope”) which resulted in Trump victory and his demagogic policies. Anyway, the IT sector is cutting jobs and both Indian as well as US employees have less hope of employment.

4. To form a union what are the requirements?

You need 7 employees as founding members and a total of 100 members (or 10% of work force whichever is less) to register a union with registrar of union in the respective region.

5. Do IT workers have formal contracts with the companies?

Most of the employees in Indian IT companies have an employment contract and are classified as permanent workers, though in recent times more and more contract employees are appointed by the companies who have no legal protections.

As per law, contract employees should be employed only for non-production activities or for short duration projects. But companies employ contract employees for client facing, revenue generating work and keep them employed for years.

IBM India is one such employer who recently fired thousands of contract employees without any compensation overnight.

6.  What are the demands of IT employees?

Job security, more transparent appraisal system, reducing working hours etc are the current concern. Issues like standard compensation package, or minimum wage will also come into focus in the future.

Questions sent in by a journalist.

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