Government of Karnataka to implement Standing orders for the IT Industry

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The IT industry in Karnataka and Bangalore has grown manifold both in terms of the manpower employed and the revenues generated. The IT industry today employs more than 10 lakh employees in Bangalore and therefore it is a vital part of the economy of the city. However in the recent past and continuing now, there has been a significant “forced reduction” of manpower by the employers. The Human resources management practices in the industry are completely arbitrary and inconsistent in nature, thereby hurting the prospects of this sizable workforce. In this matter, we wish to submit the following.

 1.      The IT industry in India has been incorrectly termed a sunrise industry and various benefits have been conferred upon the IT industry by the Government in the form of Tax Holidays, land allotment, infrastructure development and waiver of certain labour laws. It has now been more than 30 years since the inception of IT industry and therefore it is now a mature industry and no longer a sunrise industry.

 2.      The IT industry, contrary to popular belief is a highly labour intensive industry. The revenues and the profits generated by the IT industry are in direct proportion to the workforce employed. Since the capital investment is low it is a common practice to pay higher efficiency wages in this sector. Most IT companies spend around 50 to 60% of their revenues in employee wages and benefits. Most interestingly the profit margins of these companies are in the range of 20 to 30%, which is much higher than say the manufacturing sector. Therefore it is safe to conclude that the contribution of the employees in maintaining high revenues and profit margins is the most significant aspect in this growth story.

 3.      The Industry has quite adopted the hire and fire model of employment. Employees are not given any opportunity to raise grievances or the opportunity to provide explanations from their end. The Employers have become a law unto themselves in this sector due to the neglect of the employees by the State Government. In fact, the term “involuntary attrition” is used today by premiere IT companies quite fearlessly to denote the number of employees who have been fired. This is a practice that is against the principles of natural justice and violation of several labour laws.

 4.      Employees in the IT industry are constantly under the threat of being fired on false grounds of poor performance. Therefore the other service conditions of fixed working hours, shift timings, overtime wages and fair consistent appraisal/promotion policies are being denied to the employees in the IT industry.

 5.      It is in such a situation that the NASSCOM (National Association of Software and Services Companies) is yet again lobbying for the exemption of the application of Industrial Employment (Standing Orders) Act, 1946. It is baffling that the State Government of Karnataka issued a notification (LD 53 LET 2013) dated 25.01.2014 exempting the IT Industry from the Standing orders for a period of 5 years when NASSCOM , the industry representative was willing to comply with a sector specific model standing order in 2014.

 6.      Finally, we firmly reject the propositions and claims of the IT industry that the application of the Standing Orders will impede their growth. Such a proposition flies in the face of common logic. The very same Indian IT Industry in India complies with stringent labour laws of the western world (including Europe, Scandinavian countries) and yet chooses to lobby for exemption in India. This is simply unacceptable.

The Industrial Employment Standing Orders will lay down various service conditions such as classification of employees (permanent, probationers etc), work timings, shifts, Holidays, Leave, retirement age, definition of misconduct, procedures for disciplinary including enquiry etc. This will bring in uniform service conditions and end arbitrary and discriminatory practices. The IT industry today follows “hire and fire” model through methods of involuntary attrition, forced resignations, termination on false grounds of poor performance or simply because an employee has spent too many days on “the bench”. All these practices will have to stop if the Standing Orders act is introduced.

We urge the Government of Karnataka and the Department of Labour to ensure that the Industrial Employment (Standing Orders) Act is implemented in the IT Industry from 26th January 2019 to protect the interests of the 10 Lakh employees in Karnataka.

 



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