National Information Technology Employees Senate in the letter written to CM on Tuesday said companies across Maharashtra have started terminating services without any reasonable cause and withholding or deducting salaries.
A Pune-based union working for the rights of employees of IT companies has written to Maharashtra Chief Minister Uddhav Thackeray, seeking intervention to save jobs of employees who have been laid-off or are facing pay cuts in the wake of COVID-19 crisis.
National Information Technology Employees Senate (NITES) in the letter written to CM on Tuesday said several IT/ITeS/BPO/KPO companies across Maharashtra have started terminating services of their employees without any reasonable cause and withholding or deducting their salaries.
This is in complete breach and violation of directions and advisories issued by the Maharashtra government, NITES general secretary Harpreet Saluja said.
“In such testing times, the rights of employees ought to be protected by necessary orders and directions to the companies by government, as prospects of several employees of the country are under a dilemma,” reads the letter.
The NITES said it is seeking state government’s prompt intervention and support to safeguard life, jobs and families of over six lakh IT/ITeS/BPO/KPO employees in Maharashtra.
“It is our fervent hope that such exploitation of employees does not occur in future and the working conditions will improve at a faster pace,” the letter said.
Employers who are in a dominant position are taking harsh decisions and unconscionable bargains with employees, it said, adding employees are in no way responsible for the present pandemic lockdown situation, but are at the receiving end.
In the absence of issuance of any binding orders to the private companies, thousands of employees are losing their jobs and income daily, the letter said.
“Also, no procedure like notice period, intimation to government authorities, payment of retrenchment compensation, gratuity, leave encashment, has been undertaken by companies, leading to a lot of unfair labour practices,” it said.
Saluja said the letter was sent to Thackeray on Tuesday and an acknowledgement from the CMO has been received.
The NITES claimed it has raised issues of more than 68,000 employees and filed petitions with labour commissioners and district magistrates against illegal terminations, reduction in wages, deduction of earned leaves, and issues like forceful resignations and forcing employees to apply leaves as vacation.
India’s information technology services industry would see hiring freeze this year and senior level staff taking a 20-25 per cent salary cut due to the adverse impact of the COVID-19 pandemic, says IT industry veteran T V Mohandas Pai.
Bengaluru: India’s information technology services industry would see hiring freeze this year and senior level staff taking a 20-25 per cent salary cut due to the adverse impact of the COVID-19 pandemic, says IT industry veteran T V Mohandas Pai.
The former Chief Financial Officer of IT services major, Infosys Ltd, said the IT industry has done a “fabulous, unbelievable and remarkable” job in transitioning more than 90 per cent of its employees to work from home.
It has achieved this task by setting up infrastructure at home, taking permission from their clients, and making sure that “security and oversight are there.
The Chairman of private equity fund Aarin Capital and Manipal Global Education said 25 to 30 per cent, may be more, of employees of IT companies will always work from home by rotation even after the coronavirus-inflicted lockdown is lifted and the situation returns to normalcy.
Speaking to P T I, Pai said he does not expect the demand for office space in the IT sector to shrink going forward because companies would now need to maintain social distancing in their cramped office space.
“Now with social distancing, you need more space per person. So, 25 per cent working from home will provide additional space. I think space in the offices for people would get bigger; so for the next one year, the market (office space segment) could be very soft, and then it will grow at the normal pace,” he said.
On apprehensions in some quarters about job losses and salary cuts, Pai said IT companies would not hire more and they will suspend recruitment, except honouring commitments already made.
“Secondly, if people leave, I don’t think they will fill up the backlog, because this quarter and next quarter, the market is going to be soft. All the clients are in the West, they have not opened their offices yet, they are still going through the pains. So, I think next year there is going to be recruitment, this year will be soft, they (IT companies) will not grow in (terms of) people,” Pai said.
“There will be salary cuts. There will be promotions but not increments in salaries for most people. For senior level they will cut salaries to adjust costs.
“People getting Rs 75,000 to Rs one lakh and above per month, they will see salary cuts, may be 20-25 per cent,” he added.
The former President of the Confederation of Indian Industry said the IT services industry has managed to transition people to work from home during the ‘stay-at-home’ period.
More than one million information technology employees are expected to continue to work from home even after the coronavirus-inflicted lockdown situation returns to normalcy, says IT industry veteran Senapathy (Kris) Gopalakrishnan.
The former President of the Confederation of Indian Industry (CII) said the IT services industry has actually managed to transition people to work from home during the ‘stay-at-home’ period.
“And that was not a trivial task. A large number of people who have to be supported with technology infrastructure to work from home; business processes will have to be changed, with client permission,” the co-founder of IT services firm Infosys Ltd told PTI.
“Now I am told that 90 to 95 per cent of people in many of the larger (IT) organisations are working out of home. And that transition has been smooth and done very, very quickly. They have figured that out and I think this will now become part and parcel of the business continuity processing, planning in the future,” Gopalakrishnan said.
The Chairman of early-stage startup accelerator and venture fund, Axilor Ventures, also said that many of the smaller Indian startups have found that they are as effective working out of home and are now wondering whether they require permanent office space at all.
“We (Indias IT services companies) are not going back to business as usual,” he said, adding, firms would do a rethink on the office space they would require and “how we need to deliver services in the future.
Gopalakrishnan believes at least 20-30 per cent of IT employees would continue to work from home even after the lockdown is lifted and the situation returns to normalcy. That accounts for about 1.2 million people, he said noting that four million professionals work in Indias IT-Business Process Outsourcing sector as per industry body NASSCOM figures.
“Some companies will be lot more aggressive (more people will work from home), the smaller the companies lot more aggressive they will be, so that they can save significantly in terms of rental costs.”
The former CEO and Managing Director of Infosys said he does not see job losses in the IT sector but “I don’t see recruitment happening.”
He indicated that salary cuts would happen in the IT sector.
“IT sector does not see large-scale layoffs, they manage to hold on to their employees but they don’t recruit, they stop recruiting because growth is not there,” he said. He said a lot of people estimate that the impact of the coronavirus pandemic will be felt for 12 to 18 months which means that recruitment will be “nil or slow” for the one-and-a-half years.
“That’s going to hurt people who passed out this year and may be next year.”
“Yes, that’s one way you can actually avoid layoffs,” he said on possible salary cuts. “Everybody takes a small salary cut. When the whole economy is in decline, we are going to see zero growth or muted GDP growth this year; so, that will have impact on compensation and recruitment.”
“Typically, in the past what has happened (in the IT industry) is at the lower levels there is no salary cuts, as we go up it will be five per cent, ten per cent, and at the top it could be 20-25 per cent, Gopalakrishnan said when asked about the possible range of salary cuts in the IT sector.
An analysis report by IDC states that the coronavirus pandemic will cause a global slowdown that can cause global IT spends to decline by up to 4 percent.
The global industry of information technology (IT) services may see a decline in overall revenue by up to 3 to 4 percent, as a slowdown of businesses induced by the coronavirus pandemic takes a toll on the entire world. The projection has been made by market analysis and research firm IDC, which states that the impact on the overall IT industries of the world will compound as the year unfolds, in which time the exact extent of the impact on India will also be clear. Going by these projections, and taking into consideration how significant the IT industry is for India, the slowdown in overall IT expenditure across the world may cost India billions of dollars.
The IDC analysis states that while hardware businesses will face the maximum impact, the trickle down effect will also eat into the software and services industries across the world. According to the India Brand Equity Foundation, the IT and BPM (business process management) industries of India accounted for $177 billion in FY19, of which $137 billion came solely from exports, or overseas projects undertaken by Indian IT giants. While it is difficult to project how the IT industry may grow or shrink in overall volume through FY20 (due to the coronavirus outbreak towards the end of the financial year), this figure itself gives us a rather worrying estimate.
With India being a major contributor to worldwide IT services, a decline of close to 4 percent in global IT spends is bound to have an impact on India as well. Not taking India’s own IT sector into account, at the estimated rate of decline, India stands to lose over $5 billion in IT services exports itself. This can be a significant juncture to consider, as a global economic slowdown has officially pegged the world to be in recession, with many executives undertaking salary cuts and thousands losing jobs across the world and through industries. With a large section of non-resident Indians being engaged in IT services with global industry giants, this can be a major cause for concern.
“While the actual impact of COVID-19 on India market will be evident by middle of 2020, we expect a slowdown in terms of discretionary IT spending, contract renewals and new deals getting signed as enterprises recalibrate by cost structure in coming months. Existing project executions have also taken a hit due to travel restrictions in place. IT vendors will be forced to relook at their growth targets for the rest of the year as the impact will become evident in the next few quarters,” said Sharath Srinivasamurthy, research director of enterprise solutions at IDC, in a statement.
With alarming projections showing what it may cost the world in the long run, it remains to be seen how global IT majors such as TCS, Cognizant, Infosys, Wipro and other stakeholders in the industry innovate and readjust to new economic parameters in order to weather the storm. With the entire technology industry taking a major hit, the blow on IT services can be heavier than preliminary estimates.
The hub of global back-office solutions is trying to wing it with makeshift solutions as the nation remains on a 21-day lockdown.
As the coronavirus pandemic pushes India into a lockdown, the call centers and IT services firms that function as the world’s back office are struggling to piece together work-from-home solutions and other business-continuity plans. Prime Minister Narendra Modi on Tuesday ordered 1.3 billion Indians to stay at home for 21 days to stem the spread of SARS-CoV-2, following earlier lock-down orders in many Indian cities and states. As of Tuesday, India had reported over 500 cases of the virus and nine deaths.
Many of the companies that provide business services such as call centers, information technology services and business process automation were not prepared for work-for-home arrangements, according to interviews with more than a dozen employees of several companies. That raises questions about whether one of India’s showpiece industries can function smoothly amid the coronavirus crisis. “The industry has been scrambling to set up its own business continuity plan,” said R. Chandrashekhar, a retired federal government official and a former president of India’s IT services lobby group, NASSCOM.
In the technology hub of Bengaluru, an employee working at a JPMorgan call center said that until last Friday, her managers had repeatedly declined staffers’ pleas to work from home. “Even if I am infected with the virus, I know the death rate for young people isn’t very high, but I am very very scared that I might transfer it to family,” she said on condition of anonymity, as she is not authorized to speak to the media. After a state government order, JPMorgan on Sunday asked its Bengaluru staff to “stay at home until further notice,” according to a message to employees, reviewed by Reuters.
In some cases, companies must seek client permission before allowing employees to work on sensitive projects outside the office, a senior human resources executive at a top Indian IT firm said of working remotely. “These days the challenge is not really the technology, the challenge is the regulations, and, in case something goes wrong, who’s going to take the responsibility,” the person said on condition of anonymity. Indian software services firms, led by Tata Consultancy Services and Infosys, gained prominence by giving Western clients low-cost solutions to routine computer problems. Over time, they assumed a major role at many global companies.
Three employees of mid-sized IT services firm Mphasis, in the western Indian city of Pune, said they were all being asked to come to the office until last Friday, even as some expressed concerns about working in close proximity with roughly 90 other people. Maharashtra state, where Pune is located, had imposed restrictions on private company employees going to offices in an effort to curb the spread of the virus. But it made exemptions for essential services including some IT companies. During the past week, security guards barred employees from venturing outside one of the Mphasis offices in Pune to avoid attracting the police, fearing a forced shutdown, two employees said, declining to be named as they are not authorized to speak to the media.
One said a human resources executive told him not to wear a mask as it would “panic people who come to work”. As Maharashtra enforced a curfew starting Monday, some Mphasis employees were being asked to remain home this week, even though they lacked equipment such as laptops, the employees said. Mphasis said in a statement that not all of its staff were working remotely. But the company said it was speaking with clients and trying to enable as many people as possible to work from home while ensuring employee safety.
An employee of French tele-services provider Teleperformance on the outskirts of Delhi said his company had been reluctant to let staff work from home. But he said employees were finally told on Sunday that the company would begin installing corporate desktop computers at their homes after a wider lockdown in several cities. JPMorgan and Teleperformace did not respond to requests for comment. India’s home ministry, in guidelines issued on Tuesday, advised states to exempt essential IT and IT-enabled services from the national lockdown. NASSCOM, the lobbying group, said several states had listed IT and e-commerce among essential services that are exempt.