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Employees in IT Sector to Feel the Heat of Economic Slowdown

The crisis in the Indian economy is affecting each and every sector. It is now turn of the employees in the Information Technology (IT) industry to feel the heat of the current slowdown. Owing to the non-payment of salaries for months and absence of any Full and Final (FnF) settlements, reports of many grieved employees of numerous small/medium IT companies in Pune – the emerging IT hub of India – filing cases at the Labour Commissioner Offices are coming to the fore.


On August 29, the Forum for IT Employees (FITE), Maharashtra, a trade union safeguarding the rights of IT and ITES employees of India, issued a press statement urging the state officials to expedite the process of providing justice in cases against such tech-based companies as “more employees are coming forward to report [the] widespread illegal exploitation of IT employees.”


The press statement added: “It is extremely challenging and stressful situations for employees to sustain their life without salary in metro cities like Pune or for that matter anywhere in the country.”


Commenting on the gravity of the effects of the downturn on the IT sector, Basanagoda Patil, Joint Secretary of FITE Maharashtra told NewsClick, “A week back around 20-25 employees approached FITE with complaints against a reputed Pune-based IT company regarding non-payment of salaries for over 11 months.”


The name of the company is SEED InfoTech and according to Patil, around 80 cases have now been filed against the company by the employees who are demanding payment of salaries, the dues running upto crores now. This news comes amid reports of huge retrenchments by bigger IT firms, with Cognizant, an American MNC, laying off around 800 employees and HSBC’s tech arm firing 200 of them.


“The company had started providing partial payments once in every three months in response to the anger of the employees, however, as it became difficult for the employees to sustain in a metropolitan city like Pune, they sought government's intervention in the matter,” he added.


“Due to [current] economic slowdown our business been substantially impacted and the company is taking efforts to revive the business… We are trying our best to arrange for funds to resolve the issue,” Pune Mirror reported Narendra Barhate, MD and CEO of SEED Infotech as saying in response to the cases filed.


According to Patil, the experience of employees in SEED Infotech should not be viewed in isolation. The other day, well over 25 employees of NCORD Health Card LLP, another tech-based platform, filed cases in city’s labour department for pending of salaries of employees which ranged from two to ten lakhs per employee. In addition to this, numerous cases have also emerged from Mumbai and Hyderabad, wherein the union is attempting to engage in a talk with the management and organise the workforce around such issues.


However, the management often remains reluctant in initiating a dialogue with the union, Patil added, explaining that the management's reluctance comes as a fear against the collectivisation of the employees which is still very new to the Indian IT industry. It was only in February 2019 that the first national convention of the IT employees associated with trade unions was held in Chennai under the aegis of Centre of Indian Trade Unions (CITU).


The experience of the employees in IT and ITES jobs have never been better. Often marked with contractualisation and short term requirements, the digital industry has, over the years, only failed in expanding the formal employment opportunities for the Indian youth.


According to the estimates of the Indian Staffing Federation, the billion dollar technology service industry is expected to employ 7,20,000 flexi staff – people recruited for a short duration – in the next three years which will be a 44% increase from the flexi staff reported in December 2018. It is interesting to note the usage of euphemisms for fixed-term contract labourers within the tech industry’s lingo.


“This is because of the inter-relation between the automation and the ITES sector,” said Archana Prasad, who teaches at the Centre for Informal Sector and Labour Studies (CISLS) in Jawaharlal Nehru University. She added, “This can also be seen within the auto industry when jobs were lost in the past due to automation.”


According to her, many studies have busted the myth of formalisation and job security that the digital economy had claimed to bring. This informalisation has taken new forms with the advent of freelancing and ‘work from home’ phenomenons, which often creates only an illusion of ‘autonomy’ to the worker.


Speaking about the current crisis, she said, “Even in the auto sector, the decline in the demand of the commercial vehicles, among other reasons, is due to the cash crunch, which is now being faced by the technology sector resulting in loss of jobs.”


“The thing is that most of the middle class people don’t experience the crisis until they start losing jobs, which is what can be seen with the effects of the economic slowdown on the IT sector,” she added.