The IT (information technology) sector must be fuming, but lakhs of employees working for software firms in Tamil Nadu may be relieved after the state government allowed them to form trade unions, with the sector being brought under the ambit of the Industrial Disputes Act, 1947.
Until now, the IT sector has been completely exempted from this law compared with the manufacturing industry, which is highly unionised.
Acknowledging employee rights for a strong 4.5 lakh IT workforce in Tamil Nadu, state labour secretary Kumar Jayant in reply to a petition by the labour union wrote, "IT company employees also are free to form trade unions and redress their grievances through evoking the provisions of the Industrial Disputes Act 1947. Any trade union with IT employees as its members can rise industrial disputes under section 2 (k) of the act and seek remedy," said a Times of India report.
Trade unions, which have been restricted to factories, have been trying to get a foothold in the $118-billion IT sector that employs nearly four million people, the ToI report said.
So will this result in other states, particularly other Southern states, joining the bandwagon and allow IT employees to form trade unions? If it does, it may throw up a new challenge to the sector. As it is, the move comes at a time when the software industry is embracing automation and artificial intelligence which is expected to result in job losses.
A report in the Mint newspaper recently said that Wipro plans to use artificial platform Holmes to automate some aspects of projects to save $46.5 million. It would also free about 3,000 staff from "mundane software maintenance activities".
However, former Infosys board member TV Mohandas Pai has strongly criticised the move. In an interview to CNBC TV18, Pai said, "The IT industry caters to the global marketplace and there we need certainty, we need 24x7 service because we do very critical work."
"If you don’t have proper legal protection for work to be done in 24 hours and you are susceptible to several demands from employees, then, it is going to be troublesome," he said.
However, the move is not expected to increase costs for the IT companies, but experts fear the sector could become uncompetitive over a period of time.
"In my opinion, this is more like a small kind of a HR related issue that a company may face at the end whenever they would have this kind of a small slippage in terms of some firing which they may do for -- there are cases where people don’t want to relocate and the company has no choice to end up firing some of the people for non-performance," Moneycontrol quoted Rahul Jain of Systematix Shares & Stocks.
According to Pai, the IT sector has become a mature industry now. "It handles a lot of critical functions and if there are some things like this, I think it is something that they have to keep an eye on," he said.
Last year, when industry major TCS undertook a severe retrenchment exercise to cut its workforce, various labour unions had mobilised IT employees in Tamil Nadu following reports of massive downsizing by the IT giant.
While agitating techies had then said TCS was retrenching more than 25,000 workers, the tech giant maintained that it was part of its 'workforce restructuring' exercise and job cuts were not more than 3,000, a TOI report said then.