Tamil Nadu allows unions in information technology sector

A spectre now haunts the information technology (IT) sector in Tamil Nadu, that of trade unions. The state, in a significant departure, has said the IT sector will now be covered by the Industrial Disputes Act, 1947, which allows workers to form labour unions.

Kumar Jayant, principal secretary for Labour and Employment of the Tamil Nadu, which is among India's top three software exporting states, clarified this to the Puthiya Jananayaga Thozilalar Munnani (New Democratic Labour Front), a grouping that had raised its voice against the dismissal of employees at TCS last year.

The issue arose after TCS dismissed hundreds of employees in January 2015, leading to the formation of the IT Employees Wing supported by the NDLF. The front, after failing to extract a response from the state government, approached the Madras High Court seeking a direction to the administration to clarify whether the IT sector was covered by the Industrial Disputes Act, following which the note was issued.

"IT company employees are free to form trade unions and can redress their grievances through evoking the provisions of the Industrial Disputes Act," Jayant said in the note.

Most large Indian IT companies like TCS, Infosys, Wipro, HCL Technologies and Cognizant have campuses employing thousands of software engineers in Tamil Nadu. Infosys has over 17,000 employees in Chennai, Wipro has 25,000, and TCS, India's largest software exporter, has 60,000 employees in 13 centres in the state.

The clarification comes at a time when the IT industry is undergoing a business shift towards automation. All technology services firms have forecast lower hiring this year as a result of this shift. This could also affect other states if the business climate changes.

Case of Karnataka
This is a signifcant departure from the practice in the neighbouring state of Karnataka, the country's largest technology hub, which has rules prohibiting formation of labour unions at these companies.

In fact, Karnataka has exempted the sector from the industrial employment (Standing Orders) Act 1946 and has also declared that IT firms will be treated on par with "essential services" in the face of a strike or bandh.

Reactions to the move
The response to Tamil Nadu's clarification from sectoral players was mixed.

An e-mail to Nasscom, the IT sector lobby, remained unanswered. In the past, Nasscom has said the nature of work in the sector cannot be compared to work in the manufacturing industry.

"Nothing stopped employees from forming a union till now. They have chosen not to do so. So long as we take care of employees, they will not feel the need to form unions,"said B V R Mohan Reddy, former chairman of Nasscom and founder and managing director of Cyient.

"Given all the noise surrounding how some companies have not honoured their commitments, this was inevitable. Though the announcement is understandable, it is not desirable. It is also a fact that the industry has thrived because of the absence of regulatory hurdles," said Rostow Ravanan, co-founder and chief executive of Mindtree, a Bengaluru-based software services company.

Union Minister for Communications and Information Technology Ravi Shankar Prasad, too, did not provide firms much comfort. "It is a state issue, but since infotech companies are doing well, local laws have to be followed," he said.
WHAT'S THE MATTER?

• The issue arose after TCS sacked employees in January 2015
• Most large IT firms like TCS, Infosys, Wipro, HCL Technologies and Cognizant have campuses in the state
• Clarification comes at a time when IT industry is undergoing a shift towards automation
• Karnataka, the country's largest technology hub, prohibits formation of labour unions at IT companies