Onsite IT staff will have to sign bonds

Indian information technology (IT) firms have started asking employees who are being chosen for onsite work (at the client's location abroad) to sign bonds ranging from six months to a year to ensure that they do not immediately quit the company when they return to India.

Techies consider onsite posting rewarding because the difference between offshore and onsite packages is more than three times. Besides, onsite employees are given special allowances for working late hours, transport, medical costs and insurance.

However, "many are not showing much interest in it due to the recent guidance (bond)," said a Wipro employee on condition of anonymity.

Wipro Technologies, for instance, asks its employees going on onsite assignments to execute an agreement on stamp paper, committing to stay with the company for a minimum period of one year following his/her return.

The bond will be applicable for employees being sent on onsite assignments after August 1, 2007. The company in a circular issued to its employees internally has defined the long-term assignment as anything that is more than three months (90 days).

Wipro Executive Vice-President Pratik Kumar told Business Standard that the policy was not new. He, however, added that the minimum period of stay was much less than one year.

However, sources in the company said the circular said an employee quitting the organisation before completing a year after his return from an onsite assignment would have to pay a penalty on a pro rata basis, subject to a maximum of Rs 4.2 lakh for a full year.

Tata Consultancy Services (TCS) and iGATE Global Solutions have similar policies that ask employees to sign a bond committing to stay with the company for a minimum of six months on their return.

"This is done to protect the interests of our customers since most projects at TCS work on an onsite and offshore model," said a TCS spokesperson.

Pavan Duggal, advocate, Supreme Court, says short-term bonds hold good in law. "Bonds were earlier considered to be a violation of fundamental rights. However, with regard to knowledge industries like IT, the courts have started accepting short-term bonds as 'reasonable restrictions' since the sectors deal with confidential data of clients," he said.

Analysts opine that most of the new clauses in the HR policies of domestic IT firms are an offshoot of the increasing price pressure and competitive environment that require them to deliver projects on time.

So it is critical to retain the employees who have honed the right technical expertise and exposure by working at clients' locations across the globe.

Said Nikhil Rajpal, vice president, Global Sourcing Practice, Everest Research Institute, "It's all about attrition. IT companies spend a lot of money and energy on training their employees. When they quit, sometimes it becomes a difficult to get a replacement and train them so as to join the project immediately. This hampers the clients' works. I know many European companies who have similar policies."

BONDED EFFICIENCY

Short-term bonds hold good in law

They ensure smooth transition of work if the employee quits

They help retain employees who have honed their skills on onsite projects

Employees do not like onsite bonds, saying it makes the proposition less attractive since they have to pay penalties if they break the bonds