Unionization in IT/ITES Sector: A Human Resource Management Perspective
Unionization in IT/ITES Sector: A Human Resource Management Perspective
Unionization in IT/ITES Sector: A Human Resource Management Perspective
Sector
A Human Resource Management Perspective
Contents
Trade Unions in the Services Sector ....................................................................................................... 3
Introduction ............................................................................................................................................ 3
A new flavour to unions – ITES/IT ....................................................................................................... 3
Setting the Background ........................................................................................................................... 5
Why Organize IT/ITES? ............................................................................................................................ 6
Key Issues ............................................................................................................................................ 6
Nature of Work ............................................................................................................................... 6
Shifting focus to non‐bargaining activities ...................................................................................... 7
The bright side of things! ................................................................................................................ 7
All that glitters is not gold! .............................................................................................................. 7
Does IT/ITES need a Union? .................................................................................................................... 8
Challenges in Union Formation ............................................................................................................... 9
Industry Initiatives to “Organize” IT/ITES Sectors ................................................................................. 10
IT Professional Forum ....................................................................................................................... 10
West Bengal Information Technology Association ........................................................................... 11
Association of IT Employees, Kerela ................................................................................................. 11
The Future ............................................................................................................................................. 12
A Reality Check – Survey ................................................................................................................... 13
Profile of Respondents ................................................................................................................. 13
Mode of Surveys ........................................................................................................................... 13
Survey Findings ................................................................................................................................. 13
Respondent’s basic classification .................................................................................................. 13
Awareness about unions ............................................................................................................... 14
Perception on Unions.................................................................................................................... 14
Survey Conclusion ............................................................................................................................. 15
Bibliography .......................................................................................................................................... 16
Other references ................................................................................................................................... 16
Trade Unions in the Services Sector
Introduction
A new flavour to unions – ITES/IT
A few years back, India was mostly dependent on the industrial and agricultural sectors for its
growth numbers. But off late the phenomenal performance of the Services sector especially the
IT/ITES & BPO sector has positioned India as a major economy in the world. The industrial sector
comprised of Manufacturing, Mining and Electricity sectors. These sectors were perennially plagued
by major problems like Unionization and Organizational Politics. The Blue Collar worker has always
found the support of an Association or a Union, where he enjoyed the right to raise issues
concerning him, challenge management, and express his aspirations more emphatically. With the
Services sector now contributing roughly 52% of the Indian GDP, it is becoming an important source
for nearly 34% of the Indian population. Almost $55 bn of it comes from the IT/ITES and BPO sector.
This sector currently employs nearly 1.6 million people and promises to absorb another 700000 by
2010.It currently employs approximately. The market indicators continue to be positive with a
potential untapped market of over $300 billion worldwide for IT/ITES and BPO sector. The software
and services industry has continued to exceed forecasts every year. For FY08 Nasscom forecasted
revenue of $50 billion, out of which IT software and services exports would contribute $28‐29 billion,
followed by ITeS/BPO between $10.5‐11 billion. The domestic market is expected to reach $10
billion, at a growth rate of 20‐22 per cent.
India has come to be recognized as the hub of outsourcing activity. The time differential and
sufficient supply of qualified IT professional would imply that the jobs would continue to be shifted
to India, in spite of the restrictive moves in the US and other European countries. It is estimated that
in the course of the next decade about 3.3 million jobs in ITES will move out and a lot many of these
would land in India. As such the demand for outsourcing work will continue to grow as long as India
is cost effective and maintains a high quality of service.
Recent decades have seen deep changes in the political and economic background, which have had a
downbeat outcome on the situation and authority of trade unions. The interconnected factors,
which contributed to this situation, are:
• Globalization has paved the way for intensive pressure in product markets, has led to an
exponential movement of capital, and has also resulted in compounding susceptibility of labour.
• Technological changes have given hope and opportunities for redesign production through
better and more innovative methods, which include having production capacities in different
geographies.
• The skill set of today’s employee force is expanding fast and has become important for
organizations to consider.
• Women workforce now forms a major chunk of the working population.
As the IT sector is producing more and more employment in India, the prospect of unionization in
IT/ITES is being evaluated by many stakeholders.. The main stakeholders in the development are
• Employees: This category comprises of the employee workforce of the various IT /ITES
& BPO companies in the country.
• Management: This category mainly comprises of the senior management of a company
which would in case of unionization, would have to deal with the union representation.
The Middle level managers are also a part of this category, as it is under their leadership
and governance, which has a direct influence over the welfare of the employees.
• Unions: There are many State level and National Unions that have expressed enormous
interest in extending membership to these employees and growing the number of
members in their unions.
• HR Department: The HR department which is the official channel where employees
voice their concerns and career aspirations will get directly affected by origination of a
union in their respective companies.
Indian trade unions have however been slow in reacting to the change. This in turn has been
resulting in loss of membership as also marginalisation of trade unions, emergence of new forms of
workers organizations, and employers / managers undertaking roles/ functions traditionally
performed by trade unions. Dramatic changes have occurred in the industrial concentration of
labour force over the past two decades. The emerging opportunities in services and information
technology sectors due to business process outsourcing have shifted employment opportunities in
the new economy sectors. India, with its young and educated workforce has emerged as one of the
most productive source of manpower. The changes in the industrial concentration of labour force
will continue to have a major impact on trade union.
The new economy sector predominantly union‐less will be a magnet for unions. In the initial stage
steps have been undertaken to organize these knowledge workers to provide a better quality of
work life. Trade Unions have been working on exploring possibilities to enter these sectors, which
are mostly in export processing or special economic zones.
Setting the Background
On the employee relations front, the expansion of IT/ITES made employment more flexible. Services
sector has helped to escape from existing collective agreements or challenge them, eliminating the
traditional regulatory constraints, and moving in the direction of the more liberal employment
model. Indeed, union avoidance has been the core management strategy in the services sector.
Recently, fear seemed to have gripped the IT/ITES industry, this was not related to losing business
but to unions being formed in the sector. The media highlighted the possibility of investment shying
away from the Indian shores as labour groups begin to organize employees in this sector. Some fear
that unionization would kill the fledgling services boom in the country.
The media argued that there was no room for complaints against the BPO outfits as they provided
exceptionally good environment and good salaries. The move to unionize workers was seen as a
retrograde step which would spell disaster for the industry. It was asserted that third party
intervention did not augur well for the industry.
Advocates of this philosophy often negate the role of unions while emphasizing that sophisticated
human resource management (HRM) strategies have a significant potential to take care of workers’
interests. Thus, the ground has shifted dramatically from a pluralist to a unitarist perspective of the
employment relationship.
This new relationship between employer and employee marginalises the role of unions in the
workplace or emphasizes overt union avoidance. There is a choice between exclusivist and
inclusivist strategies that companies need to make.
Exclusivist strategies include firms casualising and outsourcing staff, the outright refusal to negotiate
with unions, while inclusivist strategies involve the use of employee involvement schemes and
human resource initiatives. The message it gives may either be inclusivist, that is telling particular
employees that they are an integral part of the organization; or exclusivist, that is, indicating that
particular forms of behaviour or unions, are not welcome. Inclusivist actions seek to increase
employee distancing and separation from the organization of unions, whose values are inconsistent
with those of the organization.
Management has endeavoured to increase commitment via employee involvement schemes that
focus on improving management‐employee relations and thereby eliminating the perceived need of
employees to involve unions in representing their interests. The nature of the work can provide
opportunities for unions to organize. Much of what management wants to achieve conflicts with the
employees’ interests. Performance targets, minimizing the agents’ time away from the telephones
and minimizing staffing levels result in work intensification, besides, lack of career and promotion
prospects and monotony give rise to resistance, including union representation. The “new” issues of
service quality, discretion to deviate from standards and recognition of social skills are added to the
more traditional bargaining issues of pay, working hours, and holidays.
Why Organize IT/ITES?
Labour is one factor that has borne the major brunt of the outsourcing exercise be it the indigenous
or the foreign companies. They have not only faced reduction in wages but also withdrawal of social
benefits. The policy makers however seems to have been lost in their exercise to earn more foreign
exchange and the shining ambience of the modern establishments. The issue of social costs is not in
the agenda of either the employers or to that matter of the Government.
Key Issues
Nature of Work
The attractions of comparatively good rewards accompanied by modern work environment have
been inducing the young workforce to opt for a very challenging and stressful work. In the glamour
of being designated as professionals and working for the multinational companies, these works have
been overlooking its adverse effects, particularly those that are invisible. The unions in India are in a
state of confusion as they are yet to decide whether IT workers come under their area of operation
and if so how to organize them.
Shifting focus to nonbargaining activities
In view of employers taking keen interest in the monetary and non‐monetary improvements of the
employees, unions will shift their focus to other issues related to equity, gender related aspects,
human rights, transparency and disclosure of information. Unions will also insist on soft issues such
as career development, skill formation, education, knowledge management, competency based
training and decent work.
The bright side of things!
A BPO employee’s day starts at about 18.00 hours when the company’s vehicle arrives at the
workers’ residence to pick for the office. After about an hour the worker is in office that is bright and
lively. A brief interaction with boss follows and then entry to a small cubical equipped with a
computer and telephone wherein the race to attend 100 to 125 calls in eight hours begins. The
worker is allowed to go to toilet twice, break for meal once and beverage once all of which must be
accomplished in 60 minutes. Apart from a comparatively decent salary, there are other attractions
too such as door to door transport, security guard escorts, and refreshment on the house, picnic,
excursion and young colleagues. The package also includes enhanced status of a Multinational
employee.
All that glitters is not gold!
Recent research has described BPOs as “electronic sweatshops” and “assembly lines in the head”
with jobs being characterized as dead‐end, with low complexity, low control, repetition and
routineness.ITES employees follow scripted dialogues and detailed instructions and their work is
closely monitored, tightly controlled and highly routinised. The pressure for quantity versus the
aspiration for quality imposes conflicting role requirements on employees. Working for overseas
clients whose customers are located in the US, Canada, the UK or Australia means that employees
have to work in night shifts in order to respond to different time zones. There are employees who
are able to adjust to night shifts after an initial period of discomfort. But there are others who find it
difficult to manage night shifts, experiencing health problems such as loss of appetite, changes in
body weight, chronic fatigue and drowsiness, decreasing vigilance and irritability on account of
disruption in eating, digestion and sleeping patterns, as a result. Shift work also affects family life.
Some employees do not see or have a meal with other family members for weeks on end.
Unscheduled breaks during the working hours are not permitted while scheduled breaks are tracked
by specially designed software. Employees have to log in and log out at specified times. Though
normally, during a shift, slots are provided for two 15‐minute breaks and a break of half an hour for
lunch/dinner, breaks are decided by the team leaders on the basis of call levels or call queue. Delay
even by a minute to take their seats after a break results in yelling and use of abusive language for
everyone to hear across the floor. Long queues in the cafeteria force them to choose fast food or
skip their meal/snack in order to log back in time. This also affected their food habits and nutrition
intake.
Such strict observation of time sometimes means that they cannot log out of their systems or leave
their seats even to go to the restrooms (if it was an emergency, they had to seek permission from
the team leader to do so) or get a breather. Employees are denied leave even in case of serious
ailments or problems. When the call volume is high people are expected to report to duty no matter
how ill the person is. There are some who are denied leave by the management and later threatened
with termination letters. They are not always paid overtime for the extra work they put in. In fact
extra work is required to be done to impress one’s superiors who would ensure further growth in
the organization.
For managers, employees are required to have a foremost responsibility to their job rather than to
the family. Skipping company outings in some cases is equated to lack of commitment to the team
and team bonding. Employees’ please of their inability to spend quality time with members of their
family are generally ignored by managers. As a result, in an effort to juggle between family and work
resulted in agents depriving themselves of sleep. Their weekly breaks are spent entirely with the
family or to handle household chores.
Does IT/ITES need a Union?
The job is stressful and causes friction in one’s social life. Further the job at times becomes
frustrating due to irate and abusive customers. The fact that the majority of the BPO employees are
women, life becomes even more difficult. For trade unions in South Asia, the concerns of IT works is
still to penetrate in their agenda. Let us now look at a live example where there is Union resentment
at an international level with regard to outsourcing business of Microsoft.
The stand of Indian trade unions is, understandably, divided. On one extreme is the INTUC whose
leaders have openly been supporting the emergence of new avenues of employment while on the
other hand the Left unions asking for check on exploitative conditions that exist in EPZs and BPOs.
Indian Unions needs to look at the job security, social security protection, time schedule, etc.
Adoption of a policy aimed at free movement of people between countries, through relaxing
immigration laws, could only help in meeting the challenges posed by gap between demand and
supply of IT professional.
Challenges in Union Formation
The HR department has been seen to be rendering unions redundant. In BPOs run by MNCs, team
meetings or skip level meetings are arranged to provide a platform for employees to air their
grievances. In some BPOs an email is enough for their managers to sit up and take notice. If the
immediate manager has not considered their issue, they could take it up with the next immediate
senior manager. In fact, customer service representatives in some BPOs believe that they could even
talk to the CEO or send him/her a mail.
However, this is rarely required to be done as their problems are immediately resolved. A simple
complaint to the team leader or operations manager does set things right. Individual dialogues with
ones superiors are encouraged to address grievances. Even personal problems are discussed. People
are encouraged to express their frustrations and feelings so that performance does not suffer. They
can also raise issues in the surveys that regularly happen.
For some employees, the HR department is like a union taking up issues on the behalf of the
employees. Problems with the operation managers can be reported to the HR which would then
take up the issue with the concerned authorities. This is reinforced by the belief that there is almost
no or only a minimal hierarchy between the customer service representatives and the management.
The informal atmosphere of using first names and provisions for games and sports is proof of this.
Therefore a union which could take up the issues on behalf of employees are not required as
perceived by some. They often believe that the numbers reflect performance. Performance matters
and it is natural that those who did not meet the standards should be told to quit.
Union formation is also inhibited by prevailing labour market conditions, poor awareness about
unions, a vicious public opinion against any form of employee collective and an extremely young
work force having a fluid career path. Many employees are not even sure of sticking around in a
company so they are reluctant to initiate a collective exercise. Changes in these factors over a period
of time could see the emergence of unions.
Organizational culture, human resource management and total quality management have sought to
promote a corporate ethos that demands loyalty from employees and it excludes silences or
punishes those who question its creed. Through the strengthening of culture, the space within
organizations for expressing and developing awareness of, and allegiance to, alternative norms or
values is reduced and, ideally, eliminated. People willingly perform jobs because their sense of
purpose and identity is tightly coupled to the core values of the corporation.
Tackling attrition is one area in which unions stand to benefit the most. Unions could be seen as
positively contributing to the organization’s goals, and at the same time, they could help in
organizing the workforce. Employees who may be more committed to the organizations, in which
they work, as signified by intentions to stay, are more likely to be union members than those with
less organizational commitment.
Industry Initiatives to “Organize” IT/ITES Sectors
IT Professional Forum
The first initiative to organize IT workers in India had been made in Bangalore, the original IT‐hub
center. Following the Y2K hype, a group of activists laid foundation for organizing IT Workers in
Bangalore in November 2000. Since then it has been undertaking various activities to promote
interest of IT workers. Earlier this year, the ITPF‐Karnataka initiated a process to form a national level
body to be known as the IT Professional Forum‐India. A meeting to this effect was held during April
2004.
Some of the important findings that came out of ITPF Experience include:
• IT Workers consider themselves as professional and as such have reservations in being
clubbed with workmen;
• The IT workers be organized on individual basis irrespective of the place they may be
working (this is to meet the challenges posed by high level of attrition);
• The public image of trade unions in India will have adverse impact on the present and future
employability;
• The IT industry is functional under global environment which is not clearly understood by
the unions’ current leadership;
• The benefits for which unions are fighting are already granted by the Employers;
• The Employers feel that unionization will adversely affect their product delivery schedule
which would imply loss in business to competing parties countries;
The ITPF as such is being organizing individual IT Professionals and focusing on activities aimed at
enhancing IT Workers capacities in the areas of language modulation, living and working pattern in
foreign countries; up gradation of computer handling skills etc. It is also planning to start a Business
Diploma Programme of a Business School in Australia.
West Bengal Information Technology Association
The first‐ever trade union in the fast‐growing IT sector in West Bengal was launched by CITU, ruling
CPM's trade union front, which said it was necessary because of alleged rampant flouting of workers'
rights. The West Bengal Information Technology Association was launched in satellite town ship of
Salt Lake considered the nerve centre of IT industry in the state. The association alleged that
workers' rights were regularly violated by IT companies and they were flouting rules framed by the
government, depriving workers of basic rights like PF and ESI.
Association of IT Employees, Kerela
A State‐level organization, Association of IT Employees, which claims to enjoy the support of major
trade unions, has been launched in Thrissur in November 2006. It seeks to bring together employees
in IT and ITES (IT‐enabled services) /BPO domain and countless professionals in the unorganized
sector. With outsourcing being the primary growth engine, the sector has long and odd working
hours that suit the schedules of customers abroad, the outcome: employees suffer from stress and
work‐related ailments. To combat this problem, the Union Health and IT Ministries are
contemplating a health policy for IT employees.
Also disparity in wages is gaping. Some get jaw‐dropping salaries, others abysmally low amounts.
The norm is: perform or perish. To tackle these issues, the INTUC (Indian National Trade Union
Congress) is planning to enter the State's IT sector in a major way. Trade unions alleged that
registers were not properly maintained in many IT companies. There is blatant violation of labour
laws.
However, a large section of the IT sector is worried about having labour unions. Trade unionism will
destroy the sector, especially at a time when Kerala is finding a toehold in the global IT order. Kerala
accounts for IT export revenues of Rs.500 crore. Compare this with the achievements of Karnataka,
which accounts for one‐third of the country's IT exports. In the current fiscal, Karnataka is expected
to take in 37 per cent of all IT revenues amounting to Rs.37,000 crore.
The Future
The development trends in India indicate that some of the cost advantages that it had may not
continue for long. For example the labour cost advantage may soon vanish as China and other
neighbouring countries are catching up. The overall operating cost of running a BPO business in India
is rapidly rising. The labour costs have already gone above 50% as against 15 to 25% in 2002. On the
other hand the exchange value of US dollar is ever on decline. Added to this are customer
acquisition costs‐ about 10‐15% of the revenue.
A look at the IT and ITES scenario in India show that more than 60% of the BPO business is voice
related. This over dependence on voice business could mean disaster for many companies. As such
companies need to look for more value added business by venturing in to non‐voice operations, such
as transcription processing, human resource and consulting.
The organizing of workers should not imply loss of business and then jobs. During a discussion with a
group of Senior Managers of a major Computer Company in India, it was expressed that
“Unionization of IT Workers be not undertaken as that would destroy the Indian IT Industry”. Similar
is the view of the IT Workers who say ‘Unionization for what, we already have more than what
Union can profess to secure’. In such an environment the work of organizing the IT Workers in the
above background needs to be undertaken with caution.
In the emerging global environment it is imperative for the trade unions in India to transform its
roles and functions in a manner to suit new and educated workforce seeking employment without
national boundaries. The ability of business to quickly move to other parts of the world is an
important factor that national unions need to examine before adopting their strategies. It is also
important for the leaders to acknowledge that we are living in a world where information from
anywhere is available to all at the click of a button. The unions are thus dealing with an informed
workforce. The new workforce may desire and expect use of knowledge tactics than physical force
from its leaders.
In a world that is trying to promote the idea of a Global Village the national unions can’t continue to
be local in action. They have to see that their policies and strategies are in consideration to the
developments worldwide. It is the international competition that has come to play at the national
level.
As such the international issues such as enforcement of ILO’s core labour standards, solidarity
among national trade unions, networking with GUFs for collective actions, ergonomics and other
occupation related diseases, etc need to become prim
mary motivators. The pro
omotion of a
a sincere
onship with eemployers w
work culture, cooperative relatio with aim of keeeping the eenterprises viable too
o be at thee focus of employer‐ em
ought to mployee relaationship in all the secctor of the new
n and
globalizeed economiees.
A Reallity Check
k – Survey
y
Profile of Respond dents
• Survey of ovver 200 Whitte Collar proffessionals fro om all over India was con nducted
• Employees b belonged to companies like TCS, In nfosys, Wiproo,Patni,HCL, Daksh,Adob be Texas
Instrumentss, Adobe, Evaalueserve
• Designation of Respond ware Engineeers , Projectt Leaders to Account
dents varyingg from Softw
Managers
Mode o
of Surveys
• Online Interviews
• Online Surveeys
• Hand Surveyys
Survey
y Finding
gs
Respon
ndent’s basiic classifica
ation
What do yo
ou see yourse
elf as?
Current Occupation off the
Resspondents
90.00%
% 8
82%
80.00%
%
Student
Employed 70.00%
%
60.00%
%
50.00%
%
40.00%
%
43%
30.00%
%
18%
57% 20.00%
%
10.00%
%
0.00%
%
Sttudent with Teamm Indivvidual
prrior IT exp Contribu
utor Contrributor
Awaren
ness about unions
Are yo
ou aware of aany Do/Did youu have an emmployees’
associatiions/unions for IT associaation or any other
emmployees? repre
esentative bo ody?
Yes No
83% 5%
No
17%
%
Yes 9
95%
0
0% 50% 100%
Percepttion on Uniions
78%
80%
No 82%
60%
Yes
40%
22% No
20% Yes 18%
0%
Yes No 0.00%
% 50
0.00% 100.00%
Would you like to havve such a Do/Did yoou think havving an
platform
m (an emplo oyees’ e
employee r representation, if at
re
epresentativve body) whhich helps all, would hinder you
ur client
y
you address s your workk‐related service/d
day to day ro
outine
issues at an o
organizatio
onal level? work?
Yes
Yes
No
31
1%
29%
71% 69%
Survey
y Analysiss
Bibliography
Taylor, P and P Bain (1999): ‘An Assembly Line in the Head: Work and Employment Relations in the
Call Centre’, Industrial Relations Journal,
Vol 30, Pg101–17
Rose, E (2002): ‘The Labour Process and Union Commitment within the Banking Services Call Centre’,
Journal of Industrial Relations, Vol 44, No 1, March, Pg 40‐61
UNI (2004): Global Outsourcing of IT Jobs in Asia: Issues and Challenges for the Trade Union
Movement, UNI‐APRO, Singapore, March 29
Bierce & Kenerson, P. C. (2003): In My Opinion: The India Advantage, Michael F. Associates Ltd
Other references
www.bpo.nasscom.org
Hindustan Times, 1st August, 2004
http://ibef.org/artdisplay.aspx?art_id=16032&cat_id=60&refer=n36