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The labor union has claimed that software companies are adopting a number of “unfair means” to cope with the economic downturn.
Pramod Bhasin, chairman of NASSCOM, the industry’s apex trade body, says he is working overtime to steer the IT industry out of “one of the worst economic slowdowns of our times.” But he feels bogged down with the labor union’s concerns.
On May 1 – Labor Day – Unites launched a month-long “Stop the Pink Slip” campaign. The union aims to collect 100,000 petitions from disgruntled IT workers to force the NASSCOM chairman to pressure the Indian IT industry to stop cutting jobs.
If Bhasin is losing sleep over the growing power of the labor union, the heads of U.S. IT companies are faring no better. Over the past few months Alliance IBM, the New York-based union of IBM technology workers, and the Washington Alliance of Technology Workers, the Redmond-based high-tech workers union formed by Microsoft contract employees, have been running similar campaigns against job cuts announced recently by IT companies.
Believing they could always leverage their knowledge and skills to negotiate salaries and benefits, technology workers may have largely avoided unions until now. However, as the IT sectors in India and the United States have started cutting jobs to cope with the global slowdown, technology workers have suddenly woken up to the benefits of joining labor union movements.
“We have experienced a surge of new members in Unites in the last six months,” said Karthik Shekhar, the union’s secretary general. The union had about 4,000 members in September last year, and now claims to have added 14,000 more.
Alliance IBM’s membership has reached 5,600, which includes 103 new members since January 2009, while website visits recorded a quantum jump of 260,000 hits per month compared to the average 45,000 a month last year. “So we know more employees are learning of the Alliance,” said Lee Conrad, the group’s national coordinator.
Union leaders say they are not taking a militant approach. Both Conrad and Karthik say they are merely looking for ways to protect their members’ livelihoods.
India’s IT industry includes call centers and back office services with annual revenues of US$72 billion, $47 billion of which is from exports. Of that figure, 60 percent comes from the United States.
The industry has made thousands of middle-class Indians wealthy enough to lead first-world lifestyles. Yet a large section of IT workers are still oppressed and exploited, according to Unites.
“Unlike other industries, human assets are the only assets that have helped Indian IT companies to earn billions over the years,” said Karthik. “But whenever Indian IT companies face hard times, instead of cutting down on other costs, or changing business models like focusing on other skills or other markets, the first step Indian IT companies take is large-scale job cuts.”
Consequently, the industry has seen a significant and steady erosion of its employee base. This problem is more acute in the current slowdown.
“Taking the cue of the recession, Indian IT companies are resorting to many unfair means like using unscientific and biased performance evaluation to initiate layoffs, increasing working hours, cutting down privileges and even forcing workers to resign,” said Karthik.
While large-scale layoffs are troubling the Indian workforce, the U.S. unions see India as the problem. Conrad says that Alliance IBM does not consider the Indian IT worker its enemy, but he is opposed to IBM’s policy of shifting work to other countries like India and terminating U.S. workers.
“I suspect that some companies are using the recession as an excuse and are cutting jobs to boost their profit margins,” said Conrad. “IBM, which is very profitable, is cutting jobs here in the U.S. and shifting the work to countries such as India, China and Philippines, as well as regions like South America and Eastern Europe.”
At some point, he predicts, IBM will move work out of India to even less costly areas of the world. “The goal of companies like IBM is to seek areas of lower wages and taxes in order to benefit the corporate executives and stockholders,” said Conrad.
WashTech has similar grievances. “We are opposed to the policy of American companies hiring H-1B workers to retrench American workers. We consider this an abuse of the H-1B visa concept,” said Les French, president of WashTech. The H-1B is a nonimmigrant visa that allows U.S. employers to temporarily hire foreign workers in specialty occupations. “Their use of H-1B visas these days has nothing to do with a shortage of workers in America; it’s a tool to cut costs at IT workers’ expense,” said French.
IT union leaders say that compared to the unions of brick-and-mortar industries, the IT union movements in both India and the United States have a long way to go to achieve their objectives. Yet the intensity of the economic downturn has helped them achieve some success already.
“Our movement has been successful in gaining media attention on IBM's secret job cuts and the off-shoring of jobs,” said Conrad. “We are now gaining the attention of political leaders, other unions and citizens of the U.S. who at one time believed IBM could do no wrong.”
Conrad added that Alliance’s political representatives have been able to convince the Obama administration to consider measures to halt job losses due to off-shoring.
For Unites, the recession has been more than helpful. “For three years our movement struggled to gain recognition,” said Karthik. “But ever since we predicted in September last year that Indian IT would see 50,000 cuts in the next six months – a prediction that proved to be correct in just three months – the industry has started taking us far more seriously.”
Unites’ efforts have helped stem job cuts in the last few months, and have also helped many to extract better deals. The union’s involvement forced one global IT company to raise the salary of its entire Indian workforce to US$1,000 per year. The company, it appears, had been paying its Indian employees less than its international workers who were doing the same job at the same location.
Despite these tough actions, however, the attitude on the part of unions and employers is for the most part cooperative.
“Understandably it is a very difficult time, not only for employers in the U.S. but also employers in other parts of the world,” said Les French. “But what employers and employees need to do in the current crisis is to sit down and take a look at the labor needs on a global basis to determine where every dollar spent could be best utilized to solve the problem.”
“There is also a need to move back to a level playing field,” he added.
