Close to 80 percent of the companies think the new Haryana labour law will have a negative impact on their future business operations and investment plans in the long run, according to a NASSCOM report.
The report titled, Impact of the new Haryana State Reservation Law March 2021, reveals that the impact is likely to be the highest in the first 1-2 years of implementation with high attrition rate.
On March 2, 2021, the State government passed the Haryana State Employment of Local Candidates Bill that mandates 75 percent reservation for local people in private sector jobs, where the salary is less than Rs 50,000 a month, impacting fresh hires the most.
The NASSCOM report was based on the response by the 73 member organisations that employ close to 1.44 lakh people in the State. Around 500 IT-ITeS firms employ about 4 lakh people in Haryana.
“Extrapolating to 4 lakh IT-ITES employees, the Act will overall impact about 1.5 lakh current jobs (37 percent of all the IT/ITeS jobs). Given that the Act applies to new hires, the impact is expected to be severe in 1-2 years as the industry sees a high attrition rate,” the report said.
If this policy is implemented, companies surveyed said that they will have to shift to other locations to source talent. “Majority of the companies have expressed concerns on the recruitment strategies as the law will significantly increase the compliance burden and will limit the industry's ability to hire people at will,” the report said.
The legislation will also make it difficult for the companies to adopt and follow Diversity and Inclusion policies and will lead to discrimination, the report added.
Of the total employees in the companies surveyed, more than 80 percent of them who earn Rs 50,000 or lower are not natives. Also 44 percent of the total employees earn less than Rs 50,000.
This a result of huge skill gap in local market vis-à-vis demand. The State, the report said, does not have enough skilled people in the areas of AI and machine learning, data science, R&D Skills, and engineering and technical skills, where there is a huge demand right now.
The concern persists despite the clarification from the government statement that the law is applicable only for non-technical jobs and hence unlikely to impact the tech industry.
Aditya Narayan Mishra, founder of staffing firm CIEL HR Services, said in an earlier interaction that it (clarification) definitely shows that the government is open and has rethought the policy, which earned a backlash from the tech sector. But before the companies rejoice, the sector needs more clarity, he said.
“We need a better understanding on what defines technical and non-technical jobs,” he said. For instance, it is not clear if the sales function in an engineering firm will be categorised as a technical or non-technical job. Also when IT/ITeS firms hire freshers, not all of them are hired for core technology roles.
“Some of the freshers are hired for non-technical roles such as business process functions,” pointed out Sunil C, Head, Specialised Staffing, Teamlease Digital.
There are also concerns about the nature of compliance, which was not made clear by the industry.