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Last Updated : May 19, 2020 07:02 PM IST | Source:

Is it fair for Labour Commission to question termination and salary cuts by IT firms?

According to industry watchers, layoffs are inevitable as business volumes come down and uncertainty around when the economy would recover.

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Representative image
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Cost-cutting measures such as terminations and pay cuts by few IT firms have not gone down well with the IT employees, resulting in intervention of Labour Commission.

According to executives, government interference is uncalled for when they are not illegal.

However, few agree companies should not resort to short-term measures and be more empathetic, especially when they are cash-rich.


IT firms have high cash reserves. Net cash holdings of TCS, Infosys and Wipro are $5.9 billion, $3.6 billion and $3.53 billion respectively. Employees have expressed that at this juncture, companies that can should protect employees.

What happened?

In the last few weeks, Labour Commission sent notices to IT firms such as Tech Mahindra, Wipro and Capgemini for cutting down salaries, furloughs and benching employees. Firms such as Cognizant and Infosys deferred on-boarding of lateral hires due to the virus outbreak. Smaller IT/BPO firms such as Fareportal laid off more than 300 employees.

Employees, through IT unions such as National IT Employees Senate, filed complaints to Labour Commission. The Commission then sent notices to these companies asking for clarification in the last few weeks.

According to industry watchers, layoffs are inevitable as business volumes come down and uncertainty around when the economy would recover.

Pallav Nadhani, who recently exited FushionCharts, a data visusalisation solutions company he founded in 2003, said: "As long as the company is not doing anything illegally, government should not interfere. I don't think government has any business interfering with business decisions.

According to him if 20 percent of the people who they can’t let go due to government interference is affecting the other 80 percent, one cannot run the company.

“It is like you are being penny wise and pound foolish," he added.

However, companies should be empathetic and help employees as much as they can, Nadhani added. Nadhani pointed out that it could be offering assistance is outplacement activities to help them get placed in another company.

Firms can pay six months of salary so that they can take care of their financial liabilities. "This is relevant and this should be done," he added.

Take long-term view

Anjali Raghuvanshi, Chief People Officer, Randstad India, said companies should not take short-term measures and instead focus on long term view especially when they are can.

"For, once the crisis is over you need the employees back and how you treat them now will be important," she said.

IT firms are people intensive and branding is important to attract good talent. That is why, according to Raghuvanshi, firms can first focus on cost-cutting measures that does not affect employees such as travel and other administrative. "They should never be the first focus," she added.

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First Published on May 19, 2020 07:01 pm
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