The Department of Commerce has notified an amendment to the 2006 Special Economic Zone (SEZ) rules, allowing up to 50 percent of total employees of Information Technology (IT) and IT-enabled Services (ITeS) to work from home. Experts say that the notification can help employers get employees to return to office, as well as shape a hybrid work model as it gives employees the flexibility they are asking for.
Ramkumar Ramamoorthy, a partner at tech advisory firm Catalincs and former Chairman and MD at Cognizant India, said, “One, many companies were struggling to get their employees back in office. This notification is a blessing for them to get them into office citing the government directive. Two, it helps shape a hybrid work model with employees enjoying the flexibility of working from a physical office for two to three days a week or every alternative week, and so on,” he said.
A new rule, 43A, has been added that applies to employees of IT/ITeS units, employees who are temporarily incapacitated, those who are travelling and those who are working offsite.
The Department of Commerce said the notification was issued “on demand from the industry for making a provision for a country-wide uniform Work From Home (WFH) policy.”
Industry bodies such as the National Association of Software and Service Companies (Nasscom) have demanded such a rule.
The Department of Telecom’s Other Service Provider (OSP) guidelines were relaxed when the pandemic began so that employees could work from anywhere.
Most IT companies, while they are looking at bringing people back to offices, have said that a hybrid work model will be the way going forward.
SEZ units are offered incentives such as tax benefits, but have to observe several regulations as well.
The government notification said IT/ITeS companies are required to submit details of employees who have been permitted to work from home. Companies have to maintain an “accurate attendance record” for the entire duration of the WFH, which is limited to a year initially but extendable.
The notification provides a 90-day transition period for SEZ units whose employees are already working from home. The SEZ’s Development Commissioner can approve more employees for WFH.
New ways of working post-COVID
Ravi Mahajan, a partner at EY’s India Technology, Media & Telecom practice, said the notification “provides recognition to new ways of working in the IT/ITeS sector post-COVID.”
Rama NS, the CEO of the Electronics City Industries Association, said companies weren’t willing to allow employees to work from home, because security is an issue, particularly while working for global customers.
“Customers were not for it earlier. Thereby companies were not encouraging this. Now that the pandemic has shown the way how employees can work from home without compromising security, the flexibility will definitely help employees,” she said, adding that this is in line with the thinking of employees.
“While it is helpful to interact with people in teams and employees will be expected to be present as customer visits increase, hybrid is here to stay in IT/ITeS,” she added.
Concerns have been raised about the requirement to submit details of employees working from home. Some consider it to be operationally challenging and hard to implement because it’s hard to predict which employee will be required in the office for a particular project at what specific time.
Ramamoorthy said the new model’s adoption must not be cumbersome, and companies must be given time to adjust as this notification overrides one that gave them the option of having 100 percent of employees working from home.
“The government should not make the adoption of the new model cumbersome by seeking too many details about movement of employees, equipment or gadgets and trust the companies with their judgment on running their daily operations. Else this rigmarole will run counter to the government’s claim of less government and more governance,” he said.
EY’s Ravi Mahajan also said that an alternative could be to extend the 100 percent flexibility which was introduced in response to the COVID-19 circumstances till the Development of Enterprise and Service Hubs (DESH) Bill is enacted.
The DESH Bill, set to be tabled during the ongoing monsoon session of Parliament, seeks to overhaul the Special Economic Zone Act.
For companies, Ramamoorthy added, as they are moving away from designated seats at workplaces unless there is a client mandate, it can reduce infrastructure costs by half.
“More importantly, this will enable companies to ramp up their operations in Tier 2 and Tier 3 locations where Class A commercial real estate that can accommodate thousands of employees has been a challenge, thereby making the IT growth story more distributed and inclusive,” he said.
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