In a first such instance, close to 80 techies from HCL Tech America earlier this week joined a United Steelworkers union (USW) in the US.
Many factors, including increasing localisation by Indian IT firms to counter the visa issues in the US and the resulting talent crunch, are leading to unionisation, said experts.
What happened?
So far, white collar workers from tech had stayed away from labour unions. But that changed on September 25, when 80 Pittsburgh contract employees from HCL America voted to unionise with USW despite the efforts from the company to stop them.
These HCL employees were deployed at Google's office.
The unionisation was in a bid to demand better remuneration, work benefits and also job security from HCL. Since they were contract employees they were not privy to any of these benefits that permanent employees can avail of.
Some reports claimed that these contract workers, who are college degree holders, earn only $40,000 per year without benefits such as sick leave and also the healthcare benefits as opposed to the permanent employee. A NASSCOM-IHS Markit report reveals that average IT salary in the US is $95,000, whereas Indian companies pay 2 percent higher.
Why the unionisation?
Unlike Silicon Valley, where the talents are expensive, areas such as Pittsburg have lower salaries.
Rituparna Chakraborty, co-founder, Teamlease Services, a staffing firm, said that generally contract workers are paid higher than permanent employees given that they are not eligible for any benefits. However as demand for American locals increase, IT firms are moving to areas where talents are cheaper.
In an earlier conversation with Moneycontrol, Arvind Thakur, co-founder, NIIT, said that NIIT Tech is setting up centres in low-cost locations, where talents are available at much lower rate. These low-cost locations are tier 2 and tier 3 cities in the US such Pittsburgh, Pennsylvania. NIIT Tech has set up its centre in Boise, Idaho.
This is exactly where disparity comes in and maybe to some extent justified.
"Most of the work done for Google by contractors in Pittsburgh and other tier 2-3 cities is typically non-core in nature. The pay and perks disparity between Google employees and contractors in such scenarios will be very high, given the difference in job roles," said Vimal Menon, Director, Zinnov, a business consulting firm
In addition, areas such as Pittsburgh are typically industry bastions where unions are common unlike the Silicon Valley, where tech jobs are predominant and remained largely non-unionised until now, Menon added.
"As companies search for more affordable talent and move into tier 2 and tier 3 cities like Pittsburgh, which have been traditional manufacturing bastions, unionisation efforts are bound to happen," Menon added.
This move could likely affect the sentiment of contract workers in other areas as well and that would be significant given the dependence on contract workers in the recent times.
Chirajeet Sengupta, Partner, Everest Group, pointed out that demand for contract workers have been on the rise to bridge the gap in skilled workers availability in areas such AI and ML, in addition to visa regulations. Infosys during their June quarter results accepted that continued dependence on contract workers have put their margins under pressure.
Many of these contract employees across the US are American citizens not bound by any restrictions and want their voice heard. Though they are paid more, these workers have more bargaining power in the recent times.
This creates a possibility of others following the trend despite the better pay, another expert added.
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