Moonlighting is caused by low pay, dissatisfaction with IT firms: Former HCLTech CEO Vineet Nayar

Vineet Nayar, Founder, Sampark Foundation and Former CEO HCLTech

Vineet Nayar, founder and chairman of the Sampark Foundation and former CEO of HCLTech, said that moonlighting is inevitable and is made worse by low compensation pay and a lack of opportunities for innovation, despite efforts by Indian IT service companies to tackle the practice.

With the growing culture of entrepreneurship and start-ups in India, it will be impossible to stop moonlighting entirely, as most start-ups and even many Indian IT firms began as side hustles of the founders while they worked full-time for established organisations, Nayar explained.

Moonlighting is the act of working secretly at a second job while working full-time at a company. In the last two years, the pandemic has made it possible for IT workers to work from home. As a result, IT workers have started doing freelance and gig work on the side, which in some cases has put client data at risk.

Taking a cue from the internet revolution, Nayar told Moneycontrol, “When internet came to our life, we resisted big time thinking that our data will be stolen. But it was unstoppable -- it came to our desktops, mobile phones and even watches. And since people couldn’t do anything about it so they learned to use it rather than being abused by it.”

“Moonlighting too is an unstoppable event. You can resist it but you can’t stop it. You need to understand the reasons behind it,” the industry veteran added.

Nayar believes that moonlighting should be well-regulated to protect client confidentiality, but it can't be stopped.

Growing salary disparity

According to Nayar, there are three key drivers of moonlighting in the IT sector: the widening gap between the salaries of freshers versus top management, the lack of purpose and innovation in the profit-driven culture of IT companies and the growing start-up economy.

Nayar highlighted that the salary for an IT engineer with 0–2 years of experience is a pittance. At that salary level, which remains stagnant with only up to 8 percent increase year-on-year, there is a desire for the young engineers to earn well and make ends meet.

“For a salary of Rs. 30,000-35,000 where will you stay and what will you do? Especially when employees from tier-II cities are coming to tier-I cities to work, managing expenses gets more difficult. They end up picking gigs outside their jobs to make ends meet, whether it is driving Uber cabs or doing something else,” he said.

He added, “Unless you increase your salaries dramatically which IT companies can due to margin pressures, there will be a dire need for this employee to find economic needs to meet his or her ends.”

According to an earlier report by Moneycontrol, while the median annual pay of CEOs zoomed 835 percent from FY12 to FY22, the median salary package of freshers grew just 45 percent in the same period. Over the last decade, the median fresher salary rose from Rs 2.45 lakh in FY12 to Rs 3.55 lakh in FY22.

Disengaged employees

IT consultancy services companies are increasingly becoming revenue and profit-driven companies, often lacking a culture of purpose as they are not necessarily building new products.

“The amount of disenchantment with these organisations is at its peak. Most of the surveys are saying that the employees are completely disengaged. Most of these companies are running behind profits and revenue growth, and not behind purpose. Therefore the employees are not aligned and end up becoming use and throw commodities and nobody is investing in them,” Nayar said.

“The third driver is the gig economy of start-ups. Until last year, if you look at all the major companies in the Indian IT sector and track the history till last year. Everybody was happy to say how they started their companies and all of them at that point were employed with other companies. It remained a side hustle until it became a successful company,” he said.

“Was that not moonlighting? Today also you are on boards of various companies, doing multiple things, is that not moonlighting? Moonlighting already exists,” Nayar questioned.

Companies taking strict measures

Most of the top Indian IT companies including Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech, IBM, TechMahindra, and Larsen & Toubro Infotech (LTI) to name a few have made their stance on the issue known.

Without classifying it as "moonlighting," Infosys has established guidelines for employees to pursue side gigs while keeping managers informed of their activities.  Previously, Infosys had warned employees through email that they would be fired if caught moonlighting.

IBM India and South Asia MD Sandip Patel wrote an email to his employees, defining the act of moonlighting and what activities will be considered moonlighting under IBM’s purview.

Wipro fired over 300 employees who were found moonlighting while working on client-sensitive data in the company. Chairman Rishad Premji has been outspoken in his opposition to the subject.

Meanwhile, TCS communicated to its staff that the moonlighting was unethical.

“The only way to control this river is to create a dam but keep releasing the water at certain intervals so the dam doesn’t break. What you guys are trying to create a dam and work on conflict of interest,” Nayar said about the sector’s practices.