The curious case of forced ranking and large scale layoffs - Part 2

Arul March 5, 2015

From the protest held by ITEC (a welfare group for IT employees) on January 17, 2015 against TCS Lay-offs.
Image Credits: Times of India


This article is the second part of the series which analyzes the layoffs of IT employees. The first part of the article mentioned about the gradual changes in the labour relations that led to layoffs and examined the problems of the recently introduced ranking system. The first part of the article can be read here. The second part explores the internal dynamics of labour relations in IT majors. Together these two parts provide a comprehensive understanding of the layoffs in the IT majors like Tata Consultancy Services and iGate, in particular the profit making mechanism and the processes by which the employees are exposed to neoliberal agenda in the IT sector. Apart from the ranking system two other issues that gained momentum recently are the targeting of senior employees and the question of cost optimization.

Unwanted seniors

An unusual aspect of the current round of layoffs in TCS is that most of the affected workers are relatively senior in the organizational hierarchy. Apparently, TCS is bloodletting seniors, who are on the tapering left side on the bell curve. This is ironical because attracting and retaining talent has been a strategically critical focus area for India’s IT majors until recently.

In his book ‘Dot.compradors: Power and Policy in the Development of the Indian Software Industry’, Jyoti Saraswati says that poaching from MNCs forced Indian companies to make serious investments in staff training, quality control and other human-resource practices. He observes:

“The impact of this on the [Indian] Majors was catastrophic. In their quest to compete with the [MNC] Giants in the top tier of the software services industry, the retention of staff was vital. Smaller Indian firms providing less sophisticated software services and ITeS could afford to lose employees, as their replacements required less training. The majors did not have that luxury. According to Gartner, the UK-based management consultancy, ‘higher skilled IT professionals such as project managers and systems architects take years to cultivate and mature’. So the loss of these employees was a major blow to the majors”.

Yet, why is there a change in the IT services today leading to elimination of a section of the senior workforce, who have been nurtured with serious investment over a period? We are not going to get any definitive answer to this question from the company. However, one can make several guesses based on the information available. IT companies are finding it difficult to get appropriate projects in which they can place all their costly senior resources. It could be because Indian IT firms are still not able to go up in the value chain and get enough consulting and other projects that require deep skills of senior resources. In addition, as the Software Engineering practices mature, IT tasks are increasingly becoming easy to perform with cheaper labor. In the era of rapid development and agile development methodologies, traditional heavy-weight project management practices are no longer relevant.

This is not to say that professionals with in-depth knowledge in computer science and practice of software engineering are not in demand. The point is that while the highly lucrative few opportunities in the core areas continue to exist, majority of the peripheral IT jobs that provide jobs en masse do not require highly skilled professionals.In such a situation, an organization that considers its employees as the most important asset should ideally try to retrain and redeploy the redundant workforce in other jobs. However, it looks like TCS is trying to eliminate these positions while at the same time increase the head-count by recruiting freshers. In an industry climate where hardly any labor laws exist, it is the easiest recourse for the companies to take.

Similar to any other layoff, there is a concerted effort to make the situation look like employees’ problems. A hackneyed advice to an IT professional one usually hears in such situations is about the importance of ‘upskilling’ to stay relevant. While it is true that an individual needs to take charge of his/her career, the role employer can and needs to play in the upskilling of their employees is often ignored or downplayed. But interestingly, when it matters, employers consider hands-on workplace experience as the better method for upskilling than sophisticated and costly exercises in professional development! (The 2013 Kelly Global Workforce Index).

There is nothing surprising in laying off a manager appointed; this is how capitalism works though unacknowledged by most most Indian IT professionals. . The predicament of a worker in a modern IT firm is no different from the plight of industrial workers in 19th century. Karl Marx and Friedrich Engels described these proletarians in Communist Manifesto as a “class of labourers, who live only so long as they find work, and who find work only so long as their labour increases capital. These labourers, who must sell themselves piecemeal, are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market”. The IT worker facing layoff or wage cut will not find it difficult to identify with their 19th century brethren!

How is the Indian IT professional going to respond to this changed scenario? This has been an industry, which helped thousands of bright people from middle class to achieve certain economic stability and disposable income. Although mostly driven by the dynamics of labor arbitrage, and availability of cheap labor to perform mundane tasks, the Indian IT industry was able to create an image of the ultimate destination for the brightest. However, it was the better pay and the incentives like the opportunities to work abroad that were the real reasons for most people choosing Indian IT companies to work. Therefore, it has been a common trend among Indian IT professionals to move away from the ‘menial’ technical tasks such as programming to ‘management’, which is in fact just supervisory roles, as soon as possible. It is possible that the aspiration to move away from ‘real’ work comes from a value system of our middle class, which is deeply entrenched in societal hierarchies with innumerable gradations including caste. Naturally, the companies have also recognized and encouraged the aspirations of the professional to move up in the career ladder this way. Even the product companies with relatively flat hierarchies, while setting up offshore centers in India, are sometimes forced to introduce new intermediate levels, which do not exist in other geographies. The absence of these levels in other part of the organization itself is an indication that these levels are not required for business. They exist just to provide a comfort of career advancement to the employees .

Apart from addressing the employee aspirations to move up in the career ladder, encouraging a worker to move to supervisory role early in the career serves another purpose as well. It dilutes the perceived difference between the managers and the workers. When a worker is moved to a supervisory role, regardless of the fact that if the particular role has any real decision making powers, he or she feels like the part of the management. This self delusion, along with the relatively higher salaries and perks make the IT professional believe that he is a notch above workers in other sectors.

There is nothing surprising in laying off a manager appointed; this is how capitalism works though unacknowledged by most most Indian IT professionals. . The predicament of a worker in a modern IT firm is no different from the plight of industrial workers in 19th century. Karl Marx and Friedrich Engels described these proletarians in Communist Manifesto as a “class of labourers, who live only so long as they find work, and who find work only so long as their labour increases capital. These labourers, who must sell themselves piecemeal, are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market”. The IT worker facing layoff or wage cut will not find it difficult to identify with their 19th century brethren! The recent protests and discussions generated by the layoffs in TCS is an indication that at least a section of IT professionals are realizing the need for asserting their identity as workers. It is too early to predict how far this movement can sustain itself, but let’s keep our hopes high.

Tale of “petty pilfering of minutes”

While cost optimization via head-count reduction is one part of the story, the IT industry is contemplating to extend the working day in almost all IT services companies in India. At the end of the day productivity is directly proportional to the time spend on a task, especially if it is not required to pay for the additional time! Here again, similarity between the state of Industry workers in 19th century underlines the essential fact that dynamics of Capitalism hasn’t changed fundamentally.

In his seminal treatise on political economy, Das Capital, Karl Marx devoted an entire chapter on working day. After quoting reports of factory inspectors in the 19th century English Factories, he wrote:

“These ‘small thefts’ of capital from the labourer's meal and recreation time, the factory inspectors also designate as ‘petty pilferings of minutes,’ ‘snatching a few minutes,’ or, as the labourers technically called them, ‘nibbling and cribbling at meal-times.’ It is evident that in this atmosphere the formation of surplus-value by surplus-labour, is no secret. I recollect what a highly respectable master told me in the recent past, ‘to work only ten minutes in the day over-time, you put one thousand a year in my pocket.’ ‘Moments are the elements of profit’.’’

IT services companies, more than anyone else, realize that the moments are the elements of profit. In the last couple of years there have been several reports in the Indian media about how IT companies are trying to maximize their profits by pilfering minutes from employees’ time. A Times of India report on Nov 25, 2008 reported that “Technology firms are increasing working hours and monitoring the hours worked far more rigorously than ever before in a bid to squeeze more out of employees in these difficult times.” According to that report, TCS increased the working hours by 1 hour to 9 hours and indicated that MNCs like Accenture have followed this practice.

Employees of Wipro and Infosys are required to put in more than 9 hours a day. The report said:

“Extending the work hours has a direct impact on IT services companies. For instance, by increasing work hours by an hour a day an employee works an additional 22 hours a month. If an hour of his/her work is billed at $20, the company makes an additional billing of $440 per employee. That means, in rupee terms, a single employee can bring in additional revenues of Rs 22,000 a month for the company. Such work time extension works well for projects that are on what is called the 'time & material' model. Around 70% of tech projects are currently under this model, while the rest are fixed price projects where the service providers may resort to pruning the size of teams to bringing cost down”.

The Hindustan Times on December 25, 2013, carried a news item which says “IT major Infosys to install a software that will enable the company to track the actual time spent by employees on their computers”. The report quoted an employee who made a complaint as “Earlier they wanted to make us stay in office for nine hours. Now, they want to measure how much time we spend on computers. These policies are completely out of sync with the times.” By the end of 2014, extended working days have become a common practice across industry without any significant resistance from employees’ part.

This is unfortunate. The struggle for a normal working day has been one of the major themes of class struggles since the beginning of industrial capitalism a few centuries back. As the British Economist David Harvey wrote in “A Companion to Mrax’s Capital”, “introductory courses in economics are unlikely ever to focus on the length of the working day as a serious issue. It was not discussed in classical political economy, either. Yet historically there has been a monumental and ongoing struggle over the length of the working day, the working week. The working year (paid vacations), and the working life (the retirement age), and the struggle is still with us. This is clearly a fundamental aspect of capitalist history and a central issue in capitalist mode of production”. The eight-hour workday or 40-hour workweek became a norm in the civilized world after innumerous struggles by workers and their unions.But unfortunately this hard earned right is systematically being robbed in 21st century from the workers in an Industry.

Whither IT worker?

“Reality is biting the naive Indian IT professionals” is what someone commented on Linkedin about the bloodletting in TCS. It is critical for the Indian IT worker to come out of their self-delusions as an individual and as a class and acknowledge the realities. Currently IT workers as a class do not have any voice in the consultations on policies related to IT industry; only Industry lobbying agencies such as NASSCOM are invited for these discussions. Because of this, worker’s interests are not represented anywhere. A recent example of this is the Karnataka government’s announcement on October 21 2013 that it would exempt the Information Technology (IT) industry from the Industrial Employment (Standing Orders) Act (1) under the pressure from industry lobby. This Central Government Act requires the employers in industrial establishments to define the conditions of employment with ‘sufficient precision’ and to make these conditions known to employees. The exemption provided by Government allows the IT companies operating in Karnataka to run their business without complying to this act.

Therefore in the given context there is an urgent need for ‘collectives’ to act as a balancing force to safeguard the interest of the IT worker. As Centre for Indian Trade Unions (CITU) leader S Prasanna Kumar, in a meeting in Bangalore to understand the nature of TCS lay-offs, pointed out correctly, “When G8 and NATO can be formed as political blocks , why can’t the IT employees form a trade union to protect their interests?”. It may be necessary that in the present era of global capitalism and labor arbitrage, IT workers have to find novel ways to assert their rights and to resist the multifaceted attacks on their livelihood.


  • This article was first published in the blog of IT/ITeS Employees Centre (ITEC): Perspectives. Bodhi is republishing this with the permission of the author and the publisher.
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