What is wrong with IT culture?

The recent events at TCS and Infosys, the Indian IT giants, indicate major pain points that relate to business, economics, society, politics, and culture. The sexual harassment cases, against both women and men, and allegations related to conversions, go beyond gender and religion. A combination of recent trends, and societal changes are responsible for the deep disruptions at the workplaces of firms that were once considered the best employers, and whose organisational ethos was rigorously and religiously copied by the others. Today, society seems to confront these businesses, and question them.

More importantly, the cases surfaced in Maharashtra, which is considered among the most investor- and business-friendly states. They occurred in cities like Pune and Nashik, which are progressive places and locations. Pune, in fact, is the hub of young employees, who are educated, articulate, intelligent, and at the forefront of generational changes within the society. Pune is also the place where smart, savvy, well-to-do corporate employees retire. In essence, it epitomises the new, confident, ambitious, superpower India in the making. Pune is what Mumbai was a few years ago, or what Bengaluru was.

Obviously, one of the reasons is the huge employee churn happening within Indian IT. Tens of thousands of people are being laid off, even as several thousands, especially freshers, are being hired. Thus, one set of employees are giving way to others, even as firms keep an eye on costs, salaries, and budgets. Thus, like it or not, the nature of employees is changing, or has changed in the recent past. Small cities and towns supply more people than before, and they find employment in the bigger cities like Pune and Nashik, apart from others.

In addition, news from major IT cities like Bengaluru indicate that hirings are outsourced by leading IT firms, which include several foreign names. One is not sure if this applies to TCS and Infosys, but leading firms hand out the hirings to external HR firms, which handle the hirings, negotiate salaries, and manage the HR responsibilities like paychecks, leaves, bonuses, increments, and so on. The practices by these external HT firms, as opposed to the IT firms, are different. The former may follow shortcuts, and resort to irregularities. These have led to several pain points and disillusionment among employees.

For example, sometimes, the people hired by outsiders are on their rolls, and sometimes on the rolls of the IT firms. But the employees either work-from-home, or at the clients’ (IT firms) locations. Thus, they are both a part of the IT workplaces, and not a part of it. Since their salaries are negotiated by the external HR firms, the IT firms have no idea of how they are paid, how much they are paid, and what are their employment rules. It is a hands-off approach.

The IT firms stipulate hiring budgets, and HR firms adhere to them. Obviously, several malpractices occur. The HR firms tend to cut costs to boost profits. They renege on salary promises, and pay 10-30 per cent lower to the employees, who have little options but to work until they find employment elsewhere, which is difficult given the huge layoffs in the recent past. The increments are irregular, if they happen, and bonuses are possibly out of the question. The practice is to hire such employees only for two years, after which they cannot work for the same client, or even be hired by the same HR firms.

Most employees, even if they are hired by the HR firms, think that they work for the large IT firms, both Indian and foreign. Thus, they feel cheated when they are short-changed, and feel that the fault lies with the IT firms, and not the HR firms. If their salaries are ducked, or bonuses do not come, they blame the IT giants. This explains why the complaints against them have gone up in the recent past. As an expert says, IT firms scaled rapidly through mass hirings. But the model is under pressure with different forms of hirings, coupled with layoffs.

According to a media report, “Earlier this year, employees speaking anonymously alleged that performance ratings were being systematically downgraded, particularly of mid-level staff, effectively reducing variable pay, and nudging some toward voluntary exits. The company denied any changes to its compensation structure.” As per an ex-executive quoted in a report, “The responses increasingly appear less like isolated lapses, and more like signs of a management culture that risks conflating institutional stature with immunity from scrutiny.” Another expert says that “business is changing, and companies must balance shareholder expectations with workforce realities.”

In most cases, the societies, politics, and culture of the smaller towns and cities, where more of the IT campuses are built, are different from say, Mumbai, Noida, Gurugram, or Bengaluru. The workplaces are different, even if the reputed and renowned employers impose the same rules, regulations, processes, and systems. How these are followed, and implemented differ, and this is complicated if the hirings are by external recruiting agencies rather than the IT firms. Hence, new workplaces evolve differently, and diverge from established norms. Thus, the chances of malpractices and irregularities are higher.

Hence, it is not surprising that some American senators have questioned the hiring-firing practices of the Indian IT firms. Indeed, during the past controversies related to H-1B visas, which resulted in major changes in rules, the elected representatives wanted to know the number of employees that are hired directly, and those through external HR firms. They knew that this was rampant, and obviously led to discrepancies and abuses of the employees in the form of lower pays, not-so-transparent work culture, and other practices. The entry of cheap IT labour in the US was questioned for decades.

Both TCS and Infosys have been hit by business and corporate governance issues. The former is caught between the tussle between Tata Sons, the parent, and Tata Trusts, and ego and other clashes between seniormost executives and trustees. Dividend payments by TCS to Tata Sons is a point of discussion in mainstream media. The fate of Infosys’ existing business model hangs in a balance in the age of AI. One is not sure how the firm will survive, and what will be its new shape and form. Thus, both the firms are going through a churn that may change them forever. The employees and employers are caught within their own cross-wires, with their own issues.

It is not about business. It is about social and political issues too