Infosys, Cognizant Retrench Employees, IT Unions to Fight Back

Job security in India is becoming a distant dream day by day with the dilution of the labour laws by the BJP-led central government. The case of IT workers is not any different from this and the multinational companies are constantly retrenching their workers in the name of poor performance and cost cutting. Latest in the row, India’s second largest IT major Infosys and American tech giant Cognizant have laid off their work force.

More than 10,000 employees—mainly mid-level and top level workforce—are being laid off from Infosys. Ten percent of the workforce from the senior manager level, which is known as JL6 band (job level 6) as per the internal code of the company, has been shown their way out. The JL6, JL7 and JL8 bands together consist of 30,092 employees.

In the associate and middle (JL4 and JL5) levels, about 2-5% or 4,000-10,000 people will be laid off. The strength of employees at the associate and middle bands is 86,558 and 1,10,502 respectively. Along with this, of the 971 title holders—senior executives in the ranks of assistant vice presidents, vice presidents, senior vice presidents and executive vice presidents—2-5% or about 50 people will also be asked to step out.

The company, however, says that they have no plans to lay off the existing employees and they are just letting the underperformers go.

“There is no planned lay-off. We have performance reviews and people who are not performing have been asked to leave. This is normal; there is no targetted lay-off,” said Infosys CCO Pravin Rao.

If we consider the last two quarters of Infosys, the number of lay-offs is much higher, according to the Pravin Rao. In the June quarter, the number of lay-offs was higher than that in the previous quarter, Rao said. While in the September quarter, the attrition for tech services was 19.4% and voluntary attrition was 18%, he added.

So far, the employees have not been served any notice by the Infosys management. “Usually, companies don’t serve written notices. They just ask the employees to resign and this is how it works,” said Sooraj Nidiyanga of Karnataka IT/ITeS Employees Union (KITU) while speaking to NewsClick.

“If the workers are asked to resign, it falls under retrenchment and it is clearly against the Industrial Dispute Act,” added Nidiyanga.

Read More: Exemption From Industrial Employment Act: Karnataka Govt’s Move Against IT/ITeS Workers?

Industrial Dispute Act mandates prior permission from the government for lay-offs or closure of a company with more than 100 workforce. Infosys, however, has reportedly not even approached the government for permission. So, KITU has taken up this issue and filed a complaint seeking intervention of the Labour Department.

Chief Financial Officer (CFO) Nilanjan Roy on Wednesday said that they will recruit more freshers to minimise employee expenditure and realign roles of middle and senior level management.

“There are 21 tracks we are looking at for cost-optimisation. We are targeting $100-$150 million in cost savings as the year goes on,” Roy said during analysts’ meet.

“The companies can lay off the staff only when they are in losses and that too only with the permission of the government. Companies can not hire and fire as per their wish,” Kiran Chandra of Forum of IT professionals told NewsClick.

“Though the Infosys claims that they would recruit freshers, the labour laws of the country do not allow them to do so. The law specifically states that if somebody from the company is being removed for whatever reason, the person who has been removed would be given the first preference when the company resumes operations,” said Chandra.

Meanwhile, Cognizant said last week that it will slash up to 7,000 jobs in the next few months as part of a cost reduction programme. The US-based company, which has a significant portion of its workforce based in India, had posted a net profit of $477 million in the year-ago period. It has also raised its annual revenue growth outlook to 4.6-4.9% for 2019.

Its revenue grew 4.2% to $4.25 billion in the third quarter, as compared to $4.07 billion in the year-ago period, Cognizant said in a statement.

“Over the past few months, we have sharpened Cognizant's strategic posture and begun executing plans aimed at improving our competitive positioning,” said Cognizant CEO Brian Humphries.

He added that the company is now announcing a simplification of its operating model and a cost reduction programme that will allow it to fund investments in growth.

Cognizant will remove about 10,000-12,000 mid-to-senior level associates worldwide from their current roles in the coming quarters, it said.

The gross reduction is expected to lead to a net reduction of approximately 5,000 to 7,000 roles (about 2% of its total headcount) and re-skilling and redeployment of about 5,000 of the total associates impacted.

“We expect the remaining 5,000-7,000 associates to exit the company by mid-2020 either through attrition or role elimination,” said Cognizant CFO Karen McLoughlin. The company has not detailed out the geographies that would be impacted by the reductions. However, given that India accounts for the biggest share of the company's headcount, the impact of these lay-offs is expected to be significant here.

Cognizant's total headcount stood at 2,89,900 people at the end of September 2019 quarter. The company had recently stated that its headcount in India has crossed the two-lakh mark.

“Cognizant has constantly been removing people on a regular basis,” said Chandra, adding that there is no logic in saying that somebody has become a ‘non-performer’ all of a sudden.

“Firstly, calling somebody a non-performer is simply nonsense. Actually, it is not the question of non-performers and performers because the companies want to maximise the profit and they are showing people the door, which is illegal,” Chandra added.

“They call it ‘role redundancy’ and it is a bogus concept. If there is a change in trade, it is the responsibility of the company to train the employees to fit in the new role,” Chandra explained.

According to Chandra, pregnant women are the worst-hit because of the retrenchment. When companies asses the work of a person who is coming back after maternity leave, it is easier to portray them as ‘non-performing’ citing the recent consecutive quarters.

As the lay-offs continue in various companies across the country, IT employees’ unions across the country—KITU based in Karnataka, UNITE in Tamil Nadu, All India IT Employees’ Union in Kolkata—plan extensive protests in the coming days.

Read More: Karnataka: Transferred MPS Employees Taken Back After Year-long Struggle

(With inputs from PTI)