Unionising Tech: Trying To Save Jobs In A Highly Disruptive Sector Is Futile

A forum of information technology (IT) workers is all set to get itself registered as the first union of techies in the country, amid reports of large-scale layoffs by IT companies, according to the Economic Times. This will be the launch of the Forum for Information Technology Employees (FITE).

There is a not-so-strange throwback to the past, to the industrial twentieth-century era, when you hear support for such a union. One member of the organisation comments, “According to the Industrial Disputes Act, the IT companies do not have any right to dismiss employees when they are earning profits.” So, if Foxconn in China, a highly profitable electronics manufacturing services company, which makes the iconic iPhone, decides to bring in robots to increase production capacity and productivity, it should not decrease payroll? Or, closer home, if Airtel decides to partially automate its call centres and figures there would be redundant staff as a result, it should continue employing them anyway? Would a union member running a company continue to employ someone who was no longer needed? Even if the company was profitable?

Are we looking for cozy sinecures in an idealistic welfare state where the only intent is to keep people employed, paid a monthly income, regardless of the circumstance or usefulness? They did this in former Soviet Union; GUM, a state-run department store that ran an outlet on Red Square, was famous for employing thousands of workers manning empty shelves. If that’s the objective, a universal basic income (UBI) would do just fine. But our friends in the IT industry want to retain their relatively high incomes and lifestyle – and a UBI would not get them that.

It goes to the root of our inability to accept free markets as a philosophical ideal even when it mostly works to our collective and individual gains, and confer advantages and deliver far superior returns in terms of incomes, wealth, quality of life, technological innovation and more. In fact, we still harbour suspicions as a society that someone, somewhere, is taking advantage of us and usurping what is rightfully ours. We seek the advantages, rake in the gains but, when the weather turns bad, are quick to betray our primal instincts for state intervention and interference. No matter that the state, in all its colonial majesty, is the one that duped us all, taken us for a ride for 70-odd years, and barely left us to discover what we could be – as individuals and as a nation – only now, in the twenty-first century. Seventy lost years during which this country could have scaled to advancement and wealth and joined the Rich Country Club with all the perks and influence that that brings. But that topic is for another day.

Such is the case of this latest endeavour to bring in the unions into high tech.

PSUs guaranteed permanent employment and unions

India’s public sector undertakings (PSUs) were places for guaranteed lifetime employment. Where are they today?

Our very own HMT should have become India’s equivalent of Fanuc, HAL that of Airbus, and ITI the Cisco of India, instead of becoming frayed, weak and hollowed out from within. You could blame the politicians and incompetent management, but the sad truth is that creativity and innovation don’t occur within a clerical culture – of clocking in regular hours and safe employment until retirement. This is more so the case today when new knowledge springs up faster than ever and organisations have to adapt, adopt and move faster – or risk being left by the wayside. Even great companies stumble in such environments: HP, Dell, Yahoo, Research in Motion, Sun Micro, Nortel, Informix, Sybase, Silicon Graphics, Xerox, Polaroid and Digital, just to name a few.

Thirty years ago, when Hindustan Motors wanted to establish another paint shop in its plant that manufactured the now-thankfully retired archaeological specimen called the Ambassador, chances were, it was a labour-intensive job that required more people to increase output. That was the only way as robots were little known back then. The low productivity meant that those who were employed laboured for a small salary, a pattern that was similar across the economy with its small pockets of organised employment. Thus, we had low growth, low national incomes and few consumers. The “virtuous” circle ensured no one could look forward to higher disposable incomes or have the wealth to build family assets (save, buy a home, pay for children’s education).

As a child growing up in the 1970s in a government employee household, I recall what a pinch that kind of living was. You lived in large colonial houses but with little money to spare, either for necessities or luxuries. My father was a brilliant engineer from a prestigious school, but that did not matter. That was the lot of most Indians then from the middle classes; that of the poor was considerably worse. The lucky few among the salaried employees in the post-Independence “Nehruvian” generation who bought their second-hand cars – the fashionably ugly Padmini and the Ambassador – did so close to or after retirement. One wonders if these facts are even known to the members of the new union who wish to agitate.

If today a large section of the IT sector can indulge in instant gratification – buy expensive smartphones, a motorcycle or a car, travel by air, go on a holiday, or easily secure a mortgage to buy an apartment one could only dream about a decade ago – it is because the sector grew, increasing employment, and in the very competition that ensued caused compensations to rise. For over a decade, the IT industry has seen income growth in the range of 20-30 per cent year-on-year (as a contrast, it would be useful to know that “comps” in the US and Europe are generally in the 2-5 per cent range annually across industries – if you were lucky).

The National Association of Software and Services Companies (NASSCOM), the IT industry’s lobby group, in 2011 estimated that only 25 per cent of India’s IT industry’s engineering graduates were employable. An Aspiring Minds study revealed that only 1.4 per cent of programmers surveyed could create code that was functionally correct and efficient.

We claim to have the largest number of engineering graduates in the world, most of whom, according to various studies, barely pass muster. The “finishing schools” that the big IT companies set up were to counter the poor quality of graduates from below the top tier. To this day, there is reportedly an acute shortage in specific emerging specialties in IT and data science, but a study showed that 95 per cent of engineers in the country are unfit to take up these new jobs.

Independence gave India political freedom, but left-inspired thinking continues to bog our minds down and push collective rights before responsibility, absolving the individual from reflection and action. Action needs to be distinguished from activism; the first can be proactive and challenging, the latter reactive and rebellious. Challenging oneself can reward us with personal growth and, to use marketing-speak, brand differentiation of our individual selves. Rebellion affords temporary reprieve, a feel-good state, to wallow in the company of commoditised like-minded individuals with a grievance who don’t have the guts to face up to reality and take the necessary action to correct their career trajectory.

The Jews have a word for this curious quality of guts: chutzpah, Hebrew for audacity, courage, mettle or ardour that an individual has. No wonder Israel has won 12 Nobel prizes since 1966 while having just eight universities. For our size, the number of STEM graduates every year, our much-trumpeted strength in IT, and the number of global companies that have set up shop here, this little country holds a mirror to our face. With a population of about one-third the size of Bengaluru, Israel has over 6,000 startup ventures, over 1,500 startups founded every year, 350 global R&D centres of multinational companies, almost $10 billion in venture exits last year, and ranked third in the number of Israel-originating patents filed in the United States (almost 36,000 patents granted since 2002, compared to 17,800 by India). While we still hanker for IT services jobs, as we did for government jobs not too long ago.

What’s wrong with unions

That, then, is the difference. The FITE members could ask themselves: are the affected employees capable, competent and confident enough to secure another job at a blue-chip company if they were let go at their current one? If yes, they have nothing to worry; they don’t need FITE to fight their battles. If not, they should ask themselves: why not? If they are honest with themselves, the answer should shock them into action.

Times, indeed, are a-changing, and the global IT services companies are not entirely to blame. True, they were caught napping peddling wage-arbitraged, commoditised coding for the world (and one almost everyone in the industry should be thankful for while it lasted, especially FITE) even as we are now into yet another of those technology tipping points – just as the steam engine, telegraph, railroad, highways and Internet were – that is pulling the carpet from under them. But then, most employees were equally to blame not to notice their own repetitive and un-challenging code work and impending irrelevance. Today, those who have the chutzpah would surely see opportunity – in re-skilling that aligns expertise with the new opportunity that beckons.

Not everyone, of course, has the aptitude or the perseverance but the idea of a union is simply a panacea, a soothing balm, for the newly wounded that is being proffered without a real solution. A solution demands hard work on the part of both those that are concerned and wish to help, and those who are affected. Just as our politicians want a quick fix to complex societal problems because they could not be bothered with the real hard work, FITE should be seen for what it is – an activist idea for a quick fix in an industry that cannot afford quick fixes. The industry is in desperate search for creativity and innovation; those who can bring their A-game will always have a place at the table, the rest should prepare to look for jobs elsewhere.

Unions thrived in the twentieth-century blue-collar workforce that characterised manufacturing, and in offices of government and government-owned companies. These jobs had one important characteristic: the roles were largely generalist with little need for specific expertise. Individual work disappeared within the maw of anonymity, where one person could easily step into the shoes of another and pick up the slack. The labour-intensive nature of work meant more hands to do a job, whether at the port, railways, post and telegraph, shaping rods and tubes at a factory, or pushing paper inside offices.

The IT industry and the explosive growth since 2000 have largely resembled the above in the repetitive tasks of maintenance and testing and where sizeable teams “managed” large, legacy codebases and individual work was indistinguishable from another. Productivity in development arose from easily substitutable modules, libraries, pre-written functions and macros. Visual development tools helped rookies to get going soon after minimal training. The software industry thrives on such digital “write once, read many times” concept that is the basis for its high profitability. Every project reuses programmes heavily and utilises work done earlier on other projects and only marginally tinkered with to give it some new functionality.

Such work calls for human scaling – i.e., more hands to complete the job in a finite period of time. To manage the huge numbers, the industry created an archetypal pyramid comprising the worker bees at the bottom, team leads to lead small groups, managers to manage many groups, and so on. Not unlike law firms that probably gave the industry the idea of how to bill customers, clients were charged at billable rates by the hour, corresponding to mid-or-higher compensation levels in the pyramid while actual average costing per project veered more to the bottom end, as that is where the numbers were. Firms were profitable making expansion possible (into other industry verticals, other geographies), new clients secured, generating rising employment. Tragically, this is now in a flux.

Unions cannot wage a war involving disruption to an entire industry’s business model. Therein lies the crux of the problem. The railroad could not fight the airline industry and landlines could not fight mobile phones. One can go on with the countless examples in the twentieth century alone. The IT industry is now on the throes of significant change that stems from technology but will quickly seep into every corner of business as it has been practiced. The executives and managers are themselves clueless in many ways as to the magnitude and intensity of change engendered by disruption and what this may require of companies to survive. There is no stopping these trends and unions will only be fighting a losing battle.

Disruption is the new certainty

Unfortunately for India’s IT industry, their current model is now on the verge of being at the end of its life cycle and about to be disrupted. This comes from various points: transition from monolithic enterprise architectures to modular “plug-and-play” systems often sourced and “bolted” from focused third-party offerings; from in-premises or “in prem” to cloud-based services that require less resources; dedicated client systems running on computers to auto-updating mobile apps; custom programming requiring dedicated manpower to self-use and self-services; increasing reliance on specialised third-party vendors such as for manufacturing, packaging, logistics, reverse logistics, fulfillment, payment; intelligent performance projections and customer purchase insights using AI; spectacular reversal of fortunes for giant corporations that had large IT contracts with the big Indian IT companies in the face of onslaught by online companies such as Amazon; personalised offerings using machine learning and data intelligence; pulling IT back inside the company, and so on.

This industry will barely resemble the one today in about a decade. In that context, those who cannot, or will not, change to the new circumstances – learn new skills, go back to school (evening or full time) to get a higher education or discover disciplines better suited to their personality and temperament – will find themselves left out. Unionised or not. If they need examples, they could look to history: handloom weavers gave way to textile factory workers, tailors vanished as ready-to-wear became the norm, home visiting GPs to consultants at clinics, postmen undercut by emails, and “public call office” (PCOs) self-employed gave way to personal mobile phones, and manned toll booths on our highways to automated tolls.

In the white-collar industries, we have already witnessed severe rollbacks in recruitment of bank tellers, compression of management layers in industries ranging from financial to FMCG, and automated remote monitoring and control in the process industries. We will see this trend continue to make inroads into white-collar professions such as accounting, medicine and legal practice.

Agit-prop is not the way

If the comments of the persons organising FITE are anything to go by, we may infer they are modeling it on the lines of past unions of the twentieth century. It will not work as they will have no support from government, industry or the majority of people employed by the IT industry. It is an idea that comes from a different era that’s long gone.

Let’s start with the last of these, the employees. Any individual who joins such a union and divulges that he or she is a member can kiss goodbye to making a career at any of the big companies in the future. No company would want to hire such a person. It is one thing for blue-collar workers at manufacturing enterprises to belong to one, but the logic of someone who is well-paid and afforded an upper-middle-class life argues against that of the struggling urban poor. Companies would hardly wish to see discord and disruption within when they are faced with mortal disruption without.

Second, FITE will fail miserably to get industry on board with any plans if it resorts to an agit-prop approach – i.e., one of sloganeering, dharnas and flag-waving shut-down attempts. Such disruptions will cause industry to harden its stand and mostly have public support behind it.

Finally, governments would likely make polite noises and offer verbal support but nothing beyond that. IT services represent a $150 billion foreign exchange-earning industry for the economy and no government at the centre or state would want to jeopardise this in any way – either by way of legislation or negative publicity in domestic and foreign media. As for politicians, even if we assume the industry will retrench 50,000, this is likely to be dispersed geographically, and in time, and does not represent a significant enough electoral issue for them in which to invest political capital.

So, what can FITE do? As a matter of fact, quite a lot.

Finding solutions

FITE could – should – put aside any confrontational ideas they may have and seek to collaborate with all vested interests and come up with winning proposals.

If it really does have the welfare of its target group at heart, the need of the hour is to fashion solutions that could be discussed, and get everyone on board. Here are a few thoughts:

Partner with industry bodies

Company executives at the senior-most levels hold important positions in their industry lobby groups such as NASSCOM. It is important that the gravity of the impending layoffs be brought to them in seeking payoffs in terms of positive press and proactive approach to solving industry issues. For instance, FITE could seek buy-in for the industry bodies to secure government assistance in the form of tax breaks equivalent to each company’s contribution to a retrenched employee’s retraining programme.

The associations could also be prompted to put together an empaneled list of universities and training institutions of repute and work with them to develop a catalogue of continuing education courses. These could comprise individual courses of, perhaps, three-month duration, or six-month certificate courses, and one-year diplomas that are subsidised in full by the government, industry and the companies laying off employees. This way, the industry would work towards preparing itself for skills that are becoming necessary. The industry body could be persuaded to contribute 25 per cent of the subsidised cost of such continuing education.

Partner with companies

No company really wishes to have the negative publicity of mass layoffs. This is especially so with listed companies who have to explain to analysts who begin focusing on revenue growth, costs and fleeing clients, all of which result in the company’s stock taking a hit. But they would welcome the opportunity to be able to put a positive spin on it. FITE could seek “set asides” that contribute a fraction, say, 25 per cent, of the subsidised cost of continuing education courses that they could pay each retrenched employee after they demonstrate completion of a course or programme.

Partner with government

FITE should partner with governments at both the state and central levels to ensure retrenched employees are legally afforded the opportunity, and the means, to continuing education and seek to re-skill themselves. Buy-in from the government would be critically important to get the industry groups to participate and provide legal and tax benefits to companies that lay off employees. In this scenario, the governments could subsidise 50 per cent of the cost of any continuing education programme (individual coursework, certificate or diploma programmes) and made available through the company to all employees who have been laid off. Furthermore, employees who avail of these programmes should also be allowed to deduct the cost of benefits from their annual tax filings just as with allowable commuting, travel and entertainment expenses.

Partner with educational institutions

Nothing works as well as a beneficial arrangement that works for all – in other words, a win-win scenario. FITE could proactively enlist the support of reputed educational institutions in the state and the private sector and undertake to work with them in designing curriculum for the continuing education programmes. They bring the insights from industry as to what is no longer of use and what is becoming the need of the hour. These institutions, in turn, could be offered to the industry body to qualify and accord accreditation for empanelment in the industry’s continuing education programme. Institutions would welcome this as it serves as an extended revenue stream and industry outreach.

The founders of FITE may believe they are fighting for a worthy cause, but it is easy to fall prey to passion and acrimony. FITE cannot fight and hope to win. Their success lies in taking a strategic approach. Criticisms are easy, but solutions are hard. They will need to think long and hard on what and how to come up with solutions that ties all stakeholder interests. In the long run, such an approach would provide better skilled employees and a robust means to build innovation in the industry.