A Big Boon for Cyberabad and Uttar Pradesh should it decide to capitalize
Did Karnataka govt shoot itself in the leg by clearing the IT union?
Just when the Information Technology (IT) space was still grappling with the downtrend and visa problems the Karnataka government has decided to stir up the sector and, it became the first state to recognise trade union in the IT sector.
Reports say that the state has recognised the Karnataka State IT/ITeS Employees Union (KITU) as a workers’ body to protect their interests.
Recently, a slowdown in their customer countries and structural technological changes have led to the sacking of employees, especially at the middle level. The high priced middle-level employees were replaced by cheaper fresh candidates. Though it made business sense to replace high-cost employees with lower cost ones, especially if there was not much difference in their skill sets, questions were been raised in the manner in which they were sacked.
There is no question that the unfair manner in which employees have been sacked needs to be corrected, but will unionization help?
One of the reasons why IT sector employees are treated better than those in other sectors is because employees and their knowledge base is the key raw material in the sector. Regular skill upgrades are encouraged so that both the employee and the company can grow. Improved skill sets with competence in new technologies are showcased by the companies in order to get more high-end work.
An employee union will only result in spoiling their relationship with management. There is any case a very thin line between employees and management in the IT sector. Further, the development comes at the worst possible time for the Indian IT sector which is still struggling to find their mojo.
One of the main reasons that India has become an IT hub is that of access to low-cost skilled manpower. It is a labour arbitrage game. Any increase in labour costs, in a scenario where the market is shrinking, will only result in the company shifting its base to some other state or country.
Cyberabad, the term coined for the IT SEZ in Hyderabad, the dream project of then CM did take off well but could not compete with Bangalore in becoming the Cyber Capital of India. But things are likely to change soon. With the approval of unionization of the IT workforce the companies may decide to shift there base. Off course Bangalore may still remain one of the IT Hubs but the companies are likely to leave the low end jobs there and shift there main workforce to other states providing a more favorable and conducive atmosphere.
Uttar Pradesh, with such a large population has been struggling very hard to convince the IT majors to make UP their abode. Specially so during the regime of Akhilesh Yadav but failed due to the stigma of Goondaraj and large scale corruption associated with the SP Govt.
But now with the dynamic and clean leadership in CM Yoginath, the state is striving hard to woo all the Industry Majors to come to Uttar Pradesh. This also has the backing of Prime Minister Narendra Modi. UP being the largest state of the country has a critical bearing on all National political outcomes and BJP govt with absolute majority is trying it's best to clean the arena and woo industrial partnership to provide better employment opportunities to the large population. UP holds the unique distinction of holding one of the best technical, medical, business etc schools in the country. However due to lack of opportunity it sees the maximum migration of this intellectual workforce.
The IT Majors looking for an alternative abode would do well to look into the investment opportunities and low cost technically skilled manpower available in Uttar Pradesh. The govt under Yoginath is also going extra steps in providing tax exemptions and other facilities to woo the industry. Can Yoginath use this opportunity to make Lucknow the next IT Hub of India.
Time will only tell. But by approving the unionization of IT workforce the Karnatka govt has definetly shot it's own foot.
Happy Investing
Did Karnataka govt shoot itself in the leg by clearing the IT union?
Just when the Information Technology (IT) space was still grappling with the downtrend and visa problems the Karnataka government has decided to stir up the sector and, it became the first state to recognise trade union in the IT sector.
Reports say that the state has recognised the Karnataka State IT/ITeS Employees Union (KITU) as a workers’ body to protect their interests.
Recently, a slowdown in their customer countries and structural technological changes have led to the sacking of employees, especially at the middle level. The high priced middle-level employees were replaced by cheaper fresh candidates. Though it made business sense to replace high-cost employees with lower cost ones, especially if there was not much difference in their skill sets, questions were been raised in the manner in which they were sacked.
There is no question that the unfair manner in which employees have been sacked needs to be corrected, but will unionization help?
One of the reasons why IT sector employees are treated better than those in other sectors is because employees and their knowledge base is the key raw material in the sector. Regular skill upgrades are encouraged so that both the employee and the company can grow. Improved skill sets with competence in new technologies are showcased by the companies in order to get more high-end work.
An employee union will only result in spoiling their relationship with management. There is any case a very thin line between employees and management in the IT sector. Further, the development comes at the worst possible time for the Indian IT sector which is still struggling to find their mojo.
One of the main reasons that India has become an IT hub is that of access to low-cost skilled manpower. It is a labour arbitrage game. Any increase in labour costs, in a scenario where the market is shrinking, will only result in the company shifting its base to some other state or country.
Cyberabad, the term coined for the IT SEZ in Hyderabad, the dream project of then CM did take off well but could not compete with Bangalore in becoming the Cyber Capital of India. But things are likely to change soon. With the approval of unionization of the IT workforce the companies may decide to shift there base. Off course Bangalore may still remain one of the IT Hubs but the companies are likely to leave the low end jobs there and shift there main workforce to other states providing a more favorable and conducive atmosphere.
Uttar Pradesh, with such a large population has been struggling very hard to convince the IT majors to make UP their abode. Specially so during the regime of Akhilesh Yadav but failed due to the stigma of Goondaraj and large scale corruption associated with the SP Govt.
But now with the dynamic and clean leadership in CM Yoginath, the state is striving hard to woo all the Industry Majors to come to Uttar Pradesh. This also has the backing of Prime Minister Narendra Modi. UP being the largest state of the country has a critical bearing on all National political outcomes and BJP govt with absolute majority is trying it's best to clean the arena and woo industrial partnership to provide better employment opportunities to the large population. UP holds the unique distinction of holding one of the best technical, medical, business etc schools in the country. However due to lack of opportunity it sees the maximum migration of this intellectual workforce.
The IT Majors looking for an alternative abode would do well to look into the investment opportunities and low cost technically skilled manpower available in Uttar Pradesh. The govt under Yoginath is also going extra steps in providing tax exemptions and other facilities to woo the industry. Can Yoginath use this opportunity to make Lucknow the next IT Hub of India.
Time will only tell. But by approving the unionization of IT workforce the Karnatka govt has definetly shot it's own foot.
Happy Investing
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