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Cognizant layoffs may be heading to TN labour courts as FITE preps petitions

Forum for IT Employees or FITE — an organization that claims to speak for ordinary IT workers — said a group of employees of Cognizant Technology Solutions will approach the office of Labour Commissioner of Chennai today.

“Affected CTS employees file petition to the Labour Commissioner in Chennai,” the organization said in a communication to its members.

The filing of the complaint, it said, will take place at 2 pm. Two years ago, the organization had spearheaded protests against employee lay-offs at Tata Consultancy Services.

FITE had earlier urged employees not to submit their resignations if asked to by the company, asking them to instead explore their legal options.

Establishments coming under the Industrial Disputes Act have to provide compensation in case of lay-offs, but these provisions are not applicable in case the worker submits a resignation letter.

UPDATE: Cognizant said it will let go off more people this year and shut down some facilties.

There is still some confusion about whether the Industrial Disputes Act — aimed at resolving disputes between workmen and the management in factories — will apply to the IT sector. However, at least in Tamil Nadu, the government has taken an accommodative stand.

In 2016, Kumar Jayant, principal secretary for Labour and Employment of the Tamil Nadu, said IT services sector was covered by the Act. “IT company employees are free to form trade unions and can redress their grievances through evoking the provisions of the Industrial Disputes Act,” he had said.

Thousands of employees of Cognizant are reported to have been laid off or forced to step down in the last few weeks after completing their annual performance appraisal.

Cognizant was the first of the big IT companies in India to conduct the annual appraisal, which was completed in February-March.

Wipro and Infosys are conducting their annual appraisals, while Tata Consultancy Services too has largely completed the process. TCS too was in the news a couple of years ago for allegedly firing thousands of managerial employees.

Wipro too is learnt to be firing hundreds, or even thousands of workers, but the company has refused to reveal a number or estimate about the extent of lay-offs. It said that the matter is an internal issue and not something for public consumption.

Indian IT companies have faced a reversal of sorts in recent quarters due to rapid changes in technology.

While earlier, companies engaged in activities such as manufacturing, retailing, mining and other services relied on ‘local software’ installed on their office computers to meet their IT needs, most are now moving to cloud-based software.

As a result, they no longer need huge number of system administrators, testers and customizers for the software that they use.

Moreover, even corporations that work in IT-heavy sectors like finance — which do a lot of IT development — are also leveraging alternative technologies such as cloud computing and artificial intelligence to cut down on their IT costs — impacting outsourced Indian suppliers.

The problem has been compounded this year by the new American administration headed by Donald Trump, which is in the process of forcing Indian companies to stop sending lower-paid workers from India and instead use local US recruits.

This is expected to increase the cost of IT services provided by Indian IT providers and deprive them of one of their key selling point. The move also expected to further accelerate the adoption of cloud-based, non-labor-intensive solutions by clients.

Around 4 mln people are employed by the outsourcing industry in India, and the sector contributes about 10% of the GDP.

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