IT Firms Demand Labor Law Reforms For Work From Home; 50% IT Employees Will Never Come To Office

As per the reports, India’s IT sector is seeking revisions in the country’s taxation and labour laws as over half the workforce in the $191 billion industry could begin to deliver services remotely as part of the changes being wrought by the ongoing pandemic.

Why Would This Happen? 

Earlier this month, IT industry leaders had a meeting with government officials and were asked to detail the legislative changes required to facilitate this significant transition.

Further, the Industry body Nasscom has been tasked with preparing a detailed report, after which “it will (go) to relevant ministries such as department of telecom and the labour ministry for action,” as per the sources. 

Apart from that, the industry has also requested the government to make permanent several recent concessions extended until July, which includes the relaxation of telecom regulations that allow back-office companies to work from home and move equipment out from designated special economic zones to facilitate remote working. 

What Can Be Expected In Future? 

Currently, Nasscom is reviewing labour laws from the WFH perspective and will be sending a report to the government by next week. 

Moreover, officials are of the view that labour laws should be amended in a way to safeguard employees while also providing flexibility to employers. 

The government official said, “Once work from home is enabled at a large scale, people may want to work for only a certain number of hours a day, as opposed to the norm of 8 hours a day; this could benefit women, university students and handicapped greatly,”.

Adding further, “work is going on to thrash out the details currently”. 

How Does It Affect?

So far, India’s IT industry contributes 8% to the country’s gross domestic product and has a 46% share in the country’s services exports, the lobby said in February. 

Also, the country’s software exports stood at $147 billion in the fiscal year 2020. 

The senior director and head of public policy at Nasscom, Ashish Aggarwal said “As working from home catches up, people could work for two or even three companies at the same time. So, the government will need to let employers and workers choose NPS (National Pension Scheme) instead of EPFO as a social security scheme, as in NPS a worker can be an employee today and a gig worker tomorrow,”.

He further added, “Current labour laws will need to be revisited to provide industry the flexibility to enable working hours and shift timings. Moreover, the role of employer with respect to safety and health measures at the workplace will require a rethink as the home becomes the new workplace,”.

India’s IT industry has moved nearly 90% of its workforce to deliver services from home since the lockdown in March. 

Additionally, the government categorised the industry as essential services and permitted exemptions similar to those granted to units in SEZs and STPIs by the department of telecom. 

What Do Companies Say? 

The chief operating officer of Infosys, UB Pravin Rao said, “There are a whole host of things you need to start relooking at when this (work from home) becomes the new norm,”, who is also the chairman of Nasscom.

According to him, “some of the labour laws may not cater to a work-from-home environment, so (we) need to start looking through a fresh lens,”.

Further, the successful transition is now prompting large-scale shifts in work models across the industry, with India’s largest IT services firm Tata Consultancy Services (TCS) looking at 75% of its workforce working remotely by 2025. 

The CEO of Tech Mahindra, CP Gurnani said that in the first phase, the company may start “with 25% employees” working from home. 

He further added, “Most organisations will break away from large campuses to distributed centres. Work from home doesn’t mean work from home forever. There will be a Friday meeting, etc. But instead of my campus being 10,000 people in one place, it can be 500 people in a smaller town.” 

On the other hand, HCL Technologies has seen productivity gains due to remote working and has proposed a model where 50% of its staff will work from home while the rest will be operating from office and this will be on a rotational basis. 

The CEO at HCL Technologies, C Vijayakumar said, “Right now, there are certain IP address issues. I think the government has been very flexible and provided full support and they’ve extended it till July 31. So, if we have to do this, I think they should look at some of the regulations as well, and how that will play out as labour laws and tax laws,”. 

What Do Experts Say?

According to experts, shift to a WFH model delivers gains to both the industry and to society as metros are decongested with lower migration from tier II and III cities that could lead to the reduced carbon footprint. 

Further, Nasscom’s Aggarwal said “ income tax provisions will also need to be reviewed” as expenses incurred by employers to enable work from home will need to be treated as business expenses and not as benefits in the hands of the worker, including broadband costs or office furniture. 

“If the government wants to fast forward this from five years to say 2-3 years, it will have to quickly enable a long-term policy regime for it,” he added.