Haryana job reservation law may force IT firms to press exit button

Reservation in the private sector has always been a contentious issue in India. Haryana government's job reservation law in the private sector mandating 75 per cent of the jobs for locals has created a furore. The founding fathers of Indian constitution have made provisions of reservation in the government with an aim to create a level playing field for the downtrodden. This 'positive discrimination', however, has been long used by all political parties to gain political mileage. With shrinking job opportunities in the public sector, politicians are now setting their eyes on the private sector to gain support from their targeted constituents. In all consideration, this is a regressive step and will have much debilitating impact on the job creation abilities of the private sector.

Let's take into account the Indian IT industry to gauge the impact. Over the years, Gurgaon or Gurugram has emerged as an important tier-II centre in the National Capital Region of New Delhi. Most domestic and global IT services giants including Microsoft, Google, Accenture, Tata Consultancy Services (TCS), Infosys, Wipro, HCL Technologies, Tech Mahindra, Cognizant, Oracle, IBM, Coforge (previously NIIT Technologies), Accenture, SAP, and Genpact have their centres in Gurugram region. The city also houses more than five percent of all BPM (business process management) services workers. Now, if the new job reservation law is implemented, will Haryana State have enough qualified human resources to execute the complex technology work in these centres? The answer is obviously a resounding 'no'. The $190 billion worth Indian IT industry employing about 4.5 million people runs on merit. Any dilution from this credential will negatively affect the client servicing abilities of these technology firms and chase away global enterprises to other shores.

A recent survey conducted by IT industry body Nasscom showed that nearly 80 percent of the companies surveyed said such law would 'negatively impact' their future business operations and investments plans. "The State's move would impact nearly 1.5 lakh current jobs in IT-ITES sector, and given the industry's high attrition rate, could have a 'severe' implication in 1-2 years," the survey noted. According to Nasscom, 500 IT-ITeS companies in the State employ more than 400,000 people directly and half of these staffers earn less than Rs 50,000 per month. As the act will be applicable to new hires, this will impair IT firms' abilities to select staffers on merit. Therefore, mass exodus of these companies to other centres can't be overruled.

In this perspective, it is wise on the part of the State government to give careful consideration during implementation of such norms. Because Haryana has not only attracted good amount of investment in IT sector, it has also emerged as an automobile hub. As job losses and mass unemployment don't augur well for any political party, the State government should refrain from passing such populist law which can harm their political interest in the long-run.