HR: Favouring The Locals

Awave of uncertainty seems to have hit the information technology and biotechnology (IT-BT) sector as they fear that reservations in Karnataka for locals will lead to loss of merit-based employment and tarnish Bangalore’s Silicon Valley image. In December 2016, the Karnataka government was mulling over a 100 per cent reservation for Kannadigas in all blue-collar jobs in private sector industries in the state, barring IT and BT firms, which avail concessions under the state industrial policy.

However, in February, the issue of reservation gained momentum once again as the panel headed by S.G. Siddaramaiah, the chairman of the Kannada Development Authority, reportedly sent out fresh amendments to the proposal calling for the inclusion of the IT-BT sectors under the ambit of reservation.

The new report recommends a 100 per cent reservation in blue collar jobs in the private sector for Kannadigas, who were either born in the state or have lived here for 15 years. The report also calls for 80 per cent reservation for locals in clerical jobs, and 65 per cent reservation in high-skilled or category ‘A’ jobs. The Karnataka Chief Minister Siddaramaiah recently said that he would bring a legislation based on the recommendations of the panel.

The panel has justified the inclusion of the IT-BT sector under the proposed reservation policy on the premise that the IT-BT sector has benefitted from subsidised agricultural land given by the government to set up their campuses and it is time they gave employment to those who gave up their land.

Industry observers are of the view that the proposed reservation is against the fundamentals of talent and meritocracy. “Reservation is a very old concept, which has outlived its utility,” says brand expert Harish Bijoor, founder of Harish Bijoor Consults. “Today we live in an era that worships talent and merit. Karnataka must grow forward into the future on the basis of being India’s best ‘talentocracy’ and indeed India’s best ‘meritocracy’.

Company heads such as Bijoor and few others (some did not want to be named) believe there is little merit in making things mandatory and using force. Vikram K. Limsay, CEO of Helicon Consulting, says, “For any force, there is a corresponding opposite force. While there is a case to rehabilitate displaced farmers, which seems to be the primary intent, affirmative action is perhaps more advisable than enforcing a law.”

Limsay says that the situation in the IT-BT sector is a lot different than the conventional industrial sector. In fact, he even doubts if the move would yield any substantial result. “Unlike the latter, the proportion of blue collar workforce itself is very low in these emerging knowledge sectors. So, it may just turn out to be a case of making a populist statement rather than of any real impact in terms of number of direct blue collar employment generated.”

Ketan Kapoor, co-founder and CEO of Mettl, a talent measurement company based in Gurugram, says that reservation outside of economic consideration is very inefficient. “On one hand, it is demotivating for deserving people. On the other, it promotes sub-optimal quality that is deleterious in the long run. It is like a race to the bottom,” says Kapoor.

From Fuel To Fire
The reservation issue comes at a time when the IT industry is already dealing with challenges amid skepticism that the new US administration might reform the H1-B and L-1 visa scheme restricting Indian IT companies from sending their employees for work temporarily to the US. American President Donald J. Trump’s statements on “America first” is already causing jitters within the industry that “deserving” employees may no longer be able to work in the US. In such a scenario, the Karnataka government’s policies on reservations is only adding fuel to the fire and causing tension within the sector.

Referring to the challenges in the Trump era, Arup Roy, research director at Gartner, says that the Indian IT sector must now brace for further troubled times ahead. “The sector was already battling both cyclical challenges (due to changes and shifts in financial services, healthcare verticals) as well as secular challenges (that is, cloud shift, automation, pricing pressure, insourcing) impacting revenue growth,” he says. “A sub-10 per cent growth for FY2017 is certain. Now the Donald Trump administration will add to the industry’s woes. Trump’s protectionist views would have further dampening impact on growth prospects, if the views were to crystallise into some serious policy implementations.”

Several technology companies including Infosys and Wipro declined to comment on the reservation issue as it is politically sensitive. Industry bodies like Nasscom and IESA also preferred not to share their views on the subject.

The IT-BT industry has traditionally given birth to merit-based employers. It has always been a knowledge-based industry where talent and human resource has been its core asset. Therefore, given that the proposed policy also includes the high-skilled/ category ‘A’ jobs, any step towards reservation dismisses the basic premise on which the IT-BT industry had flourished over the years.