Employee Voice and Collective Formation in Indian ITES-BPO Industry

pdcruz@iimahd.ernet.in) are at the Indian Institute of Management, Ahmedabad

REVIEW OF LABOURmay 31, 2008 EPW Economic & Political Weekly38(for exampleIBM) have industrial relations histories which have displayed an opposition to trade unionism. Third, manyUK and European companies such as Prudential, Lloyds/TSB, Royal and Sun Alliance, Barclays, Siemens Business Services andABN-AMRO, who have offshored (either to their own “captive” operations or to third party providers) do recog-nise trade unions for bargaining purposes in their “home” operations but have not extended these arrangements to India. While it is not being argued that explicit union avoidance was a primary motive for relocation, the central drivers of lower costs and labour flexibilities certainly have been facilitated by theunion-free industrial relations environment prevailing in IndianITES-BPO.Though these factors together imply that attempts to establish an independent employees’ organisation would be destined to fail, for a minority of ITES-BPO employees, the establishment of precisely such an organisation (UNITES Pro-the union of informa-tion technology enabled services professionals) has been a wel-come initiative, providing them with a voice and a body to repre-sent their interests. With a principal aim to interrogate the categorical claim that organising efforts in IndianITES-BPO will be stillborn, this paper is based on a study of the membership of UNITES, highlighting their experiences, perceptions and expectations. While it enables us to evaluate the extent to which there is a genuine basis for the establishment of trade unionism in IndianITES-BPO, its wider sig-nificance lies in the fact that little is known of organising workers in the “offshored” industries of developing economies [Castree et al 2004; Kelley 2002]. 1 Indian ITES-BPO IndustryWhile the Philippines, South Africa, Latin American and eastern Europe states are emerging locations, India remains the pre-eminent location for offshored and outsourced business activities, accounting for 46 per cent of all global outsourcing [Nasscom-McKinsey 2005] and offering “an unbeatable mix of low costs, deep technical and language skills, mature vendors and support-ive government policies” [Walker and Gott 2007: 29]. The figures provided by Nasscom are undeniably impressive. Indian ITES-BPO exports were estimated to have grown from $6.3bn in the financial year 2005-06 to $ 8.4bn in 2006-07, while revenue in domesticITES-BPO grew from $ 0.9bn to $ 1.2bn in the same period [Nasscom 2007]. Direct employment inITES-BPO is calculated at 5,53,000 in the 2006-07 final year. Putting the employment figures for India into some comparative perspective, a May 2007 report of employment levels for the second most important ITES-BPO global destination, the Philippines, was given as 1,60,000 call centre employees and perhaps another 60,000 for employees engaged in various back-office activities [Locsin 2007].That the IndianITES-BPO industry displays a high level of internal differentiation, which has implications for the collectivi-sation endeavour cannot be ignored. Apart from geographical dispersion across Tier 1, Tier 2 and Tier 3 cities whose urban char-acter, infrastructure, costs and labour supply and quality differ considerably, the industry also embodies heterogeneity as companies fall into several distinct categories including multi-national corporation (MNC) captives, MNC third party providers, Indian third party providers (either pure plays or BPO arms of software companies) and domestic players whose scale of operations differ widely. While 60-65 per cent of services fall within the call centre space and 35-40 per cent are back office ac-tivities, there has been no wholesale move up the value chain to-wards greater complexity. Undeniably, though there has been con-siderable diversification in the range of processes delivered from India and there certainly has been growth in higher-value and professional knowledge process outsourcing, the evidence strongly suggests that, in overall terms, the ITES-BPO industry in India still tends to provide largely standardised and routinised services of low complexity [Taylor and Bain 2006b], in keeping with the massproduction model, which has important implications for work organisation and the experience of work [Batt et al 2005; Taylor and Bain 2005]. Tight monitoring, surveillance and a plethora of quantitative and qualitative controls are implemented, minimising employee discretion [d’Cruz and Noronha 2006; Remesh 2004; Taylor and Bain 2005]. Although the “cyber coolie” metaphor [Remesh 2004] may be overdrawn, many voice and non-voice agents do report that they experience their work as pressurising and contributing to exit and burnout. In recent times, many employees have experienced an intensification of work, stemming from sharpened competi-tion in the outsourcing market, affecting both captives and third parties, rising costs in India and reducing margins [Nasscom-McKinsey 2005]. While companies have sought to realise cost savings through economies of scale, concomitant with this has been this focus on leveraging efficiencies through “managing productivity and utilisation”. The outcome of these imply increas-ing pressure on workers: longer shifts, shorter and fewer breaks and tighter targets. Yet, the existing distinctive characteristics of the IndianBPO industry embody significant pressures: nocturnal call-handling for overseas customers, long commuting times, extended shifts and unpaid overtime, all of which have health and work-life balance implications. Researchers have also identified a “democratic deficit” in Indian ITES-BPO, with customary Indian hierarchical cultures being transposed to theITES-BPO sector across segments [Taylor and Bain 2006a]. Top-down methods dominate staff communications systems [Nasscom 2003] and employee involvement practices are task-based, geared to increasing productivity and quality, without giving employees a voice, let alone any real participation in decision-making. Employees have reported managerial and supervisory arbitrariness and at times authoritarian treatment, including disciplinaries and even dismissals for little or no good reason. One issue that appeared to emerge as an employee concern has been the practice of managers withholding leaving or reliev-ing certificates, by which workers are prevented from leaving for another company. These are part of more concerted Nasscom-facilitated attempts to control attrition, such as establishing non-poaching pacts [Nasscom 2005]. There is the important issue of pay and rewards which are distributed unevenly across the sector: levels of remuneration tend to be higher for back-office employees than for voice-based agents [Nasscom 2007] but,

REVIEW OF LABOUREconomic & Political Weekly EPW may 31, 200839more significantly, captives and MNCs tend to pay more than Indian third party providers and both considerably more than domestic outsourcers.2 EmergenceofUNITESUNITES was formed in September 2005 on foundations laid from 2004 by the Centre for Business Processing Outsourcing Profes-sionals (CBPOP).CBPOP had emerged organically as a network of ITES-BPO professionals who believed they needed their own organisation to represent them and advance their interests. CBPOP/UNITES was thus distinct from the Information Technology Professionals Forum (ITPF), an organisation which was oriented more specifically on software/information technology (IT) profes-sionals [Hirschfeld 2005]. BothUNITES andITPF were and remain projects supported by the International Trade Secretariat respon-sible for business services, Union Network International (UNI).The justification for creating UNITES as a separate initiative direc-ted exclusively at ITES-BPO was grounded in the understanding that employees’ conditions of work were sufficiently distinct from those of IT professionals. Although a distinctive undertaking, UNITES took on board some of ITPF’s ethos and orientation. Its members wished to develop UNITES as “a community of professionals”, which would en-sure that it provided educational and training services as well as in-formation and advice for its career-minded employees. One conse-quence of this approach was the conscious avoidance of unnecessary adversarialism and hostility to employers, which were redolent of an inappropriate conflictual style of trade unionism that would neither progress the interests of the industry nor attract members. Nevethe-less, UNITES made it clear that it would not hesitate from champion-ing issues of employee rights, justice, fairness and corporate social responsibility and would represent those with genuine grievances against their managers and employers. AlthoughUNITES’ history of organising ITES-BPO workers is a very recent one, its record since formation does indicate real progress [UNITES 2006]. Overcoming numerous bureaucratic ob-stacles, it has secured legal status under the Trades Disputes Act (1926) through the Labour Commission in Karnataka and has been granted “provisional affiliation” to Indian National Trades Union Congress (INTUC). It now has organising centres and claims viable chapters in six areas (Bangalore, Hyderabad, New Delhi/NCR, Chennai, Mumbai and Cochin). Analysis of UNITES activities between its formation and the re-search period [Taylor and Bain 2008a,b] demonstrates that suc-cess has been achieved through much-publicised campaigns on behalf of ITES-BPO employees. The issue which provided UNITES with its first recruitment opportunity was generated by the distinc-tive Indian industry practice of providing transportation for em-ployees. Employees had long identified concerns over night-time safety, which tragically anticipated the rape and murder of Pratibha Srikanth Murthy in December 2005, a young woman employed by Hewlett Packard (HP) Globalsoft Services in Bangalore. This horrific crime galvanised public opinion and raised many important issues, most pertinently corporate responsibility for the safety of employees (especially women). The callous indifference exposed by the remarks of Som Mittal, HP’s CEO,then of Nasscom’s executive council (http://www.indianexpress.com/res/web/pIe/full_story.php?content_id=84118) and now incoming president, provoked protests in which UNITES was prominent. Through these actions, UNITES attracted its first significant tranche of members. Other notable interventions have included representing employees of the Bangalore-based company BelAir who had been summarily dismissed without pay and successfully intervening to support employees of a third party centre in Noida in their ef-forts to secure payments that they had been denied. In addition, UNITES has played an important role of advocacy on behalf of many individuals. UNITES has also succeeded in negotiating four collective bargaining agreements (Excel Outsourcing Services, e-Merge Business Processing, Infopoint and Transact Solutions), although these breakthrough arrangements are confined to small and me-dium enterprises (SMEs) in the domestic sector and the aim of securing collective bargaining in international facing operations has yet to be realised. Clearly,UNITES has established a genuine, if limited, presence in IndianITES-BPO, highlighting questions concerning Nasscom and the industry’s assertion that the independent representation of employees is unnecessary and unwanted in the Indian ITES-BPO environment. 3 The Study The questionnaire distribution strategy aimed to capture as many UNITES’ members as possible working in domestic, third party, and captive operations between April and July 2007. Using UNITES’ membership databases, independent social science graduates were employed under the direction of the Indian researchers to approach members and complete the question-naires as structured interviews. This strategy produced 1,206 completed questionnaires from Bangalore (30 per cent), Chennai (17 per cent), Hyderabad (16 per cent), Cochin (16 per cent), Mumbai (14 per cent), and Delhi/NCR (8 per cent). However, 13 per cent of respondents claimed not to beUNITES members and were excluded from analysis, leaving a total of 879 completed questionnaires, which we are confident, reflects UNITES’ active membership. Supplementary semi-structured interviews withUNITES mem-bers enabled deeper exploration of their experiences. The re-search team carried these out in four locations – Chennai, Delhi/NCR, Hyderabad and Bangalore. A cross section of members was chosen across genders and company type producing a total of 45 interviews, each lasting approximately one hour. All interviews were voluntary and were taped and transcribed. 3.1 RespondentProfileThe majority ofUNITES members responding (70 per cent) was based in Indian domestic companies with 22 per cent in captives and 8 per cent in Indian third parties. This is an important find-ing, demonstrating the concentration of UNITES members in the domestic sub-sector and a lesser penetration amongst captives and particularly third party providers. The even gender balance reflects what we know about the industry [Batt et al 2005]. Posi-tively, this suggests that to the limited extent thatUNITES has made headway, it has succeeded in recruiting equally from both genders. Membership also reflects the strikingly youthful nature of

Age Tenure (months)

Captive Indian Domestic Total Third Party N % N % N % N %

How did you find out about UNITES? Colleague/friend at work 151 79 43 63 451 73 645 74 UNITES web site 10 5 13 19 211 34 234 27 Friend/relative working in different call centre/BPO 52 27 31 45 73 12 156 18 UNITESleaflet 2 1 5 7 51 8 58 8 How did you join UNITES?

Sophisticated and effective HR practices do not prevail in international-facing centres. Budhwar et al (2006) emphasise limitations in career progression, development and retention policies, while focused sessions at Nasscom conferences have been dominated by discussions of the need to develop coherent HR management approaches in place of existing adhoc practices [Taylor and Bain 2006b]. Recalling the telling critique of HR management as it emerged in the UK, there is often a contradiction between “rhetoric” and “reality” [Legge 2004], with sufficient evidence to question the notion that human resource departments and their supposedly increasingly sophisticated policies have the effect of “rendering unions redundant” [Noronha and d’Cruz 2006: 2118].

Captive Indian Domestic Total Third Party

N % N % N % N %

Captive Indian Domestic Total Third Party

N % N % N % N %

Captive Indian Domestic Total Third Party

N % N % N % N %

Captive Indian Domestic Total Third Party N % N % N % N %

REVIEW OF LABOUREconomic & Political Weekly EPW may 31, 200845operations (42 per cent) and captives (22 per cent). These are very important findings, suggesting that large numbers of employees believe that they will be penalised by their employers for joiningUNITES (Table 8). Interview data illustrates members’ perceptions of ITES-BPO em-ployers’ explicit anti-unionism. Of considerable interest is the testi-mony of the member who maintained UNITES’ web site who re-ported how many employees when they contacted the organisation might say, “Can I join in secret?” or “I am a member but please do no let it be known that I am a member”. Fears were expressed that employees would be “terminated” if their membership became known to management. Therefore, contrary to the official portrayal of a universally benign employment experience, there is evidence of a relatively widespread fear of punitive measures being taken against employees who either voice their concerns or express an interest in joining a union. Given the evidence of perceptions of the reluctance of employ-ees to joinUNITES for fear of reprisals including being sacked, it is necessary to reflect upon the pertinent International Labour Organisation conventions. Firstly, there is convention 87 (Freedom of Association and Protection of the Right to Organise) and con-vention98 (Right to Organise and Collective Bargaining). At the very least, many employees in theITES-BPO industry would ap-pear to believe that these rights do not apply and it seems that employers are not making efforts to ensure that employees are appraised of their rights. Turning to the inclusivist obstacles listed, Table 8 demon-strates that the most significant of these relates to the effects of high salaries. Fifty-seven per cent of respondents overall reported that high salaries meant that employees believed that they did not need to joinUNITES. While there was little difference in the responses of domestic members (60 per cent) and those in cap-tives (58 per cent) far fewer in third parties (24 per cent) be-lieved this was a very important factor. Next in order of impor-tance (54 per cent overall) was the perception that ITES-BPO employees see themselves as professionals. Again this was seen as a very important problem by more respondents in domestic centres (60 per cent) than in captives (44 per cent) and third party centres (35 per cent). Most of the remaining inclusivist obstacles (employees believe that the employer is all they need, manyITES-BPO professionals do not see the need for UNITES or think that they will be pro-moted or believe that their problems will be solved by their man-agers) were seen to be very important by around one-in-three of respondents overall. For most items the differences between the sub-samples were not considerable, except in relation to last of these. Only 9 per cent of respondents in third parties believed that the successful solving of employees’ problems by managers was a very important problem. Coming to structural characteristics of the ITES-BPO industry, the youth and inexperience of the workforce was considered to be very important by 59 per cent of respondents overall. The question of SAGE AD

REVIEW OF LABOURmay 31, 2008 EPW Economic & Political Weekly46high attrition making it hard to recruit and build a stable member-ship requires some discussion. While almost one-in-two (54 per cent) in domestic centres perceived this to be very important as a problem facing UNITES, around one-in-three in both captives (34 per cent) and third parties (32 per cent) did so. This resonates with what we know already of the tendency amongst many employees in the domestic sub-sector to treat their current employment as a stepping-stone to the more prestigious and higher-paying interna-tional-facing centres. Clearly, intense labour turnover has contra-dictory effects as far as the potential for developing collective or-ganisation and UNITES are concerned for, on the one hand, labour is placed in a potentially strong bargaining position but, on the other hand, employees tend to pursue individual means to capital-ise on relative scarcity.Considering the more overtly ideological difficulties facing UNITES, almost half the respondents (47 per cent) thought that the fact that their many ITES-BPO employees do not believe in unions was a very important problem. Only a quarter (26 per cent) of re-spondents thought that the fact that unions are seen as damaging the Indian industry’s growth was a very important problem. 5 Conclusions The evidence is unequivocal that there is a constituency for UNITES in Indian ITES-BPO, notwithstanding contradictory attitudes amongst ITES-BPO employees, the opposition of employers and the benefits of the job. It needs to be emphasised that what has been captured in this survey are the attitudes of employees who have already indicated through their identification with UNITES that there is a need for some kind of independent employee representation. Of course, we cannot generalise these findings to the entire population of the ITES-BPO workforce. Yet, the host of grievances reported here, from the seemingly trivial in-dignities of favouritism to the more heavy handed arbitrariness of supervisory and managerial treatment or to material grievances re-lated to pay and workload or even to profound concerns over safety, suggest that these are widespread throughout India’s ITES-BPO industry. They may be experienced with differing intensity and regularity depending on the sub-sector or company in which em-ployees are engaged but they are nonetheless prevalent. UNITES has made genuine progress, albeit limited by its youth and inexperience, in recruiting from the virgin workforces of Indian ITES-BPO. For UNITES to remain relevant, it must continue to deepen and broaden its membership base and to develop clus-ters of self-reliant members in workplaces and across companies. The broader task facing UNITES is how to reconcile the tension between the requirement to reflect the professional aspirations of its members and the need to act more overtly as a trade union in the making. It is only through experience that UNITES will be able to develop the understanding of what tactics are appropriate in a particular set of circumstances. Indeed, UNITES is developing agendas that can advance the interests of its professional mem-bers whilst simultaneously demonstrating the constructive role it can play in representing employees. Further, particularly in rela-tion to the captive segment, developments within India can in part be shaped by external developments, by the actions and in-terventions of unions in the global north and of global federa-tions [Taylor and Bain 2008a,b]. 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