Why TN allowing unions for IT cos is bad news : Mohandas Pai, Head of Aarin Capital Partners
Updated on: 10 Jun 2016
The state of Tamil Nadu has allowed employees of IT companies to form trade unions, by bringing the sector under the ambit of the Industrial Disputes Act, 1947.
The move is unlikely to result in significant costs for IT companies immediately, said Rahul Jain of Systematix Shares & Stocks.
But former Infosys board member TV Mohandas Pai criticised the move, saying that an industry that has 15-20 percent attrition levels -- where employees can move out if they are not satisfied -- such a law was not required.
"The IT industry caters to the global marketplace and there we need certainty, we need 24x7 service because we do very critical work," he said. "If you don't have proper legal protection for work to be done in 24 hours and you are susceptible to several demands from employees, then, it is going to be troublesome."
Below is the verbatim transcript of Rahul Jain and TV Mohandas Pai's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Sonia: How should a stock owner approach this newsflow, should he be worried about the potential cost increases for IT companies or is this just noise?
Jain: In my opinion, this is more like a small kind of a HR related issue that a company may face at the end whenever they would have this kind of a small slippage in terms of some firing which they may do for -- there are cases where people don't want to relocate and the company has no choice to end up firing some of the people for non-performance. Buy beyond that, from an investor perspective, I think it is too small a thing to make any impact.
Latha: This news that Tamil Nadu has now said that the industrial disputes act applies to IT companies as well. The labour secretary clarified that yesterday to journalists. So is this going to be big bad news for IT companies?