New Delhi | Bengaluru | Pune: India’s information technology 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.
At a meeting with government officials earlier this month, IT industry leaders, who estimated that close to 50% of the country’s 4.3 million IT workers will soon work from home, were asked to detail the legislative changes required to facilitate this significant transition.
Industry body The National Association of Software and Service Companies (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,” a top government official told Economics times.
The industry has also requested the government to make permanent several recent concessions extended until July, including 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.
Report by Next Week
“There are a whole host of things you need to start relooking at when this (work from home) becomes the new norm,” said UB Pravin Rao, chief operating officer of InfosysNSE -0.76 %. “Some of the labour laws may not cater to a work-from-home environment, so (we) need to start looking through a fresh lens,” said Rao, who is also the chairman of Nasscom.
The National Association of Software and Service Companies (Nasscom) is currently reviewing labour laws from the WFH perspective and will be sending a report to the government by next week.
Officials are of the view that labour laws should be amended in a way to safeguard employees while also providing flexibility to employers.
“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,” said a government official adding that “work is going on to thrash out the details currently”.
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.
The country’s software exports stood at $147 billion in fiscal year 2020.
“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,” said Ashish Aggarwal, senior director and head of public policy at Nasscom.
“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,” he said.
Since the lockdown in March, India’s IT industry has moved nearly 90% of its workforce to deliver services from home. 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.
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.
CP Gurnani, CEO of Tech Mahindra, said that in the first phase, the company may start “with 25% employees” working from home. “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.”
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.
“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,” HCL Technologies CEO C Vijayakumar said.
Experts are of the view that a 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 reduced carbon footprint.
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 said