Photo: Mint
Photo: Mint

Opinion | IT firms ignore local sentiment at their own peril

Sentiment in a post-Brexit UK and in a Trump-led US are black swans that are now a reality

The world changed inexorably in 2016. The backlash from the “dispossessed" native white populace in countries such as Britain and America has created a new world order that one needs to accept and adjust to. While trade is far from dead, it has been knocked into a different playing field, where the rules are different, and the players are rougher. It is as if the comparatively genteel game of cricket has now been transformed into a violent rugby scrum.

New games, new umpires and new rules just mean that adjustments in one’s style of play need to be made. The Indian information technology (IT) and business process management (BPM) industry will do very well to look at the late 1970s and early 1980s when the backlash against Japanese-made automobiles in the US and other parts of the Western world was very high. Parking lots in the same rust belt that voted Mr Donald Trump into office had printed signs aimed at owners of Japanese marques such as Honda, Nissan and Toyota, which said: “Park Your Import Elsewhere".

In just a few years, these Japanese automobile giants transformed themselves into firms that had the capability to manufacture their cars locally, while still retaining their unique engineering and design advantages. Apart from setting up manufacturing plants in the US and UK, thereby allowing themselves to be seen as local employers, the Japanese also set about recasting their local image with great dexterity.

Other parts of Japan’s industrial machinery have gone even further. For instance, in 2005, Sony named Howard Stringer, a Welsh-American executive, as its CEO, the first time an American had run a top Japanese company.

Indian IT and BPM outsourcers ignore ground-level sentiment in countries like the US and the UK at their own peril. In the US, lawsuits are being filed against them for allegedly systematically cutting white Americans out of jobs and promotions, while favouring South Asians of Indian descent instead.

Erin Green, formerly head of Infosys Ltd’s immigration section in the US, filed a racial discrimination lawsuit against the firm last year. His allegation was that Infosys deprived him of an equal right to work because of his race and that it had retaliated against him because of his complaints. Green was let go from his job in June 2016. His case has now been taken out of the court system and relegated to arbitration proceedings.

Infosys is not alone. Texas resident Reese Voll filed a class action complaint in a US district court against HCL Technologies Ltd. His lawyer said: “The key allegations are that HCL discriminates against non-South Asians in hiring, promotions and terminations."

Mint reported last year that Tata Consultancy Services Ltd (TCS) is also fighting claims in a US court that its hiring practices are anti-American. In both the TCS and HCL Tech cases, a key statistic being used to shore up the plaintiffs’ complaints is that at least 70% of their employees in the US are South Asian Indians, while South Asian Indians only make up 11-12% of the IT workforce in the US.

Cognizant Technology Solutions Corp., the biggest sponsor for H-1B visas, is facing a lawsuit where three former employees claim they were forced out of their jobs and replaced with “less qualified" Indians after being poorly treated by their Indian supervisors and colleagues, given unjustifiably low performance ratings and denied promotions.

It must be said of all these companies that they have denied the allegations and defended themselves vigorously. They have also aggressively stepped up local hiring recently. Far be it from me to claim that their accusers’ complaints have—or don’t have—any merit. The lawsuits may well be dismissed. But as an interested observer, it seems to me that the sentiment in a post-Brexit UK and in a Trump-led US are black swans that are now a reality. American firms seem to have understood this. For instance, International Business Machines Corp., which supposedly has more workers in India than in the US, does not showcase this fact.

Indian outsourcers are making a mistake if they think “this too shall pass". Could it be that an American or British CEO at one or more of these companies will send a strong positive signal to the countries that host them?

Siddharth Pai is founder of Siana Capital, a venture fund management company focused on deep science and tech in India.

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