Delayed onboarding unfairly punishes employees for errors of the employer

Nascent Information Technology Employees Senate (NITES), in its complaint, has highlighted the "delayed onboarding" of about 200 lateral hires by Tata Consultancy Services (TCS), who, the union alleged, had been left “stranded and jobless" after the IT major failed to follow through its offer of employment with an actual job, according to a report in the Mint.

"Delayed onboarding" refers to companies not transitioning their job offers into actual, salaried positions. This issue surfaced after the Covid-19 pandemic, which disrupted businesses globally. Though there was an increase in IT spending due to the new remote-working norm, it led to a churn in the kind of skills and talent required.

Post-pandemic, with slowed growth in the US and EU and reduced IT budgets, India's $220 billion IT industry has faced challenges. JP Morgan has forecast a “washout year" with “no discernible uptick" in new deal signings seen this year.

In fact, most IT majors, have warned that their global clients have been cutting IT spends, while delaying or cancelling ongoing contracts. This has had a knock-on impact on hiring.

Not that overall hiring has dropped. In fact, according to industry body NASSCOM, India’s IT sector continues to be a net employer, with a current employee strength of over 5.4 million, with 290,000 new jobs created in FY23. But there has been a significant drop in hiring at the fresher level, with staffing services firm Teamlease predicting a 30% drop for the current fiscal ending March 2024.

While thousands of offer letters have been issued, there has been considerable delay in these firms converting their offers to actual jobs. There are no consolidated figures for the number of hires actually left in the lurch, but social media is awash with complaints from stranded candidates. A poll of members by NITES found that 90% of respondents had faced delays in onboarding, by as much as a year or more.

Delayed onboarding falls into a legally grey area. Technically, an offer letter is a statement of intent, not an actual employment contract. However, once an offer letter is accepted by a candidate within the stipulated period, it becomes a legally enforceable promise under Indian contract law. But most jobseekers -- fresh graduates or experienced professionals -- seeking employment have neither the means, nor the courage to legally take on defaulting employers, fearing getting blacklisted, or negative impact on their future careers.

Employers, of course, have the right to withdraw offers, specially if the potential recruit has misrepresented information about qualifications, experience, salary or other details. However, leaving candidates hanging after making an offer falls between the cracks as far as the law is concerned. It is this gap which may be tested by the Maharashhtra labour department, if it decides to take up the NITES complaint.

The ethicality of delayed onboarding, however, is a different matter altogether. It is patently unfair, as it puts the cost of the erroneous hiring call made by the employer on the potential employee. While business conditions change constantly, forcing changes in business strategy, it is up to the employers to gauge this accurately and decide on how much hiring they need to do. If they make an error in this assessment, the cost of this error – as in all business decisions which go wrong – ought to be paid by the one who commits the error.

India’s IT sector have led the way in transparency and professionalism in Indian business. They have led India Inc in professionalising work practices and work conditions for their staff. With 2 million women employees, IT Inc has also blazed the path on gender equity in the workplace. It would be a pity to tarnish this excellent track record with the dubious practice of delayed onboarding, which unfairly penalises those with the least agency. If industry fails to do so voluntarily, our lawmakers should seek to plug the gap.