Figure 4

Examples of Retention Strategies for young

Professionals in India’s BPO and Services
Sectors
Name of the
Retention Strategy Impact
Company
 A choice of working in
over 170 offices across
40 countries in a variety  Significant
Tata
of areas. impact on job
Consulting
 Paternity leave for hopping
Services(TCS) adoption of a girl child achieved
 Discounts on group
parties

 Identification of
 Have been
potential talented staff
able to
ICICI Bank  Alternative stock
achieve higher
options
retention rate
 Quicker promotion

WIPRO  ‘Wings Within’  Has led to a

programme where higher
existing employees get a retention rate
chance to quit their
current job role and join
a different firm within
 Figure 4
Examples of Retention Strategies for young
Professionals in India’s BPO and Services
Sectors
Name of the
Retention Strategy Impact
Company
WIPRO

 Fostering a sense of
belongingness, creative
artistic and social
 Moderate
activities for the
Retentions
INFOSYS employees and their
rate increase
families.
achieved
 Initiating one of the best
‘corporate universities’
in the world

Microsoft-  Excellent sporting and  Struggling to

India wellness facilities minimise job
 Employees allowed to hopping
choose flexible working
schedule
 Moving people across
functions and sections in
assisting employees find
 Figure 4
Examples of Retention Strategies for young
Professionals in India’s BPO and Services
Sectors
Name of the
Retention Strategy Impact
Company
their area of interest

 Culture change valuing

innovation and talent
over age and experience
 Institutionalising a  Stabilised job
Mahindra &
practice called ‘reverse hopping
Co mentoring’ where young significantly
people are given
opportunities of
mentoring their seniors

India remains handicapped by enormous infrastructure

and institutional .
(labour and capital) constraints. The question is not
whether India has not begun
to produce an impressive record in growth, employment,
and poverty reduction,
but rather how to overcome the obstacles impeding even
faster progress, as the
global economic system becomes increasingly
competitive.
According to the Report of the 2nd National
Commission on Labour, the perceived benefits of
globalization are as follows:

Sustained economic growth, as measured by gross

national product is the
path to human progress.
Free markets, with little or no intervention from
government, generally
result in the most efficient and socially optimal allocation of
resources.
Economic globalization, achieved by removing barriers
to the free flow of
goods and money anywhere in the world, spins
competition, increases
economic efficiency, creates jobs, lowers consumer
prices, increases
economic growth and is generally beneficial to everyone.
Privatization, which shifts functions and assets from
government to the
private sector, improves efficiency.
The primary responsibility of the government is to
provide the
infrastructure necessary to advance commerce and
enforce rule of law
with respect to property rights and contracts.
However, there is a growing realization that globalization
is not an
unmixed blessing. It can at best be an outcome, not a
prerequisite for successful
growth strategy.

Advent of libralisation, privatization and globalisation

Policies of privatization and disinvestment are being
pursued as part of
economic reforms in India. The objectives of disinvestment
basically are:
To enhance budgetary receipts.
To minimize budgetary support towards loss making
units.
To improve performance by bringing out changes in
ownership and
performance
To ensure long term viability and sustainable levels of
employment
in public sector enterprises.
Broad based dispersal of shares, especially in the profit-
making
public sector enterprises among investors (Venkata
Ratnam &
Naidu 2002, p. 19).

The following are among the several

demerits or pitfalls of globalization:
The process of globalization seems to be driven by a
few in a uni-polar
world whereby it is benefiting few and hurting many.
It is another form of imperialism.
It is leading to growing inequalities between the rich
and the poor, both at
the level of individuals and among countries.
It is destroying jobs and local communities.
It is ruthless, root less, jobless, fruitless…(UNDP,
1996).

Whatever form it takes, social effects

of privatization or restructuring will
be as follows :
Initial overstaffing will lead to rationalization,
retrenchment and
displacement of labour
Informalisation of the economy
Stagnation of employment in organized sector
Growing casualization of labour .
In dealing with the redundant workers, several options are
available
though not all are equally attractive in solving the problem
of unemployment.
These are : 7
Voluntary retirement scheme (VRS)
Cash compensation or golden handshake
Retraining of workers
Redeployment
Counselling
Eventual Rehabilitation
Creation of unemployment benefit and social security.
New Actors and the Emerging Dynamics.
The industrial relations system
comprises certain actors in a certain context. The actors
are a hierarchy of managers or of workers and trade
unions. Then, there are governmental agencies. In the
post-liberalization, globalization era, consumers and
community have begun to assert themselves and take a
significant role. When the rights of consumers and
community are affected, the rights of workers/unions
and managers/employers are taking a back seat.
The court rulings are borne by the realization that wider
public good matters most in preference to the narrow self
interest of a minority. Workers and unions, in particular are
asked to assert their rights without impinging on the
rights of others, particularly the consumers and the
community. Hence, the ban against bandhs and even
restrictions even on protests and dharnas.
Increasingly, trade unions are getting isolated and see a
future for themselves and their members only when they
align themselves with the interests of the wider society.
As regards the changes in the industrial relations
machinery, it is felt that inspection of establishments
cannot be done away with. However, the process
of inspection can be used to create awareness and to
educate the employers and workers with regard to benefits
of timely and genuine compliance. The role of inspector
can also be modified so that he acts as a facilitator helping
employers in complying with the provisions of the laws.
Selective and purposeful inspections have to replace
routine statistics oriented inspections. Similarly, the
conciliation officers need to be well aware of the new
challenges posed by globalization before the employers
and employees and equip themselves with necessary
knowledge, attitude and skills to handle industrial disputes
whose nature and dimensions will be very different from
industrial disputes hitherto handled.
To be successful, they have to avoid 5 ‘A’s and promote 3
‘H’s:
A1 ….. Anger H1 ….. Honesty
A2 ….. Anxiety H2 ..... Health
A3 ….. Annoyance H3 ….. Helpfulness
A4 ….. Arrogance
A5 ….. Arguments
The process of globalisation has forced trade unions to be
defensive and
maintain a low profile. Therefore, there is a need for the
industrial relations machinery to be more proactive and
vigilant so that undercurrents of discontentment and
grievances are detected in time as unions may not report
the grievance in changed environment.
Labour Market Flexibility
Even within the organized sector, an increasing number of
jobs are approximating the character of these in the
unorganized sector as a result of the increasing labour
market flexibility in the wake of globalization. A
comprehensive survey of about 1300 firms scattered over
10 States and nine important manufacturing industry
groups, shows that between 1991 and 1998, employment
increased at the rate 2.84 per cent per annum
(Deshpande et al, 2004). Nonmanual employment
increased at 5 per cent per annum whereas manual
employment increased at 2.29 per cent. This increase is in
total employment was brought by increasing the share of
non-permanent employees and increase in manual
employment by increasing the share of women workers.
Smaller firms grew faster than bigger firms. Firms, which
increased sales, increased manual employment as did
those which employed contract workers.
Employers who increased fixed capital per worker reduced
manual employment.
Employers increased employment but only of one or other
category of nonregular flexible workers.
It was found that as a whole over the 7 years of
liberalization (between 1991 and 1998) dualism in the
labour market did increase. The share of permanent
manual workers declined from close to 68 per cent in 1991
to 64 percent in 1998. Not only did the share of non-
permanent increase but the share of casual in non-
permanent increased even faster. It is the big firms that
resorted to the greater use of non-permanent workers.
Holding all other factors constant, firms employing 50-99
workers and those employing 500 or more workers,
increased the share of non-permanent workers
significantly between 1991 and
1998. Also, firms employing 500 workers or more
increased the share of
temporary workers.

Industrial Disputes Act: Mr. Yashwant Sinha, the then

Finance Minister
in his budget speech (2001) stated that the chapter VB
would be amended to
raise the existing limit from 100 workers to 1000 workers.
The Chapter V-B of
the I.D. Act regulates lay off, retrenchment and closure in
an industrial
establishment which engages more than 100 workmen,
and which is not of a
seasonal character. All factories, mines and plantations
are covered under this
chapter. This resulted in criticism from several trade union
quarters. The
severest criticism emanated from the founder President of
BMS.
The Task Force on Employment Opportunities (Ahluwalia
Committee)
recommended doing away completely with the permission
clause in all
establishments. The threshold limit of 100 was introduced
by the 1976
amendment to the ID Act. Prior to that, the limit was 300 or
more workers. The
Second National Labour Commission has recognized the
need for providing
flexibility to the employers in handling labour to promote
competitiveness and
improve productivity in the context of globalization. The
Commission has taken
care to provide a safety net cushion to the workers.
The Commission believes if the employer could decide the
size of the
employment at the start of the business, why should he
not do so during the
conduct of the business. Therefore, it has recommended
the repeal of section
9A which relates to issue of notice of change in the
conditions of work.
The Commission has also favoured complete freedom to
the employers to
lay off or retrench workers. Further, it has recommended
restoration of the
original threshold limit of 300 or more workers relating to
the need of the
employers to get prior permission from the appropriate
Government for closure.
However, the Commission has suggested payment of all
dues to the workers and
higher compensation to the workers than provided in the
I.D. Act.
Just as an industrialist has a right to establishing a factory
or start a
mining or plantation operation, equity demands that he
should have freedom to
close down the establishment. In the era of globalization
and severe competition
in the manufacturing, mining and plantation sectors
(commodity sector), it is
necessary to have an urgent re-look into the provisions of
the Industrial Disputes
Act relating to lay off, retrenchment and closure. In several
advanced countries,
there is a clear-cut hire and fire policy. Even in China there
are not many
restrictions in this regard. Time has come to review the
provisions in the I.D. Act
relating to this subject. A simpler hire and fire policy can
attract more FDI in the
manufacturing, plantation and mining sector.

The two clauses which are considered out of tune in a

globalised scenario
cover the following aspects:-
(a) Rationalisation, standardization or improvement of
plant or
technique which is likely to lead to retrenchment of
workmen;
(b) Any increase or reduction (other than casual) in the
number of
persons employed or to be employed in any occupation or
process
or department or shift (not occasioned by circumstances
over which
the employer has no control)
As globalization has resulted in increased competition, the
manufacturing
industry was adversely affected resulting in diminishing
rate of growth in this
sector. The sector could not face the competition given by
the Chinese goods
flooding the market at affordable prices. It is reported that
the rate of growth of
manufacturing sector of China is almost twice that of India.
This certainly calls for
introspection. The time has come to deal with these two
clauses of Fourth
Schedule appended to the I.D. Act as rationalization,
technological upgradation
and improved productivity are of an imminent necessity.

Impact on Industrial Relations including in the newly

emerging Services
Sector
Most of the trade unions have opposed the policy of
globalization,
economic reforms, privatization and disinvestments. They
attempted to
demonstrate unity in such opposition and organized
nation-wide strikes and
bandhs. The marked feature of post globalization is that
the unions in the private
sector hesitate to go on strike. The public sector
undertakings viz. Coal India,
Singareni Collieries Ltd., Indian Airlines, Air India, ports
and docks, banking and
insurance sector, telecom, power sector continued to be
plagued by industrial
unrest.
After the great railway strike of 1974 which paralysed the
railways
functioning throughout India for nearly a month, it has
been generally quiet on the
railway front. The well established Permanent Negotiating
Machinery is
functioning more or less smoothly. Hence, there have
been only a few local
instances of unrest since the opening up of the economy.
Similarly, after the
historic strike of textile workers in Maharashtra in 1982
which resulted in loss of
employment of more than 75,000 workers, the textile
workers are generally
hesitant to go on strike, barring a few exceptions viz. the
prolonged strike of Delhi
textile workers in 1986.
Workers of Coal India Ltd. have participated in several
agitational
programmes even after the advent of globalization. It
appears there is no impact
of globalization on the trade unions operating in Singareni
Collieries Company
Ltd. The workmen of public sector airlines industry have
gone on sporadic
strikes from time to time even after the opening up of the
economy.
The trade unions operating on ports and docks have
agitated on several
occasions on the issue of Productivity Linked Bonus. They
have demanded this
bonus on all ports basis which is not a rational one. The
staff of public sector
banks have been opposing privatization and have also
been agitating for revision
of their salary. The staff had to concede for all-round
computerization and also
21
flexible deployment policy. The insurance sector workers
have been agitating for
revision of their salary from time to time.
Power sector reforms have resulted in unbundling and
privatization of
power sector companies resulting in acceleration of
agitational programmes by
the unions. Despite the disturbances in the public sector,
the telecom industry is
rapidly moving towards 250 million customers with the
highly versatile phones
and tariffs matched with the world class technology. The
Indian telecom industry
is moving forward in a revolutionary mode. The private
sector has not been
affected by any visible industrial relation problems.
) Liberalization, globalization and IR
The above situation reflects the "normal" pattern of labour
market activities governing employment
relationships in industrialized and industrializing countries until
recently. But a number of
destabilizing influences have now emerged, and have coalesced
around the forces of liberalization
and globalization.
(i) Overview
The move towards market orientation (liberalization) in many
countries has been reflected in
deregulatory policies by governments, including the reduction
of tariff barriers, facilitating the flows
of capital and investment, and privatization of State owned
enterprises. Liberalization has preceded
or been forced by globalization (involving greater integration in
world markets, and increased
international economic interdependence). Both phenomena
have been facilitated by the significant
growth in world trade and foreign direct investment in recent
years, and by information technology
which has facilitated rapid financial transactions and changes in
production and service locations
around the world.
Recent data (1991-93) indicates that about two thirds of the
inflow of foreign direct investment (FDI)
is to advanced industrialised countries, which are also the
source of some 95% of the outflows of
such investment (UNCTAD 1994:12) . The most significant
sources of FDI are multinational
corporations (MNC's) based in the US, Japan, UK, Germany and
France.
During the period 1981-92, FDI valued at $US203 million flowed
to the ten largest developing and
newly industrialising countries (This represented 72% of the
total FDI to such countries). The ten
countries or territories concerned were (from highest to
lowest): China, Singapore, Mexico,
Malaysia, Brazil, Hong Kong, Argentina, Thailand, Egypt and
Taiwan [China] (UNCTAD 1994:14).
The proportion of East Asian countries in this group is notable,
as is the growing significance of
Singapore, Taiwan [China] and Korean MNC's as investors in
China and other Asian developing
countries. In this regard, between 1986-92, about 70% of FDI
flows into China, Indonesia, the
Philippines and Thailand, originated in other Asian countries,
with about 18% coming from Japan
and 50% from Hong Kong, Singapore, Taiwan [China] and Korea
(ILO/JIL 1996: page 3, note 2).
The flow of FDI within the region can be expected to increase
with the further development of the
trading areas constituted by the Association of South East Asian
Nations (ASEAN) and Asia-Pacific
Economic Cooperation (APEC).
(ii) The relevance of globalization to IR - a summary
Increasing international economic interdependence has
disturbed traditional IR arrangements in
several broad ways.
Firstly, such arrangements have normally been confined to the
circumstances created by national
markets; but globalization has fundamentally changed, and
considerably expanded, the boundaries of
the market place. In this respect, the extent of information
flows made possible by new technology is
building inter-enterprise networks around the world, is calling
into question the traditional
boundaries of the enterprise and is eroding current IR
arrangements.
MNC's are the primary driving force for change. They are
organizations that engage in FDI and own
or control productive assets in more than one country (Frenkel
and Royal 1996a:7). They are creating
very complex international production networks which
distinguish globalization from the simpler
6
forms of international business integration in earlier periods. As
producers of global goods and
services (notably, in the area of mass communications), centres
of networks and large employers,
MNC's have an impact extending far beyond urban centres in
the countries in which they are located.
In addition to the activities of MNC's, many locally-based
enterprises, of varying sizes, in many
countries are using information technology to focus on the
demands of international (and domestic)
"niche" markets in a way which is contributing to a growing
individualization and decollectivism of
work.
Secondly, globalization has disturbed the status quo between
"capital" and "labour" in each country,
in the sense that capital is significantly more mobile in an open
international environment, while
labour remains relatively immobile (here it should be noted
that, under globalization, international
labour migration is continuing, but, proportionately to the rate
in the1970's, has not increased - see
World Bank 1995: 53). This can place "labour" at a relative
disadvantage, in that "capital" can now
employ "labour" in different countries, at lower cost and on a
basis which can prejudice the
continuing employment of workers in the originating country.
Thirdly, globalization is having a contradictory impact on IR. It is
accelerating economic
interdependence between countries on an intra- and inter-
regional basis and encouraging similarities
in approach by individual enterprises in competitive markets.
This may lead to some convergence in
industrial relations arrangements around the world. At the
same time, there is clear evidence of
resistance towards convergence, based on particular national
and regional circumstances (eg, in
Europe and Asia). This aspect will be considered later in the
paper, in relation to Asia and the
Pacific.
(iii) The role of MNC's
The principal focus of the changes taking place in response to
globalization is at the level of the
individual (predominantly, private sector) enterprise. MNC's
have had and will continue to have a
key role in these changes (see below), although this role should
not be overestimated (Kuruvilla
1997:5-6). UNCTAD estimates that, globally, there are about
37,000 MNC's having over 206,000
affiliates. Over 90% of MNC's are based in advanced countries,
with nearly half of all affiliates in
newly industrializing and developing countries (UNCTAD 1994:
3-5).
MNC's are a major employer of labour. Globally, approximately
73 million persons are employed by
these enterprises. This constitutes nearly 10% of paid
employees engaged in non-agricultural
activities worldwide, and about 20% in developed countries
alone (UNCTAD 1994: xxii - xxiii).
Compared with the position in parent enterprises, there has
been a substantial increase in
employment in MNC foreign affiliates, particularly in developing
countries, during the 1990's. The
World Bank estimates that MNC's employ in the order of 12
million workers in developing
countries, but affect the livelihood of probably twice that
number (World Bank 1995: 62).
What is the impact of MNC's in local markets, particularly
where they are competing for workers?
And what is their relationship with trade unions? Available
evidence suggests that larger MNC's
generally pay more than local firms and at least match or
exceed working conditions and other
employment benefits in the local labour market (UNCTAD
1994:198-201). While there are still
disturbing incidences of "fly by night" MNC's, an increasing
number of MNC's are emphasising their
social responsibility, which reflects itself in a basic commitment
to workers' welfare and "guiding"
the employment practices of subcontractors and joint venture
partners (UNCTAD 1994:325-27).
This role is being reinforced through promotion of the ILO's
7
Tripartite Declaration and the OECD Guidelines concerning
Multinational Enterprises, and, more
recently, through industry codes of conduct on labour practices
in various countries. MNC
relationships with trade unions are influenced both by labour-
management relations in their country
of origin and circumstances in their host country. In general, it
seems that MNC's prefer not to
recognise trade unions or to bargain with them; but normally
do so where it is required (eg, by
legislation). Where MNC's appear to be predisposed towards
trade unions, it is usually towards
unions based in the enterprise. Overall, MNC's vary
considerably in their IR/HRM strategies, and
this an important area for future research in Asia and the
Pacific.
(iv) Information technology and IR
The impact of changes in information technology on the
organization of production and work at
enterprise level - the IR heartland - provides a specific example
of the forces encouraging and
supporting globalization. The discussion which follows reflects
the situation - currently or
developing - in many western industrialized countries, and in
the more advanced Asian countries. It
is a trend which is likely to spread more generally across the
Asia and Pacific region with increasing
industrialization and the impact of globalization.
Increased competition in global (and in many domestic)
markets has created demand for more
specialised, better quality items. This has lead to higher
volatility in product markets and shorter
product life cycles. These circumstances require enterprises to
respond flexibly and quickly to
changes in market demand.
In terms of the organization of production, new technologies
are increasing the scope for greater
flexibilty in production processes, and are resolving
information/coordination difficulties which
previously limited the capacity for production by enterprises at
different locations around the world.
Where enterprises are servicing more specialised markets,
smaller and more limited production
processes are now involved. New technology has also made it
possible to produce the same level of
output with fewer workers. In both situations, there is
increased emphasis on workers having higher
value capacities and skills to perform a variety of jobs. This has
blurred the distinctions (both
functional and hierarchical) between different kinds of jobs and
between labour and management
generally. In addition, efforts to improve products (through
innovation, quality, availability and
pricing) have led enterprises to establish cross-functional
development teams, transcending
traditional boundaries between engineering, manufacturing
and marketing. These developments have
been accompanied by the erosion of the standardized,
segmented, stable production process (of the
"Ford" type) which had facilitated collective IR. In many
industries and enterprises there are also
fewer workers available to be organized in trade unions.
Another area of enterprise activity to be affected by
globalization concerns the organization of work.
To achieve the flexibility and productive efficiency required to
respond quickly and effectively to
market changes, narrow worker job descriptions are having to
be re-written. This is resulting in work
tasks based on broader groupings of activities, emphasising the
undertaking of "whole" tasks. In the
interests of greater efficiency, work is also being re-organized,
giving greater emphasis to teambased
activities, and re-integrated with a view to improving linkages
across units and departments
within an enterprise.
Related changes have seen a "flattening" of management
hierarchies and devolution of greater
operational responsibility and authority to lower level
managers, supervisors and work teams. In this
process of adaptation, many enterprises have been increasingly
relying on internal and external
8
"benchmarking" to establish and maintain "best practice", and
to emphasise "organisational learning"
(ie, applying lessons related to superior performance to the
work of individual managers and
workers). All of these changes are directed to achieving
stronger commitment by workers to the
enterprise and its objectives and closer relations between
managers and workers, based on
consultation and cooperation.
Finally, enterprises have been seeking to "rationalise" their
operations to strengthen further their
competitiveness, by reducing costs (including both wage and
non-wage labour costs). Responses
have included identifying core functions (ie, those which define
its essential rationale and
competitive edge and must be maintained), and subcontracting
(or reconfiguring existing such
arrangements) for the performance of peripheral functions
outside the enterprise; substituting
technology for labour; and "downsizing". Strategic alliances and
company mergers have also
increased markedly during the past decade. This has made the
employment environment for workers
in the formal sector in many industrialized, and increasingly in
industrializing, countries much more
unstable.
(v) The impact of other trends
To these developments must be added other changes which
have been taking place to the IR
environment in many countries, and as a result of broader
societal changes. The impact and the pace
of these changes has varied from country to country, and will
have varying impact in the Asia and
Pacific region. They include the continuing shift in employment
from manufacturing to serviceoriented
industries, accompanied by a shift from traditional manual
occupations to various forms of
"white-collar" employment. Also, public sector employment (in
both line Ministries and state-owned
enterprises) continues to decline in most countries.
Broad social developments in many countries have also
witnessed the increasing incidence of women
in the labour force. This has been combined with growing
demand for atypical forms of employment
(eg, part-time, temporary and casualemployment; and home
work, in the form of certain kinds of
process work and, increasingly, telework).
All of these changes have affected IR, and are likely to continue,
to a greater or lesser extent, in
individual countries. The manufacturing and public sectors in
many countries have been the
traditional base of support for trade unions. They are now
experiencing considerable difficulties in
maintaining and increasing membership, as the source of
growth in many economies is increasingly
coming from a services sector whose workers (many of whom
are women) have demonstrated a
reluctance to join unions.
(d) The changing nature of IR - a re-definition?
As noted previously, IR is not a self-contained area of activity. It
can only be understood clearly by
reference to the persons, groups, institutions and broader
structures with which it interrelates
(including, for example, changing product markets, the
processes of labour market regulation, and
the education and training system) within a particular country,
as well as to influences arising from
beyond its borders.
The development of global enterprises, the changes occurring
in the course of industrialization and
the impact of new management systems (particularly, HRM)
require a broader perspective to be
taken on employment relationships.
9
The scope of IR must now be viewed as extending to all aspects
of work-related activities which are
the subject of interaction between managers, workers and their
representatives, including those which
concern enterprise performance. But issues which are critical to
the manner in which an enterprise
operates - such as job design, work organization, skills
development, employment flexibility and job
security, the range of issues emerging around HRM, and cross-
cultural management issues - have not
until recently been considered as part of labour-management
relations; and, in many cases, they have
not previously been made the subject of collective bargaining
or labour-management consultation.
But this situation is changing, and has been particularly
noticeable in Western industrialized
countries.
A broader approach to IR would seek to harmonize IR and HRM,
by expanding the boundaries of
both fields.In particular, IR will need to address, much more
than it does currently, workplace
relations - and people-centred - issues, and recognise that it
can no longer focus only on collective
relations. Given the range of issues which should now be the
subject of labour-management
exchange at enterprise level, it may be that a different, more all
embracing expression (for example,
"employment relations") might be used to describe these
relations.