Aug 31, 2007 01:16 PM
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The present export of USD 23.6 billion marks a jump of a whopping 33% over 2005-2006 & is expected to cross USD 60 billion(as expected by National Association of Software & Service Companies). We all need to note that this accounts for nearly 24% of the total exports(USD 100.60 Billion) from India.
Well, so far so good. This story isn’t about these supposedly rosy scenarios for this sector.
Recently local(American) newspapers were abuzz about a lawsuit that Charleston County filed against the Indian owned body-shop and outsourcer, Tata Consultancy(TCS). The lawsuit alleges that Tata bungled a large software contract apart from taking undue advantage of an indentured contract with an Indian national Gopi Vedachalam supposedly brought onto a project for a US based client after his father paid an amount of INR 50, 000 as a condition for employment so Vedachalam was made liable for failure to fulfill the contract.
The said contract was for 2-3 years and required him to work in India on the said project. After close to working on the same project for three years in India, he was brought to US(in 2000) on an L1 visa. In addition to the Rs 50, 000, Vedachalam was subject to a$30, 000 charge for liquidated damages if he was charged with breach of contract while in the U.S. He would also be responsible to repay Tata’s litigation and attorney fees if there was a legal disagreement.
Just to provide further insights; “Liquidated damages” are used in the U.S. in much the same way as an indentured contract in India — large monetary penalties are used to shackle foreigners to an employer by making him liable for unsatisfactory work.
Now, Gopi had signed a document that mentioned that he agreed to work long hours without compensation in the U.S. And had Gopi didn’t meet expectations he would be subject to all penalties mentioned above. The agreement also stated that legal disputes ought to be settled by the Indian court system.
By the time Gopi arrived in the U.S. he was yoked to the grinding stone.
However, on closer scrutiny of his contract documents, Gopi found out(to his rescue) that newer contract documents stated that legal disputes would be settled in US(and not India as earlier printed). This enabled Gopi to take his grievance to US courts instead of India. As per the original contract Gopi was supposed to be paid a salary of USD 74000 a year but as per his account, he didn’t receive the agreed amount and further alleged that Tata siphoned off USD 25000 of state and local taxes that belonged to him.
Gopi’s complaint boils down to three major revelations:
1) A usual practice of breach of contract in terms of an H1B worker not being paid his/her dues as agreed in the written contract.
2) A general uneasiness among the brighter lot of India in opting for an H1B as opposed to the trend in the 90s. An IIT or an IIM pass-out may not be that interested any longer for that seemingly lucrative technology job and more importantly the brighter lot now seem to get a clue about the real pitfalls in getting ‘outsourced’
3) Larceny by Tata and similar IT companies firms(long suspected) have been proven once and for all not to forget their money laundering tactics apart from gulping down tax funds that are usually due to thousands of technology workers like Gopi.
In all likelihood, however, Gopi doesn’t actually owe any taxes since international “living allowance” trade rules allow L-1 visa holders to avoid taxes. TCS was simply pocketing cash at Gopi’s expense.
Coming back to this case, (not surprisingly) they(TCS) refused to pay back the Rs 50, 000 indenture fee; which didn’t go over too well with the Federal District Court in California who determined that Gopi served his 2 year indentured labor contract, and was therefore not liable to the fee. It appears that unless Tata can somehow reverse this decision they will have to pay Gopi’s father the money back. This court decision could have international law and trade implications over jurisdiction which is interesting to ponder.
The bad news for Tata(or now rather the Indian software fraternity) doesn’t stop there!
Gopi’s initial complaint has morphed into a huge class action lawsuit against Tata. H-1B and L-1 visa holders are filing lawsuits to get tax money that they claimed was ripped off by Tata. Tata tried to head this lawsuit off by asking for a motion to dismiss the case. U.S. District Court Judge Vaughn Walker refused to let Tata get away with this transparent effort at moving the case to India. Big bummer for Tata! U.S. courts aren’t nearly as friendly to tax fraud and indentured slavery as the Indian courts. Tata’s odds of winning just went down a notch!
This is definitely not a one off stray incident and thousands of technology workers are continually being put to such miseries. However, as a silver lining, the IT industry as a whole is underneath a huge restructuring mode and is bound to witness the next level of outsourcing; considering the higher billing rates for Indian software engineers.
Not to forget, enormous amounts of research work being undertaken in formulating a new framework in the next level of automation in the IT industry; most notably coding & troubleshooting. The exercises seem too far fetched but let’s not forget that code reusability is a truth and code automation plainly requires a plausible integration(& creation) of class libraries / subroutines / procedures etc.
The next level of off-shoring seems to be originating from Indian shores itself with the majority of work being gobbled down by the East European countries. So where does that leaves the Indian software developer(or a coding mechanic; a term often used detrimentally)? Or more importantly, what happens to a once coveted field called ‘information technology’? A pretty shocking scenario; I am afraid; but this is what will happen in the immediate future:
§ IT as a career option would be relegated to the level of blue collar jobs
§ International tech companies currently boasting of their long term commitment for India would venture out to greener pastures like Eastern Europe, Russia or even China(ultimate insult)
§ IT exports from India would eventually dwindle and newer career options like biotech, pharma apart from automobile / aeronautical / mechanical & civil engineering disciplines would get more prominence over fields like CS or IT.
