Proposed labor laws spark concerns in Bangalore, India’s tech hub

The state of Karnataka — home to India’s tech hub Bangalore — is facing pushback over proposals affecting the private sector, including a contentious plan to control the hiring of people from other Indian states.

Last week, the state government said it would enforce up to 100% reservation for state natives in private-sector jobs. Following widespread outrage on social media, officials temporarily paused the plan.

Later, the state government said it had received a proposal to increase the working hours for IT and ITES sector employees to 14 hours per day, triggering protests from the employees’ union.

Bangalore accounts for 39% of India’s market share of global capability centers, according to a recent government report. Global capability centers or GCCs act like an enterprise’s extended IT arm within a large enterprise, often employing thousands of techies within a single center, and in some cases taking key IT buying and deployment decisions for the global enterprise.

Some of the world’s largest firms including Walmart, Goldman Sachs, JP Morgan, Merck, and Siemens, have massive GCCs in the city, employing over 550,000 people. Bangalore’s vast IT workforce has made it possible for hundreds of such companies to scale their IT teams rapidly as per demand.

The city also has R&D centers of major companies such as Samsung and IBM, making it a critical location.  

Any government decision affecting the operations of the private sector could potentially stir uncertainty and raise concerns for these companies. This could even lead to questions about the need to relocate to other cities that offer better support.

Protests from the industry

Not surprisingly, industry leaders have raised their voices against the move. Responding to the plan for reservation, former CFO of Infosys TV Mohandas Pai took to X to protest, saying, “This bill should be junked. It is discriminatory, regressive, and against the Constitution. Is the [state] government to certify who we are?”

“This is a fascist bill, like something out of Animal Farm. Unbelievable that the INC [the ruling party] can come up with a bill like this – a [state] government officer sitting on recruitment committees of the private sector and people having to take a language test?” he added.

Executive Chairperson of Biocon, Kiran Mazumdar-Shaw also said in a post on X, “As a tech hub we need skilled talent and whilst the aim is to provide jobs for locals, we must not affect our leading position in technology by this move. There must be caveats that exempt highly skilled recruitment from this policy.”

Implications for companies

If the extended working hours rule is brought into effect, companies may have to revise their HR manuals and devise new policies and budgets to accommodate this change, according to Bhanupriya K, MD of the talent consulting firm Perceptives Solutions.

“They will have to entice people to come to work now,” Bhanupriya said. “With 14 hours of work, the office will be literal home now, and there should be a plan to bring kids from school to office, make provision of tutors or time off by parents to teach their children for their homework.”

This becomes even more relevant as many companies continue to struggle to bring employees back to the office. As recently as last week, HCL Technologies announced plans to link leaves to attendance.

However, Pareekh Jain, CEO of Pareekh Consulting said that concerns about mandatory long working hours are primarily relevant to Indian companies and might not significantly impact international firms, which typically adhere to standardized global practices.

Impact on India’s Silicon Valley

Perhaps most importantly, these moves could potentially impact the decisions of companies planning to invest in Bangalore. Rahul Sasi, CEO of CloudSEK, said in a LinkedIn post that companies will face significant challenges in finding the best talent, leading to a potential decline in innovation and competitiveness.

“This move will deter global and national firms from investing in Karnataka, adversely affecting the overall economic growth and employment opportunities in the region,” Sasi added.

Analysts further said that both developments would impact the image of Bangalore, which has so far enjoyed the title of Silicon Valley of India.

“From the companies’ perspective, the issue I can see is the impact on the brand image of Karnataka,” said Jain. “You have to see the latest development of extended working hours in the context of the reservation bill. People might say it’s not a friendly place or they’re not friendly about the talent here. Karnataka is the number one place for talent for global capability centers and IT services and I think Karnataka’s brand for talent might get hurt by this.”