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Sambhar Mafia - Cooked To Kill!

Wednesday, August 10, 2005

A not-so-best practice

There was a time when IT professionals were viewed as bonded labour as there were some industry practices which were quite prominent during the 90’s. TCS had this concept of bonds for employees who quit within a certain period. Although it was a hotly debated topic in the 90’s, it lost steam as people realized that TCS can’t really enforce the bond. I’m not sure whether TCS has done away with this bond concept. With the entry of lot of MNC’s, attrition levels seem to be quite high in the Indian IT companies. The homegrown IT companies seem to be imparting few months classroom training for fresh engineering grads and hence they might want to ensure that the money spent on training a new hire should be recovered within a certain period. With this in mind, IT Major Wipro has come out with a deposit criterion for new hires.

One of the leading IT companies, Wipro, has evolved the process of conducting campus recruits for a conditional pay of Rs 75,000 as deposit before joining the firm as project engineers. The deposit, which will be repaid with four percent interest at the end of 15 months, should be paid by the selected candidates through a demand draft. Those, who shift jobs prior the stipulated period, would forfeit the amount.

These kind of practices are unlikely to help in building goodwill among the prospective employees. If an employee is determind to quit, he will find a new employer who is ready to foot the bill of this deposit amount. These kind of practices might put off the prospective employees. I already hear that engineering grads are shunning some of the IT majors because of the low entry-level salaries at these places. I’m sure the popularity levels of these IT firms will take a further dip after these developments.


  • Hey kaps-is that true.wipro le yaarukaavadhu nut kalundu pocha. What a crap.

    By Anonymous vasanthi, at 2:10 AM  

  • Not sure about Wipro following this practice. TCS has discontinued this 'bond' system. I know that Thinksoft has a 3-month notice people for everybody across the board and people who dont serve the notice period pay a huge amount (to the tune of lakhs) to get relieved..
    Whatever it is, this practice is sick wherever it is followed.

    By Blogger vee-jay, at 2:37 AM  

  • it'll make them start off on the wrong foot with the employees. Its almost like they're saying "we won't be doing anything to make you wanna stay with us. so we're gonna take money to make sure they don't leave"!

    ps: apart from the interesting content, i really enjoy your posts cos u write so well. along that line, shouldn't the heading be 'practiCe'?

    By Blogger Balaji, at 3:23 AM  

  • My opinion on Wipro goes down a lot after reading this.

    When I joined Ramco 9 yrs back, I signed a bond that if I leave within 3 yrs, i hav to pay 50k. Everyone there knew that its not-enforceable and ppl simply went away. I too thot of showing my middle finger to them sometime.. but its a different story that I ended up staying there for another 7.5 years.

    All said, I asked one of the HR guys (from a different IT company) abt what they wd do when employees leave caring a damn for the bond. He said that in future when his/her prospective employer asks for any reference, they wd say all crap abt him or mebbe say that he never worked for the company. Man.. thats plain character assasination and very scary.

    But I thot how many employers really check abt a person with their previous employers. I got the answer last month when "imagination at work" asked me to wait till they get a "he is a good boy" letter from Ramco.

    I hate HR people.

    By Blogger Chakra Sampath, at 3:55 AM  

  • btw, Congrats on the Kavidhai potti... i saw it on Narayanan's blog... but couldn't leave a comment in yours.

    Liked the way you responded to that anonymous sucker.

    By Blogger Chakra Sampath, at 3:58 AM  

  • this is just fear of rejection. previously atleast some people were considering on joining these IT companies, now this will just scare them away. you have to be open to be competitive .. dunno how wipro failed to understand this. yeah there is a big population, but there is competition too.

    By Blogger saranyan, at 8:35 AM  

  • That is really outrageous. I wonder why someone does'nt slap a lawsuit on companies promoting 'bonded' labor.

    By Anonymous Anonymous, at 9:39 AM  

  • tcs still have a bond system. employees joining as fresher has to sign a two year bond. if the employee leaves the company before that period he/she has to pay 50k with interest.

    if any employee is going to abroad for the project related work then he/she has to sign an agreement for working in the company atleast 6 months after coming to india.

    as described by chakra, reference is a big problem if anyone ditches.

    By Anonymous Anonymous, at 10:46 AM  

  • @Vasanthi,
    Iim not kidding.

    Most of the companies have 1 or 2 month notice period. But I have heard of companies that have a 3 month notice period. However bonds and notice periods are 2 separate issues

    Thanks for the praise.....not very sure whether I deserve it. I have corrected the spelling now.

    This reference letter / experience certificate is a scary business. But these days companies are have relying more on References and if you give good references, chances are that they might waive this request for reference letter.

    This is quite scary. Since other firms offer similar payscales and similar working atmosphere I think that prospective employees will join other IT firms.

    This is akin to bonded labour.

    Thanks for the clarification about the TCS Bond.I think lot of companies do have the overseas bond concept. it is pretty much industry standard.

    By Blogger Kaps, at 11:18 AM  

  • Kaps Nice view!
    //Popularity levels of these IT firms will take a further dip after these developments //
    True ! TCS already is in critiques for being the lowest compensating IT firm.

    Deposits and similar other things will no longer remain to be a strategy of keeping employees intact. Its the level of satisfaction clubbed with the degree of compensation that will prove to be ultimatum.

    By Blogger Go.Ganesh, at 1:02 PM  

  • this cannot continue for long, kaps. soon, they need to come out with better soultion to keep the workforece.

    By Blogger Ram.C, at 1:12 PM  

  • Now, isnt it true that everything is a cycle in business.. what was once the grips for arts grads of yesteryears has come to haunt the professional grads now..

    its one thing to sign a bond and stay for 3 yrs,, but its worse to rotate a 75k jus to join a company..

    By Blogger Chez, at 1:22 PM  

  • tell me about it..i have seen all that considering that all these so called IT majors came to my college for campus recruitment.....

    The entry level sal is a big deterrent...that is one reason people move out and also the nature of the work...most of the IT majors take some time before giving these fresh recruits any proper responsibility...they get real bored being on bench....

    My company doesn't have a bond..they just follow one policy..if any campus recruit doesnt stay for atleast a year, then they will not go to the same college next year for placement.....

    I think oracle's policy is real nice, they give a fresher a starting salary that is more than double that offered by the IT majors...and hence the frshers would never move......attrition prob solved......

    By Blogger monu, at 1:23 PM  

  • this sucks...panam sambaarikka dhaana we go to work!! 75000 is just too much...y wud i work for someone else if i had that kinda money to start with & wht abt ppl who cant afford it? how do they join?

    By Blogger capriciously_me, at 1:33 PM  

  • It was there last year too.. Wipro asked me to pay that kinda amt to join..

    I am yet to send a reply to her..

    By Blogger ioiio, at 2:31 PM  

  • I can vouch for even MBAs under bonds for undergoing specific technology training viz. Siebel etc. But there has been numerous instances where employees have not honoured their bonds and have simply left. Not much has been done regarding the same by the company. So is this just a scare tactic?? Need better anti-attrition strategy! :)

    By Blogger maverick, at 3:56 PM  

  • This happened in infy in yr 2003. Freshers who joined infy were treated as contractors for an year, and they were not in the payroll. This was not mentioned during the campass recruitment.
    This created a lot of fuss, and finally NRN stepped in to dissolve that practice.
    HR guys really suck.

    By Blogger JaganLee, at 4:13 PM  

  • @Go.Ganesh,
    It is sad to note that these firms win the best emloyer awards year after year. It's time to question the ranking procedures.

    Something tells me that they will discontinue this if more employees frown at them

    @Magnus Astrum,
    It is difficult to cough up so much money when u r just out of college. Some of the students might have taken loans to study BE and if they are asked to shell out 75K to join a job which offers INR 10 - 12K the fresh grads will have every reason to feel agitated.

    We still need to rely on these IT majors as they are the ones who can recruit in large numbers. So is your company going to your college next year?

    If you can't muster so much money they would expect you to take a loan for this amount

    good that u didn't take it up

    I have heard of such bonds for people learning SAP and Oracle Financials in the last 90's. The HR folks need to buck up. These measures are unlikely to strike a chord with the employees.

    Lot of companies are moving to the contractor model. How it is essential that they make this known upfront before recruiting the employees. Didn't realize that this post will turn out be a HR bashing one.

    By Blogger Kaps, at 12:59 AM  

  • attrition rates is an issue for all these companioes and I think that none of this can stop or curb that...actually it gives them a feeling of insecurity as such...

    15% rate for Infy
    around 13% for Wipro
    8% for TCS as per public results

    but then I always doubt these numbers and it does not differentiate between lateral attrition and trainee attrition and break up in exp etc

    By Blogger @mit, at 1:57 AM  

  • the bond system in TCS is very much there... only now they call it a "service agreement". This coupled with an ineffective HR policy makes it an unattractive place to work in, as I painfully learnt.

    By Anonymous Anonymous, at 5:48 PM  

  • yes the so called service agreement kinda practice is still alive atleast with TCS. i am currently facing it. But i still dont know what to do or how much they would ask in terms of compensation.

    By Anonymous baidya, at 6:25 AM  

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