Wednesday, June 06, 2007

Barriers to Mobility

There is lot of noise about the world becoming flat and jobs and opportunities moving to where the talent / value is at the best possible price. That premise is valid, if and only if we humans allow the world to become flat. More walls have come up since Berlin wall came down in 1989. Israel has walled large sections of West Bank virtually creating Palestinian ghettos. US and India have been building walls with its neighbors too. But this article is not about international politics or about people mobility across the borders.. It is about people mobility within India. So let me get back to the subject on hand..

Indian IT companies are rejoicing the fact that hordes of jobs are moving to India from other parts of the world. But the IT companies themselves are raising exit barriers to stem the attrition. InfoSys is asking its employees to sign non-compete agreement with this years annual raise. Interestingly, this non-compete document specifically names certain SI companies (IBM, TCS, Accenture, Wipro & CTS) that the employees cannot join for six months from the exit date.

According to the reports, the non-compete agreement specifies Infosys' competitors as Tata Consultancy Services (TCS), Accenture, IBM Global Services, Cognizant Technology Solutions and Wipro.

The agreement letter also mentions that the employees cannot accept job offers even from its clients (which they have serviced in the last 12 months) for a period of six months.

The clause will make it difficult, if not impossible, for employees to find employment with its customers and some of its competition.

I know that most of the freshers are asked sign bond for a couple of years to stick with a company, but this exit barrier for everyone is new. Will this stand in the court of law? Is this enforceable?

IT companies in India are having a great time with the jobs moving from all over. But they don't want their employees to have the same kind of mobility. The bottom line seems to be, I want to protect my turf and I want everyone else (read other countries) to lower their barriers so more jobs can move freely. !!!


  1. This is a lousy idea by T V Mohandas Pai HR Director of Infosys. Pathetic. As a shareholder I despise. No wonder this comes from a company where the National Anthem was insulted. Hema Ravichander would have found a way around this. All is what will make other not to poach is good work! Why are they missing out Satyam?

    Note - the agreement is void in court of law, and what if they work as a consultant fulltime with another co. and work for these 5 clients?


  2. i think we need to clarify a few questions, before jumping into any conclusions.
    1. why is this clause being added now that too for a specific companies? Was there instances where Infosys faced the issue due to its employees joining these companies?
    2. Is this mandated to all employees starting from fresher or is it for employees after certain grade?

    I worked in a Product based MNC Company. And this non-compete clause is mandated for employees after certain grade.There are no companies specifically mentioned, but it emphasizes that the employee cannot join a direct rival company.

    Infact now i am joining another company in few weeks and the offer letter has a non-compete clause mentioning,"During the employment period and for a period of 3 months following termination of employment, notwithstanding the cause of termination, you will not, directly, or indirectly, work for, own, invest in, direct, or aid any company or person engaged in competition with the Company. "

    I feel there is nothing wrong in having this clause. It doesn't imply that the employee's freedom is curtailed. This is done, only with the intention that the information about previous company should not be misused in the new company.

    so far Infy might have been a simple services company...but they do have plans of restructuring and realigning themselves as company with products and niche solutions, so that they can differentiate from other services companies in India.
    So when a company is going thru this, it is perfectly normal to have non compete clauses.

  3. AFAIK, the non-compete clause mentions specifically that you can't join the above mentioned competitors & work for the same client one has recently worked for in Infy. And this , for a period of
    6 months.

    Guess it doesn't restrict one from
    joining the rival company and work
    for any other client.

    Funny how "educated" people jump
    to conclusions :)