80% of companies feel Haryana job quota law to negatively impact future investment plans: Nasscom

New Delhi:  Nearly 80% of the companies surveyed by Nasscom recently stated that Haryana’s job reservation law would “negatively impact” their future business operations and investment plans.

The state’s move would impact nearly 1.5 lakh current jobs in IT-ITES sector, and given the industry’s high attrition rate, could have a “severe” implication in 1-2 years, the survey by Nasscom said.

The apex industry body recently conducted the survey to assess the impact of the New Haryana State Employment of Local Candidates Act, 2020, which stipulates 75% reservation for locals in private sector jobs, with a monthly salary of up to Rs 50,000.

Nasscom said 73 companies participated in its survey, and these firms have over 144,000 employees in Haryana.

Overall, 500 IT-ITeS companies in the state employ more than 400,000 people directly, Nasscom said. About 80% of the companies surveyed stated that the latest move will negatively impact their future business operations and investment plans, with the majority of them revealing that it may precipitate shifting/ growing their operations to other states and in other countries.

“Extrapolating to 4 lakh IT-ITES employees, the act will overall impact about 1.5 lakh current jobs (37% of all the IT-ITeS jobs). Given that the act applies to new hires, the impact is expected to be severe in 1-2 years as the industry sees a high attrition rate,” the survey revealed.

Most companies expressed concerns about the recruitment strategies as the law would significantly raise the compliance burden and limit the industry’s ability to hire people at will.

The respondents also felt that such legislation could make it difficult to adopt Diversity and Inclusion policies and initiatives, and follow equal opportunity policies.

“Major skill gap in Haryana where salaries are less than Rs 50,000 per month includes communication –spoken as well as written, AI (Artificial Intelligence) and machine learning skills, analytical and statistical skills, Finance and accounting, programming skills, data science, research and development skills, engineering and technical skills,” it added.

Ashish Aggarwal, Senior Director and Head Policy Advocacy at Nasscom said the move “undermines” a slew of reforms seen over the last year that enabled remote working, facilitated ease of doing business and encouraged startups.

It is pertinent to mention here that India Inc has warned that Haryana’s job quota move would hurt industrial development and investments in the state. Industry associations have appealed to the state government to re-look at the legislation, saying that reservation impacts productivity and competitiveness.