Story of IBS - V K Mathews learns the hard way
November 4th, 2008
V.K. Mathews started IBS (International Business Services Group) in 1997 and over years the company has grown to one of the leading IT companies based in Kerala. IBS employs over 2000 people and most of them are from Kerala.
Now we all Malayalees know what will happen when you start a factory or a business in Kerala. Hell, there are even a dozen Malayalam movies which shows you what will happen if you start a business. You will be labelled as a “boorshaw” and suddenly unions will try everything they could to destroy your business. So intelligent malayalees start their business outside Kerala. MRF from Malayala Manoram group is a good example.
So far IT industry in Kerala was protected from the militant trade unionism. Partly because IT employees enjoy very high salaries and there isn’t much to complain about. But trade unions are waiting for a way to get inside and cause havoc. They got their weapon when IBS terminated services of about 25 employees.
The news spread like wildfire and in an instant IBS was projected as a monster. Kerala government says they will take “strict action” against IBS and the labour commissioner was at his best on TV. There was demonstration in front of the technopark by people who have no idea how an IT organization works.
In 2001, IBS was going through a crisis due to recession at that time. The company tried all it could to prevent sacking employees and many of the employees left the company after salary cuts. This time it appears V K Mathews was trying to bring in some quality control of his work force. But he learnt the hard way why it is not very easy to run a business in Kerala. I quote from his email,
Personally, it was a sad weekend for me to see all those news coming up in the channels. It is unfortunate that a company with such impeccable business, social and employee track record is now subject to attack without any valid reasons. It has been an unfair and one sided trial, without collecting any information from the company. When Governments and related agencies worldwide is doing everything possible to safeguard companies and financial institutions during this period of acute economic crisis, it is unfortunate to see such campaigns against respectable and socially responsible companies which create thousands of high quality jobs in Kerala.
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November 4th, 2008 at 10:26 pm
IBS is considered a topnotch company and when news appears in blogs about the way employees were asked to leave the company in 10 minutes is disturbing. I would say that the timing for this trimming operation was not apt.
November 4th, 2008 at 10:33 pm
well.. IT industries are also industries.. so, the government is justified in desiring to look into the job cuts.. the idea that trade unions are bad itself is wrong.. just because the demand is so huge, people in IT companies are not complaining.. this doesnt mean that the government shouldnt be concerned about possibilities of exploitation..
for example, if an IT company sacks employees based on gender/religion etc, the government has reason to look into it.. the government is justified in ensuring that employees are sacked with reason.. and not due to things which cannot be accepted..
the new generation’s view that trade unions are militants is definitely not based on facts
November 4th, 2008 at 10:41 pm
@sajeev,
Asking someone to leave company premises in 10 minutes is the norm. Note that they are given 2 months salary as per the agreement. They are also free to join anywhere else.
Now if you don’t do it potentially the employees can cause harm to a company’s operations and it is very difficult to address it once it happens.
The question here is - did company violate any rules? Did they refuse to comply with the employment terms? Are they providing PF benefits etc.
November 4th, 2008 at 10:44 pm
@Deepak,
You raise some valid points there. But the ground reality in Kerala is different when it comes to unions. Visit any government office if you get time.
November 4th, 2008 at 10:50 pm
We can’t say lay off is not possible if the company is making operational loss/planning to wind up operations…but it should be managed in a professional manner. There is no doubt that layoff will be a highly painful incident for an employee [employer will be in the same level of trauma when a critical resource quits the company without sufficient notice]
Ultimately layoff is not the only option for making business running and I would say it should be the last resort. Why don’t try salary reduction, benefits cut etc.
Don’t know what happened to this company? It was one of the established companies in their domain and first few IT majors in Kerala’s IT capital. From various media sources like India vision, manormaonline…what I understood is somebody poorly managed layoff @ IBS or created unnecessary scenes in their campus. It can be HR Team or Operational Management Team or somebody else! But personally I would say HR Team could have avoided this unfortunate incident [don't know the HR power and Org hierarchy there]
Next let’s come to the performance issue. Now wherever layoff is happening, the official note will include ‘by considering poor performance of employees’. Let me ask something, when a client buy company’s product, if it is not up to the expectation, does the company expect client to abandon the product and go to competitor! or does the company request client to give one more chance to improve? I believe employee performance can be improved and not thinking that performance management is only for arriving at ‘bell curve’, end of the year. Based on planned performance management, company should be able to understand its people and based on that they should plan their career. If layoff is the only choice for poor performance then why companies are investing in HRD? Quality initiatives? But if somebody is not improving even after giving feedback, then last resort would be layoff.
For knowledge industry layoff is not a new thing. But the way companies are treating the layoff is very critical. One should not treat employee like dirt. Need a very courteous and empathetic approach
November 4th, 2008 at 10:57 pm
@Sree,
Note that IBS had done salary reduction in 2001 since they had problems in continuing the business and they lost a lot of staff in 2001. Few of my friends also left IBS at that time.
But this time it appears that they wanted to leave the bottom 1% of the workforce to improve the workforce quality. They probably forgot that it needs to be done quietly in Kerala.
Also I wonder whether any of the terminated employees gave a formal complaint to the authorities. Then it makes sense to investigate!
November 5th, 2008 at 4:21 am
pretty desperate stories going around in the media about this issue..
The breakthrough will be when our CM decides to carry on a protest in his own style: picket the TP entrance..:).. this will be the end of TP and IT@ Kerala..
November 5th, 2008 at 11:38 am
Telling people to leave immediately is the norm as it will prevent some bad elements from damaging the company by taking data with them or deleting files. It happens all the time. And if people want a reception on the way out, companies should garland them and escort them out.
November 5th, 2008 at 5:45 pm
Why there is lot of fuzz about this issue?? Many IT companies are laying off employees. Wipro recently announced 5% will be laid off.. and we read all kind of bad news from IT Industry. IBS being a small to mid size company is naturally forced to lay-off employees. WorldWide airline industry is in huge loss so ibs is naturally affected!!
One should not forget the fact the, 2008 passout freshers placed in IBS have joined the company months back, but people with offers from big big companies are still waiting for date of joinining!
November 5th, 2008 at 5:57 pm
V K Mathews should seriously look at moving his company outside Kerala. He can even move it to Nagercoil or Marthandam and have peace. Employees can take a bus to Nagercoil.
Update: The labor department claims they have a complaint and asked IBS officials to report in person to the labour commissioner. Fun begins…
November 6th, 2008 at 5:50 pm
If i where Vk mathews,the first thing i will do is to move IBS out of kerala to some nearby states where there is operational freedom
December 12th, 2008 at 10:22 am
There are many companies in Technopark that ask ladies to quit, simply because they got pregnant - SunTech, Flytxt are some of them. In some others, they spy on employees’ every activity and dismiss them for petty reasons.