Indian act threatens outsourcing prowess

The revival of a long forgotten law banning women from working through the night is threatening to derail the boom in the Indian outsourcing market.

The labour department of the State of Haryana, neighbouring New Delhi, has cited the Punjab Shops and Commercial Establishment Act 1958 and notified many Gurgaon-based call centres to remind them that women employees are not allowed to work night shifts.

Section 30 of the act warns that “no woman shall be required or allowed to work, whether as an employee or otherwise, in any establishment during the night”. IT companies are exempt from the law in Haryana, but the state is claiming that call centres are not IT companies and therefore the law should apply.

With women workers accounting for approximately 40 per cent of the call centre workforce, the revival of the law could fundamentally threaten the operations of numerous multinational corporations that have outsourced work to the subcontinent.

According to Simmons & Simmons partner David Barrett, whose firm regularly handles outsourcing projects in India, the law could have a significant, but not terminal, effect. India is a federal jurisdiction and there is no guarantee that other states will follow the Haryana lead, he said.

Although Haryana, and in particular Gurgaon, is a major base for call centre outsourcing, there are many others, particularly in the south, where in general the authorities have been far more sympathetic.

“In addition, we’re already seeing a move away from outsourcing to India to other jurisdictions – for example the Philippines, Mexico, Malaysia and, in particular, China, as well as Eastern Europe and the Maghreb countries of North Africa,” added Barrett.