Saturday, January 17, 2009

Stuck to Satyam?

You can check in but you can never leave... That was Hotel California but the situation is somewhat similar at Satyam right now.

Firstly, there are few openings elsewhere. Secondly, as far as freshers go, the company has taken a Rs 2 lakh bond from each trainee. Apparently it works like this: you keep a fixed deposit of Rs 2 lakhs with State Bank. If you leave before completing two years you forfeit that FD to Satyam.

Asking employees for a bond is an IT industry practice. However Satyam is the only one which asks for so much money upfront and for a period of 2 years. TCS and Wipro too have a bond but for Rs 50,000 and Rs 75,000 respectively.

Says one recent engineering graduate working with a consulting firm: "Other IT majors have SLAs .. so if they train you in some niche skill they have SLA for large amount".

He explains, an SLA is a Service Level Agreement. Although it would be more appropriate to refer to it as a bond. A legal document on 'court paper' signed by your company and you. "So when settlements happen while leaving.. they get this amount if you leave job early."

How exactly can one 'enforce' this? Well, the company can refuse to give you the experience letter or NOC required to join the next place unless you pay up.

This guy, let's call him Engineer X, had an SLA of Rs 1 lakh for 1 year. Now that period is over and he can move on freely (if he wishes to). Until he gets trained in some other skill and is under SLA again for some time.

I don't know if SLA bonds work efficiently but certainly keeping cold hard cash does! The fact that I have to literally PAY 2 lakhs (or at least lock it in for 2 years) raises several issues in my mind:

* I need money to get a job. They promise to give it back to me but it still sounds very un-capitalist.

* Would every fresh engineer have this money to spare. If not, does the bank provide a loan for this purpose?

A job at Satyam for a fresher would pay between Rs 2.4 lakhs-3.5 p.a. Engineer X adds,"Satyam many a times offered jobs to top 10 students in many colleges..!!" Obviously not the IITs or other big brand name colleges but still.

So where is this money? If we estimate around 10,000 freshers joined the company in the last two years (and that is a conservative estimate) the amount collected as bond would be Rs 200 crores.

Given that Satyam managed to manipulate its bank FDs in all kinds of interesting ways one has to wonder whether this money is safe! Hopefully the new auditors will get to the bottom of this one.

As for the bond itself - kya yeh Fevicol ka hai jo kabhi tootata nahin? Under the changed circumstances it should be revoked. When things fall apart, why should freshers hold?


  1. This is present in Wipro Technologies too. However, with a twist.

    My wife recently quit Wipro and we forfeited the entire bond amount of Rs.75,000/-

    Before she joined Wipro, she was asked to deposit Rs.75,000/- in full in State Bank of India and asked to sign the bond paper for a period of 1.5 years.

    If she was not able to deposit the sum in entirety, she was asked to take a loan from SBI and deposit 10,000/- in the same branch. The remaining amount of money 65,000 will be a loan the employee has taken from the SBI, for whatever reason.(Photocopies of the bond paper, loan details, nature of the relationship between Wipro and SBI were NOT provided in spite of repeated requests)

    If the employee decides to call it a day before 1.5 years, then the loan amount has to be settled in full at SBI (in case of a loan) or the 75k deposited at SBI will be forfeited by Wipro in Full.

    The problem is really with the labour laws in our country.

    The worst part is, if we had contested with Wipro on the legality of this whole thing, we might have spent more than the 75k so we just kept mum and forfeited it.

  2. Completely agree with Avi, I had an offer from Wipro after my engineering where they had asked for bond money and provided instructions on how we can take a loan in case we are not able to arrange it on our own.
    My friends in TCS also had a 50,000 bond.
    Thankfully CAT came to my rescue!

  3. Well as a matter of fact, you've got both your facts wrong. First of all a Service Level Agreement is a contract signed between an IT Vendor and its clients (not employees). The SLA is what determines and streamlines the work done in a particular project. By no means is it in anyway related to an employee.

    Second, amongst the top 4, only Infosys doesn't ask for any bond money. The rest three i.e TCS, Wipro and Satyam do.

  4. Thanks for the info - I have made corrections in the original post to reflect the same. As regards 'SLAs' I am aware they are between vendors and companies but that is what the employee concerned referred to the 'bond' as. Pata nahin kyun!

  5. asking for deposit should not be encouraged...........

  6. Actually(at least when I was recruited back in 2004) TCS did not ask for any money to be deposited in a bank a/c. A bond for 50K was furnished on a Rs.100 stamp paper. Couple of sureties (parents in my case) had to sign it as well.

    And also when you plan leave the company there is something called notice period (3 months for TCS) which you need to adhere to. When I left TCS with in few months, I paid 50K + the basic salary of 3 months notice period as I did not want to linger around. The total bill came out to be 72K. Thankfully my new company came to my rescue.

    Hope this info helps.

  7. Here is pune based firm who use to induct freshers like this ( I am not sure - if the scheme is still there ).

    Firm was small at that time and to deter IT engineer ,which they used to train for 6 months ( Literary ) were asked to give a bank guarantee for 70,000 Rs.

    But fact should be underlined - that the money remains on the name of employee deposited in the bank and firm claims this to bank ,in case employee quits within first two years. If employee stays with the firm for two years ,bank return the deposit to employee plus interest earned.

    Firm just wish to reduce the employee turnover ( as in spite of paying very high salaries , employees use to quit ) .

    Actually some quit in spite of this arrangement -when they had abroad opportunity.

    But I know majority who stayed with the firm for long and I would like to comment that the arrangement worked best for everyone. Those who stayed for two years or more , received very high level of training coupled with the high profile of experience. All of them are enjoying very high flying careers now (In spite of severe downturn ) . Firm enjoyed the good growth with retained employees. ( In fact many of these employees stayed even for more than two years )

    I think employees also need to understand the need of such plans by employer. What exactly employer should do for employees who quit immediately after such exhaustive training ?

  8. I clearly remember, Wipro did not insist on bond in 2000. Their HR manager had said something to the effect "We don't indulge in such shady practices like others" with clear allusion to Infy. Things have definitely changed over the years.

    It's sad to see the companies fixing the problem of attrition in the worst possible way.

  9. "It's sad to see the companies fixing the problem of attrition in the worst possible way."

    dear Shashikant ...then do suggest what should a small company do if his key employee/employees says , I have got a job offer from TCS...and wont stay here if u pay the double salary..or anything on earth ..coz the guy is unmarried and TCS brand name is vital for a good a small company is going to save their project...

  10. No one thinks about an employer.. I think we should be in employer's shoes and understand why practices like these were started. Employees can be equally irresponsible many times and leave the project in lurch...

  11. my sister-in-law joined satyam some months back,but she had to quit since she was getting married to my brother and ultimately she lost Rs.2 lakh...!

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    更新日期:2009/08/25 17:19

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