IT companies tighten governance process and legal framework to fight rampant moonlighting

A midsize information technology services company recently approached law firm Cyril Amarchand Mangaldas, seeking to know if it could physically audit the workspace of employees working from home.

“Another client is considering putting in place a system of video auditing its employees with 30 minutes’ prior notice, to ensure that they are actually at their home workspace and working for the company,” said Ankita Ray, a partner at the law firm.

A crackdown is on against moonlighting at India’s IT companies. From random sampling of provident fund records, identifying prolonged absenteeism to video and physical audits of remote workspace, these companies are stepping up vigilance, according to experts at recruitment services and law firms.

These companies are also tightening governance processes and legal framework and strengthening background checks on existing and new employees. Employees found to have taken up a second job without approval from the primary employer are often dismissed.

Moonlighting is seen more rampant in the IT sector, which employs millions in India and where addressing talent shortage is a challenge companies are facing. Estimates suggest at least one in 100 employees in the IT sector have more than one job, ET reported last week, citing experts at recruitment services companies.

Tata Consultancy Services, Infosys, Wipro, Mphasis, Tech Mahindra, Mindtree and Larsen & Toubro Infotech did not respond to ET’s queries. Some of these IT companies have already openly warned employees against taking up a side hustle.

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At least five to six IT services firms are grappling with employees taking up second jobs, Bishen Jeswant, also a partner at Cyril Amarchand Mangaldas. “They are now contemplating whether to take the route of firing these employees or to adopt less stringent measures.”

Kamal Karanth, cofounder of staffing firm Xpheno, said absenteeism associated with a drop in productivity and heightened leave consumption are treated as red flags about the employee being involved in a side job, and are taken up by HR for investigation.

“Random sample investigations over PF records for remittances (from another employer) as a practice is seen gaining popularity among employers,” he said. HR teams are also scanning popular gig platforms for the presence of their employees.

Companies have started running corporate training through company portals against moonlighting. “Employees go through these and accept. This includes conditions or policies of not working for other gainful employment, a standard practice forever,” said Jimit Arora, partner at the Everest Group.

Some have started to define policies against moonlighting, particularly the ones which are directly competitive in nature to the employees’ primary organisation, said Yeshab Giri, chief commercial officer, staffing & Randstad Technologies at Randstad India.

According to some experts, moonlighting in some shape and form can actually help address talent shortages in the IT industry. Many startup founders have also supported the idea.

“But clear guidelines, legal boundaries, and enabling frameworks are needed first. Each IT firm can then take a call about creating its own response and policies toward moonlighting,” said Arora of the Everest Group.

‘Moonlighting’ in job space: Here’s why it may not be all that bad

‘Moonlighting,’ i.e. Working at more than one job, has been especially enabled by India’s enormous demand for digital skills, shortage of skilled workers and remote jobs. But, is it right to moonlight? Does it not create a conflict of interest, and can organisations remove some control over their designated FTEs? ET Prime’s Debleena Majumdar gives arguments in favour of it.

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