Capping the moonlighting volcano

There’s simmering tension over moonlighting, hybrid work and a breakdown of old workplace norms. Will this erupt into a full-fledged crisis? Or will better sense eventually prevail?

Indrajit Gupta

[From Unsplash]

The debate over the moonlighting phenomenon has become centrestage.

At the same time, it isn’t difficult to spot the rumblings of discontentment among large swathes of employees either.

A broad consensus on how to deal with the moonlighting issue continues to remain elusive. Partly because the two extreme positions on the subject aren’t easy to reconcile. 

At one end of the spectrum is Wipro. Its executive chairman Rishad Premji was the first to draw a line in the sand. Moonlighting amounts to plain and simple cheating, he said. He also said 300 employees had been sacked for unauthorised moonlighting. Since then, every other day, Infosys, TCS and IBM have been talking about the scourge of moonlighting that’s afflicted their organisations—and the need to root it out.

And at the other end, it isn’t just CP Gurnani, the CEO of Tech Mahindra, who has chosen not to join the chorus of these IT firms. Mohandas Pai, the stormy petrel of the IT industry, took up cudgels for employees twice—once pointing out how young IT workers had been exploited over the years, without salary hikes at the base of the pyramid and then again last week, arguing that moonlighting was here to stay.

Over the last few days, Rajeev Chandrashekhar, Union Minister for state for Skill Development and Entrepreneurship, and Nandan Nilekani, the non-executive chairman of Infosys, have argued about a generational shift—and why companies need to adapt to the new ways of working and also why employers should not pin their employees and put a lid on their dreams.

So how does one thread the proverbial needle?

At loggerheads: Two schools of thought

Here’s the nub: There are two schools of thought on this issue—and bridging them looks tough. A sensible public debate might force both sides to question themselves or understand their own positions. However, if the two public stances harden, be prepared for things to worsen:

Imagine you’re against moonlighting

Whether you are a large frontline IT firm or a mid-sized ITES firm, you’ve either pressed or are likely to press one or more levers to stamp out the menace. One, start monitoring or surveilling employees. There is enough AI software available to monitor the productivity of remote workers. Privately, many firms admit they have begun using technology to track keystrokes to gauge how much time employees are in front of their machines. 

A leader in an ITES firm says that if employees put in an eight hour shift in a day, he reckons they are eligible to take on other work that is not in conflict with the core work they’ve signed up for as full time employees. The law allows employees that flexibility. 

Now, imagine the consequences of this kind of snooping. At Founding Fuel, in a story by my colleague and co-founder Charles Assisi, we found such instances during the early part of Covid. If this AI-based monitoring system takes a life of its own, it has the potential of escalating into a major invasion of privacy.

Two, expect many firms to tighten employee contracts shortly, if they haven’t done so already. More pernicious clauses like termination without notice in case an employee is caught moonlighting are likely to be introduced.

Three, many business leaders believe that the ‘work from anywhere’ culture has led to this phenomenon of moonlighting. They reckon it is not possible to supervise remote workers as easily as it was when they were in office. Increasingly, policies that force employees to adopt a 70:30 norm of hybrid work could become all-pervasive soon.

On their part, after successfully working remotely for two years, many employees are not in the mood to come back to the office. If we’ve made it work, why insist on us coming back to work, they ask. Especially in cities where they have to commute long distances to work. Diktats that force them to do so run the risk of triggering large scale resignations, wherever employees have marketable skills. Given that attrition levels have climbed sizeably, employers have been treading on eggshells on this issue.

Clearly, if firms end up relying on these blunt tools, the bedrock of trust that defined the relationship between an employer and employee will be eroded. Employers frame it as an ethical issue. If you moonlight without approval, especially during work hours or if you’ve chosen full-time employment, and that too with a rival, it is hard to argue for this kind of mercenary behaviour.

Shades of grey

Issues surrounding moonlighting aren’t always black-and-white. Take for instance, Wipro’s $500 million buyout of Appirio in 2016. It bagged TopCoder, a marketplace with nearly 1.5 million freelance engineers, data scientists and designers, as part of the Appirio acquisition. When it moved in, insiders say that they found a few hundred Wipro employees listed on TopCoder, in their own official Wipro email IDs. Since they had paid good money for the buyout, Wipro chose to look the other way. But they now seem to have an issue with moonlighting, says the same insider, citing double standards. There is another problematic issue: by buying TopCoder, Wipro effectively legitimised coders from its rival firms—and some of its own—from taking on work for clients that could potentially run into conflict of interest issues. Should this then be construed as a case of running with the hare and hunting with the hounds? It isn’t just Wipro. Across the industry, hiring gig or freelance workers is starting to pick up, as this Mint story says.

In the last two years or so, there’s another phenomenon that has gotten employers in the tech and knowledge space rattled and immensely frustrated: the prospect of job hopping, CV shopping and last minute drop-outs, all three of which are rising significantly. Attrition levels have been rising among almost all the major IT firms.

A founder at a leading ITES firm told me that more than half his senior level hires tend to skip joining at the last minute after having accepted a job offer. They tend to shop around their CVs, sometimes managing to bag hikes of 50% more than what they were offered by his firm.

Firms are moving swiftly to blacklist such “last minute drop-outs”. And soon, they may choose to share the lists with other firms. But here’s the issue: such unethical behaviour won’t easily go away, unless the job market cools down. Many well-funded startups have gone on a mad hiring spree, often dangling all kinds of carrots. Many of them are under immense investor and board pressure to assemble a strong leadership team, as soon as they get funded. Sooner than later, these startup founders will need to bring in a semblance of order. Plus, a funding slowdown—and more layoffs at startups—could help curb such mercenary behaviour among employees.

If you’re for moonlighting

During Covid, there were firms that held their line. They didn’t lay off, cut salaries or bonuses. In fact, they doubled down to provide healthcare support, counselling services and showed genuine empathy in times of adversity. Equally, there were enough corporate Scrooges, who slashed salaries, denied bonuses—and ruthlessly laid off ordinary workers, even as CEO salaries were substantially increased.

The doublespeak is hard to accept. Wipro announced that it would withhold its variable pay for all its mid to senior staff from July 2022. According to a PTI story published in Business Standard, an internal email sent to its employees ascribed a drop in Q1 margins, inefficiency in its talent supply chain and investment in technology as the reasons behind the cut in variable pay. But that didn’t deter Wipro from doling out a 20% hike to its CEO Thierry Delaporte, pushing up his total compensation to Rs 79.8 crore.

It is the same story for Infosys. It reduced variable pay by 30% for the quarter starting June 2022, even as CEO Salil Parekh saw his salary go up by 88% to Rs 80 crore. TCS did not reduce variable pay for its staffers, even though its CEO Rajesh Gopinathan’s salary went by 27% from last year to Rs 25,77 crore.

Employees are perceptive enough to see through this charade. The gap between young workers and the CEO is only increasing at a rapid clip, even as starting salaries have remained stagnant. Infosys pays average salaries around Rs 6 lakh at entry levels in the engineering schools, which haven’t moved appreciably over the years. It is a data point that Infosys co-founder NR Murthy ought to look at. After all, in an interview with Financial Express in September 2020, he averred that CEO salary and the salary of the lowermost employee ought to be a “fair multiple”. So if the lowermost employee earned Rs 2-3 lakh, the CEO remuneration should be Rs 70-80 lakh.

Moonlighting has exposed this inherent hypocrisy inside Indian IT firms: It is tough to demand a higher ethical standard from employees when they are the first to be laid off as soon as performance dips and there is pressure on the stock price, and yet the CEO salary continues to soar.

Plus, Covid has reset expectations—and given rise to a new mercenary tendency among employees. Moreover, many of them are now no longer willing to define themselves by the work they do. It is now just another—albeit important—part of their lives.

This generational shift will have major implications about the workplaces choices young people make. Trying to bind them through contracts and rigid workplace policies and practices could result in a major upheaval. There’s another reality: there is a playbook for remote work that’s been around for more than two decades, except it wasn’t until Covid arrived that  adoption of remote work picked up. Many employees who have experienced the benefits of remote work now want more choice and flexibility in planning and executing their work. Measure us on outcome, they say. Equally, there are others who would prefer to be back in office.

Supervisors, typically those in the older age groups, haven’t taken to remote work that easily. They would much rather see their teams back at the office where it is easier to track their performance.

Therefore, the debate around moonlighting needs to be reframed around two new ideas. After the momentous events of Covid, the most pressing issue is about offering greater flexibility as opposed to a rigid model. This current debate seems to have gotten stuck on an outmoded industry way of working. And it seems as if CEOs aren’t able to move forward with the times. There is one other issue that is often spoken about and needs to change: gone are the days when you could own all the talent. It’s time to rethink the employment model-based access to capabilities, especially at a time when the potential for gig work is growing.

On August 3 this year, the pragmatic leadership team at Swiggy read the writing on the wall and introduced their industry-first moonlighting policy. They announced a policy that allowed its full-time staffers to work on external projects for money or pro-bono.

It makes sense to recall what Girish Menon, head of human resources at Swiggy, said back then. “Our goal is to encourage employees to pursue their passion without any constraints due to their full-time employment with us.” During the pandemic, Swiggy said that many people started new hobbies or activities for an additional source of income. It said it believes that such projects help in professional and personal development.

However, the onus is on the employee to seek approval from the company before they pursue such side hustles. And the issue of conflict of interest will be looked at while deciding on the approval.

When asked if such policies would help productivity and growth, the same Business Standard story quotes Menon: “We trust our employees. For example, we don’t have ‘swipe in’ and ‘swipe out’ (for recording login hours). Even now we don’t track productivity or use those online tools,” said Menon, in an interview. “Some of our best work in terms of the Instamart launch and expansion has happened almost remotely in the last two years.”

“As long as we are able to understand and empathise with the (employees), we are able to create relevant policies,” said Menon. “And these policies are not detrimental to the business, but actually beneficial to the organisation.”

Swiggy recently said it has reached its first milestone in implementing a two-year ESOP (employee stock ownership plan) liquidity programme. This year eligible Swiggy employees had the option to receive liquidity of up to $23 million against their ESOPs.

As soon as you use the Swiggy case study, other CEOs tend to jump up and say their industry is different. It needn’t be either a cut and paste job or a one-size-fit-all approach. The key is to find a sensible way to create win-wins for the organisation, and employees, keeping in mind the nature of the industry, the nature of work and nature of the workforce.

So what are other CEOs waiting for?

Dig deeper

(A shorter version of this Strategic Intent column appeared in Business Standard)

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About the author

Indrajit Gupta
Indrajit Gupta

Co-founder and Director

Founding Fuel

Indrajit Gupta is a business journalist and editor with over two decades of experience. He was the Founding Editor of the Indian edition of Forbes magazine. Within four years of its launch, Forbes India became the most influential magazine in its space.

He is the co-founder and director at Founding Fuel.

He has served in leadership positions at many of the leading media brands in the country. Before taking up the assignment to start up the India edition of Forbes magazine, Gupta was the Resident Editor of The Economic Times in Mumbai and before that, the National Business Editor of The Times of India.

Over the years, Gupta has built a reputation for grooming talent and creating highly energised and purposeful newsrooms. He has interviewed several leading global thought-leaders and business leaders including CK Prahalad, Ram Charan, Wayne Brockbank, Sumantra Ghoshal, Carlos Ghosn and Nitin Nohria, and also led cutting-edge joint research-based projects with McKinsey & Co, The Great Place to Work Institute, Boston Consulting Group, KMPG and Coopers & Lybrand.

He won the Polestar journalism award in 2010 and was awarded the Chevening fellowship by the British Foreign office in 1999. Gupta is an alumnus of the SP Jain Institute of Management and Research, Mumbai and a B.Com (Hons) graduate from St Xavier's College, Calcutta.

Gupta teaches a course on Business Problem Solving at his alma mater. He writes a column named Strategic Intent in Business Standard’s edit page. He lives in Mumbai with his wife and two young daughters.

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