Feudalism in the 21st century?!

By virtue of being almost half MBAs by now, the top-of-the-mind recall for ‘bonds’ is financial debt instruments. However, the next in line recall is by virtue of working in an IT company for almost two years- the service bond. ‘Bond’ has both a positive and negative connotation. In a positive sense, bond means to create a long-lasting relationship and the negative sense brings the practice of several centuries ago to mind- that of bonded labour. These men had to work for the feudal lords till they were able to pay off the money they had borrowed from the lords. Often the lords exploited them in the process, extracting much more work than the money’s worth.

Now, even in the 21^st century, there are bonds (similar to above) when we consider companies like Wipro, where some of the respondents to this forum were working. As Partho has explained, new joinees had to deposit 75000 Rs with SBI as fixed deposit and the money is returned only at the end of bond period. In case of financial difficulties, one can avail of a loan of this amount and for repayment of loan to the bank, the cash in hand for employees will be reduced as certain component of salary will go towards payment of loan over the eighteen months. This is on similar lines to working for repaying borrowed money, except that it’s much more systematic and looks professionally crafted to retain the employees. Also the work environment and culture is such that, high tech employees barely complain of being ‘exploited’ during their bond tenure, even if companies make them slog for 14 hours.( like the case of Megatech’s engineers)

As mentioned by other contributors, many people give a damn about staying ‘bonded’ to the company just because of signing a contract (‘just another piece of paper’, as Ninad says). They would rather forfeit the bond money and go on to more lucrative offers or if they have converted a call from IIMs or other higher study options. Only in case of dire financial problems or maybe lack of will, do people stay back in a company and hence compromise, even if they find no proper work as per their expectations or abilities. Companies only care for their profits and costs, and employees are at the end, replaceable resources. So let the employee departing from the company pay the cost invested in him and leave. But what about the intellectual capital of that employee? Can that be limited by a monetary value of a lakh or two? Isn’t that a cost of being ‘freed’ which is being paid to the company, and this cost cannot even make the same intellectual capital immediately available ( as the company has to hire new employees and train them, which takes more time) ?

Also another perspective is the varying levels of bond money decided by companies, as in the case of IMFL Group. Depending on the ease of training/replaceability, the bond amount has been varied for MTs & GTs/diploma engineers/electrical engineers. Even companies like OPGC, with archaic bond laws need to change them to make them relevant. Soumyo’s point about the Government of India investing so much on IIT/IIM graduates who eventually go to other countries to settle down is also interesting. Here though there is a catch- increasing fees to reflect the cost of education is a much better course of action as a solution to this problem in today’s age, where education loans are readily available. Government can make specialised loans available to those who can’t afford the education at all, so that paying the cost of education becomes mandatory for all over the next several years after passing out.

Coming to the implication of ‘bond’ as I had said in the beginning, the companies force a ‘long term relationship’ ( 2 to 5 years) or ‘bond’ rather than actually retaining the employee by his own will. Rather, it’s closer to bonded labour, in a much more disguised/subtle form, I must say, leading to bringing down attrition just by some basis points.