Karnataka which is known globally as India's Silicon Valley, is now at the crossroads with the recent passage of the Karnataka State Employment of Local Industries Factories Establishment Act Bill, 2024.
The new legislation has sparked significant anxiety within Karnataka's tech industry, which contributes 25 per cent to the state’s GDP and houses a quarter of India’s digital talent.
In a recent development, National Association of Software and Services Companies (Nasscom) and its members have voiced deep concerns over the new bill. Nasscom fears that the bill's provisions, which mandate significant local quotas for jobs in the private sector, could lead to a scarcity of skilled talent. This, in turn, might compel companies to consider relocating to more favorable business environments.
“nasscom members are seriously concerned about the provisions of this bill and urge the state government to withdraw the bill. The bill's provisions threaten to reverse this progress, drive away companies, and stifle startups, especially when more global firms (GCCs) are looking to invest in the state. At the same time, the restrictions could force companies to relocate as local skilled talent becomes scarce,” the non-governmental trade association said in a statement.
Karnataka's Tech Hub
In the Karnataka's economy, the technology sector is one of the key sector, which contributes nearly 25 per cent to the state GDP.
Bengaluru, its capital, houses over a quarter of India’s digital talent and is home to more than 11,000 startups and 30 per cent of the nation's Global Capability Centers (GCCs).
Nasscom's Concerns
In response to these concerns, Nasscom has called for an urgent meeting with state authorities to discuss the potential repercussions of the bill.
In the statement, the company added, “nasscom is seeking an urgent meeting for industry representatives with state authorities to discuss the concerns and prevent the state's progress from being derailed.”
“Globally, there is a huge shortage for skilled talent and Karnataka despite the large pool, is no exception. For states to become a key technology hub a dual strategy is key - magnet for best talent worldwide and focussed investment in building a strong talent pool within the state through formal and vocational channels,” it added.
