🧐 Adani-Ambani Sign A No-Poaching Pact

Adani and Ambani have been engaged in a cold war for some time now. But they have finally extended a hand of friendship towards one another. Here's why.

Buck of the greatest rivalries of our times has to be Ambani v/s Adani (we’ve covered this rivalry in detail here).

But now these two rivals have raised a white flag and are announcing a truce of a kind. 

The Adani Group and Reliance Group have now signed an anti-poaching pact, meaning none of these companies can go after employees of the other. 

But why now? 

Because the 3rd richest man and the 11th richest man on Earth have realized that retaining talent is their ticket into the big leagues.

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💡 Talent Comes First

Employees make a company. But the problem is India is facing a severe shortage of talented employees. Yes, over 63% of companies claim so. 

Now, India's talent shortage can be attributed to several factors like our education system, lack of good opportunities and resources, the brain drain from India and so on. 

But this knowledge cannot really help solve the problem, at least not in the short term.

So, employers need to hold on to and nurture the skilled employees that they already have.

This is why Adani and Ambani are being so possessive about their employees.

What's more, their rivalry and the common ground that they have would give each of the companies a higher incentive to poach the others' employees.

Huh?

You see, the Adani group is a major player in renewable energy, an industry Reliance has recently shown interest in.

Similarly, Reliance is a top player in the petrochemical industry, an industry Adani has been eyeing since the introduction of Adani Petrochemicals last year August. 

The two have also been going head-to-head in the telecom sector, with Reliance Jio Infocomm emerging as the largest bidder in the recent 5G auction and the Adani Group acquiring 400MHz spectrum for ₹212 crores along with acquiring media houses like The Quint and NDTV. These two were eyeing each other’s throne until this April and the best strategy on hand was to mobilize the rival’s soldiers against the rival.

But they both realised that this would be a losing game for them both. So, now thanks to the agreement, they have one less thing to worry about, with each company forbidden from hiring from the other one.

Both companies are in for a win with this pact:

• Poaching often leads to rising wages, with each company trying to retain its talent. When you increase wages, you directly increase the money you are betting on an employee and their productivity. It is a gamble that might not always give enough returns.

• These companies no longer have to worry about their trade secrets and confidential information being leaked to their direct rival.

Such pacts have existed between rival companies informally for a while now.

For instance, Infosys has a non-compete clause which forbids employees from joining rival companies like IBM and Wipro. 

But the legality of this was recently questioned by a labour union.

The complaint claimed this created a massive power difference between an employer and an employee. What's more, it also violates Section 27 of India's Contract Act, which states that once an employee is terminated, the company has no right to prevent them from engaging in their profession or trade.

So, non-compete clauses aren't legal.

However, the exact details of the Ambani-Adani pact are still unclear. But such a pact usually also forbids the employees from joining the rival even after their contract has expired, at least for a few months or years, which could also make it illegal. 

With Adani-Ambani signing a formal pact, and Infosys being sued, how these incidents will be affecting future arrangements between other rival companies will be…interesting?

Nevertheless, the working majority are getting the shorter end of the stick with this pact as it not only bars them from multiple opportunities but also poses a threat to all who hoped for a package increment through a job change.

If an employee, by their wish, chooses to leave Reliance to join the Adani group, will their choice be respected under Section 27 or would they have to settle? I guess we’ll find out when one tries to.

P.S. This piece was written and researched by our intern Navya Gupta.

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⚡In a line: Adani and Ambani are kind of ending their cold war to protect what’s most important: talent.

💡Quick question: Do you think such no-poaching agreements are ethical?

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