The National Association of Software and Service Companies (Nasscom) has demanded scrapping of a Karnataka bill that aims to reserve jobs for locals in the private sector, saying it would force businesses to relocate.

The industry body said on July 17 it was disappointed and deeply concerned about the Karnataka State Government Employment of Local Candidates in Industries Bill, 2024, cleared by the state cabinet two days earlier.

“Nasscom members are seriously concerned about the provisions of this bill and urge the state government to withdraw the bill,” the industry body said in a statement.

The bill, cleared in a cabinet meeting chaired by Chief Minister Siddaramaiah on Jul 15, mandates 50 percent reservation for locals in management jobs and 75 percent in non-management categories in private firms.

The restrictions would force companies to relocate in the face of shortage of local skilled talent, Nasscom said.

Nasscom said the tech sector contributed 25 percent to the state GDP, housed a quarter of the country’s digital talent, more than 11,000 startups, and 30 percent of the total Global Capability Centres (GCCs).

The industry body said the bill threatened to reverse the progress, drive away companies and stifle startups, especially when more global firms, such as GCCs, were looking to invest in the state.

Nasscom has asked for an urgent meeting with the state authorities to discuss the concerns and “prevent the state’s progress from being derailed.”

“It’s deeply disturbing to see this kind of bill which will not only hamper the growth of the industry, impact jobs and the global brand for the state,” it said.

There was a huge shortage of skilled talent and Karnataka, despite the large pool, was 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,” Nasscom said.

The government’s move to reserve jobs in the private sector for locals has come in for sharp criticism from industry leaders, who argue that the measure will deter talent and investment from flowing into the state.

Karnataka is not the first state to try to reserve jobs for locals in the private sector. The most recent example is Haryana. The BJP-led coalition government’s decision was struck down by the Punjab and Haryana High Court in November 2023. The Haryana law provided for 75 percent reservation for locals in jobs with a monthly salary of below Rs 30,000.