On 3rd May, ScanCafe had to let go of 67 employees due to reduction in business. The reduction in volume of business, according to the company, was due to the implementation of stricter privacy laws in Europe with the General Data Protection Regulation (GDPR) coming into force from 25th May 2018.
The company outsources 15 percent of its work to European countries, and therefore, the company is losing its clients from Europe since it does not fulfill the stringent requirements of GDPR.
ScanCafe said that this has actually left the company with excess manpower for the amount of work they have to do.
ScanCafe’s Director of Operations, Ramendra Narayan, said the company has decided to relieve the 67 employees purely based on performance record from the past eight months.
The company approached the Department of Labour to understand the rules on letting go of so much staff in such a project. Narayan said the management has decided to relieve some employees by offering two months’ salary including 100 percent performance incentives in the given notice period of two months, and other separation benefits as per the company service rules. “We, as a business, are not able to do much about the issue than to take this step which is not an easy task,” he said.
“GDPR implementation is also causing a lot of problems to outsourcing companies in India and other global outsourcing companies dealing with data of EU citizens,” he added.
Out of seven FDI companies in Tech Park, three companies get some business from European countries. However, Tech Park’s CEO Tshering Cigay Dorji, said the other two companies have not reported about the impact so far, and that the chances of getting impacted by the EU regulation is lesser since the amount of work is very less.
He said that the new privacy regulation requires the companies to take explicit consent from individuals of EU for their data and its use with an option to revoke the consent anytime by the individuals. “The IT and IT-enabled services industry would be the most affected,” added Tshering.
The penalty for violation is up to 10 million Euros or two percent of the company’s global annual turnover of the previous financial year. The second violation is up to 20 euros million or four percent of the company’s global annual turnover of the previous financial year, whichever is higher. Europe is seen as a leader in regulations for privacy and data protection.
Tshering said the separation benefits offered is more than the minimum required under the Labour and Employment Act of Bhutan 2007. He further added that the company has promised to give the affected employees first preference in case new openings come up in the future.
The company deals with the digitalizing, organizing and editing the photos and videos of the clients. With 437 Bhutanese employees, ScanCafe is known for having the largest number of IT employees in the country, occupying about 50 percent of the space in IT Park.
Director of Operations, ScanCafe said the overall impact of GDPR is not going to affect ScanCafe’s operational continuity in Bhutan. He said there are no plans to reduce the amount of space leased at the IT Park. “Apart from the regulation issue, the company has been growing substantially, and we are rather hopeful that we can expand the business further in Bhutan in the future.”
Currently, Thimphu Tech Park has seven FDI companies and nine startups in the incubation centre, employing about 600 people in total.