Potential HR cleanup expected in major IT companies following Rs 100 crore 'job scam' at TCS

According to experts, the recently reported bribery scandal at Tata Consultancy Services Ltd (TCS), involving an alleged sum of over ‘Rs 100 crore’, will not only damage TCS’s reputation but also have far-reaching consequences for the entire Indian IT industry. They argue that significant measures need to be taken to address the issue and initiate a thorough cleanup process.

The TCS bribe for jobs scandal would also create doubts not only in the minds of its clients but in the minds of other clients of Indian IT majors about the quality of the people working on various projects, said experts.

The scam will also help in the cleaning up of the human resource recruitment system as the staffing companies blacklisted by TCS are major suppliers to many big Indian IT companies, they added.

Simply put, some employees of TCS accepted bribes from staffing companies and hired personnel — bribes for jobs. According to a news report, the scam has been going on for some time and the amount involved is as high as about Rs 100 crore.

Tata Consultancy Services (TCS) has refuted a recent report claiming the involvement of certain high-ranking individuals in a bribery scheme related to job placements. The report, published by Mint, alleged that four senior officials were dismissed for accepting bribes from recruitment agencies in exchange for securing employment for their candidates. According to a whistleblower, this illicit activity had been ongoing for several years.

However, TCS countered these claims in a stock exchange filing, stating that there was no recruitment scam but rather a violation of the company’s code of conduct by a small number of individuals.

The scam amount involved is possible given the size of the company, said an industry official.

“For a $1 billion turnover IT company nearly 60 per cent will be the manpower cost, that is $600 million. And 15 per cent of the personnel would be contract employees at a cost of about $90 million a year. Even a one per cent bribe on the above amount is a sizable one,” Aditya Narayan Mishra, Managing Director and CEO, CIEL HR Services Pvt Ltd told IANS.

The Bengaluru-based CIEL HR Services is one of the leading human resource services companies.

Be that as it may, TCS in a regulatory filing said on receipt of the complaint (from a whistle blower as per a news report) it had launched a review to examine the allegations in the complaint.

“Based on the review: (1) this does not involve any fraud by or against the Company and no financial impact; (2) the issue relates to breach of Company’s Code of Conduct by certain employees and vendors providing contractors; and (3) no key managerial person of the Company has been found to be involved,” the company said while skirting the issue of action taken against the employees and the vendors.

According to reports, the company has blacklisted a couple of its human resource vendors and sacked some employees.

“Some staffing company names are going around as blacklisted by TCS. The vendors supplying people to TCS also provide people to other major Indian IT companies. Those IT companies will have to check their hiring process,” Mishra said.

According to him, the underhand dealings are generally done by small time human resources companies in respect of middle level contract or short duration employment.

“Companies go for short duration hiring due to (1) skill sets not available inhouse and (2) the job itself is of short duration. Big companies will have about 10-20 per cent on contract,” Mishra said.

In the wake of the TCS job scandal, the Indian Staffing Federation (ISF) with over 120 members in a statement said it has a robust due diligence process that precedes the acceptance of any staffing company as our member.”

“We urge all stakeholders, including corporates and the Government, to consider engaging staffing companies that prioritize ethical employment practices and regulatory compliance,” the ISF said.

The job scandal in TCS may be a major one but inducements to HR officials of corporates by private educational institutions has been there for a long time.

“It is true some second rung educational institutions do entice HR officials of corporate to send their teams for campus placement,” Mishra said.

Be that as it may, TCS has to manage the damage to its reputation owing to the bribe for a job scandal.

“The value of bribe as indicated in this particular case if true seems to suggest that it is certainly that of a major corporate governance aspect issue as well that needs to be fixed as part of brand reputation redressal,” a reputation consultant told IANS.

“This scandal hurts not only TCS but casts a slur on the entire ecosystem of HR recruiters and agencies that are used. Old whispers that have prevailed in corporate corridors are today solid testimonials.This is not a TCS issue alone. TCS has made it public. Let’s respect the transparency here,” Harish Bijoor, brand expert and founder of Harish Bijoor Consults Inc, had told IANS.

(With IANS inputs)