TCS sacks employees after Rs 100 crore bribe-for-jobs scandal

Tata Consultancy Services (TCS), India’s #1 IT software company, has been embroiled in a scandal involving the exchange of bribes for job placements.
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In FY 2023, TCS made a net addition of 22,600 employees globally, taking the total employee base to 614,795, representing 150 nationalities.

Several high-ranking executives responsible for hiring crucial personnel were found to be accepting bribes from staffing firms in exchange for securing positions for their candidates.

A whistleblower reached out to the CEO and COO of the company, accusing ES Chakravarthy, the global head of TCS’s resource management group (RMG), of accepting commissions from staffing firms over a prolonged period of time, according to media reports.

Upon receiving the complaint, TCS promptly formed a team of three executives, including Ajit Menon, chief information security officer, to conduct an investigation. As a result of the investigation, TCS placed the head of recruitment on leave, terminated the employment of four executives from RMG, and blacklisted three staffing firms involved in the scandal.

ES Chakravarthy, who holds the position of vice president, has been prohibited from entering the office; however, his email account remains active. Additionally, Arun GK, another official in the RMG division, has been dismissed from the company.

“While occasional complaints regarding code of conduct violations may arise, our company has robust processes in place to thoroughly investigate and resolve such matters,” a TCS spokesperson told LiveMint newspaper.

TCS, a part of the Tata Group, has yet to determine the full extent of the irregularities. It is estimated that those involved in the fraudulent scheme may have accumulated commissions totaling at least Rs 100 crore.

This job scandal marks the first of its kind to impact the technology giant since K Krithivasan assumed the role of chief executive on June 1st.

Experts have expressed concerns about the impact of the reported bribe-for-jobs scandal involving TCS. They believe that the repercussions of the scandal will extend beyond TCS, affecting the entire Indian IT industry, and emphasize the need for necessary actions to address the situation, IANS reports.

The scandal raises doubts not only among TCS clients but also among clients of other major Indian IT companies about the competence and quality of personnel working on various projects, according to experts. Furthermore, the blacklisting of staffing companies involved in the scandal by TCS is expected to contribute to the improvement of the human resource recruitment system, as these companies are significant suppliers to other major Indian IT firms.

In simple terms, certain TCS employees accepted bribes from staffing companies in exchange for hiring personnel — an alarming practice commonly referred to as “bribes for jobs.” Reports suggest that this illicit scheme has been ongoing for a considerable period.

Aditya Narayan Mishra, Managing Director and CEO of CIEL HR Services, explains that for a $1 billion turnover IT company, about 60 percent of the revenue is allocated to manpower costs, amounting to $600 million. Additionally, contract employees constitute around 15 percent of the workforce, with an annual cost of approximately $90 million. Even a 1 percent bribe on these amounts would be significant.

TCS in a regulatory filing said that it initiated a review to investigate the allegations. TCS clarified that the issue did not involve any fraud against the company itself and would have no financial impact. TCS acknowledged that certain employees and vendors providing contractors had breached the company’s Code of Conduct. TCS did not provide specific details about the actions taken against the employees and vendors involved.

TCS has blacklisted some of its human resource vendors and terminated the employment of certain employees. Experts suggest that other major Indian IT companies should review their hiring processes as these vendors also supply personnel to them.

The Indian Staffing Federation (ISF), comprising over 120 members, released a statement in response to the TCS job scandal, asserting that they have a robust due diligence process in place for accepting staffing companies as members. They urge all stakeholders, including corporates and the government, to engage with staffing companies that prioritize ethical employment practices and regulatory compliance.

While the TCS job scandal is significant, it is worth noting that inducements to HR officials by private educational institutions have been prevalent for some time. Certain lower-tier educational institutions entice HR officials of corporations to send their teams for campus placements.

Nevertheless, TCS must address the reputational damage caused by the bribe-for-job scandal. A reputation consultant highlights the value of the bribe, indicating that if true, it raises significant concerns about corporate governance, which must be addressed to restore the company’s brand reputation, say experts.

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