recruitment scam in tcs Reported by this newspaper An internal investigation has begun and a new head has been appointed for the company’s resource management group, which handles the deployment of employees and contract workers. At least 15 executives have reportedly been sacked and, at last count, around eight recruitment companies have been banned by the IT services major. The company is conducting a rigorous audit of its recruitment processes in the wake of a whistleblower report.
The whistleblower alleged that several senior TCS executives involved in the recruitment process regularly accepted kickbacks from staffing firms to favor their respective candidates. It is believed that other large IT organizations are also auditing their recruitment processes and if industry rumors are to be believed, many HR departments in the IT sector have been infected by this deadly corruption.
The industry employs a large number of people. As each engineering batch graduates, a large percentage look for jobs in this sector. In addition, companies are climbing the ladder as they try to acquire experienced employees with specific skills from each other. This is reflected in the high attrition rate, which can often exceed 20%, as people move companies in hopes of furthering their careers.
Staffing firms play an important role in this. These costumes can be considered as one of the first filters in the selection process. Some “search” for high-level executives, while others seek large numbers of fresh graduates and mid-level employees. They sign up experienced workers looking for change and want to place them where their skills and experience are best suited.
Every big or medium sized IT business works with these staffing organizations who charge commission based on fixed compensation. It is unethical but not really surprising that some staffing organizations offer bribes to HR personnel in IT companies to favor candidates in their field. This hiring (and poaching) and firing process is hardly transparent. IT companies are choosy about the people they want to hire for specific projects or skills; And recruiting organizations are also careful about seniors on their books.
The industry employs over 5 million people directly and many more indirectly, and is estimated to have generated $245 billion in revenue in fiscal year 2013. The market leader is TCS, which reported revenue of $27.9 billion in FY2013 and has a market capitalization of approx. 11.7 trillion. TCS alone employs less than 615,000 people. Arguably, given the outsourcing model, TCS and other IT services companies are doing their own staffing organization – when a company needs IT skills, they find people who can provide it.
Ideally, of course, an executive who is hiring on behalf of his company should focus on selecting the best person for the job. But in practice, when companies need to scale up quickly, such as during a pandemic, they hire hundreds of people a day. Furthermore, a large proportion of jobs in this sector are commoditized (the term “ant farm” has often been used pejoratively to describe large IT organizations). In such circumstances, a proper qualification is sufficient, and it is easy for the HR executives to choose the candidates of their choice.
Thirty years ago, when young graduates started looking for jobs in the IT sector instead of the government, their families often saw it as a big gamble. After all, they were giving up the security and comfort of lifelong employment, pensions and social status to join an industry that was still in its infancy. Nowadays the pecking order is reversed – a look at Shaadi.com reveals that IT-sector profiles, especially those with H1B visas, are highly coveted.
This shows that the industry has grown – in fact, it has doubled in size in the last five years. During this period of frenetic growth, it is not surprising that questionable practices in hiring have cropped up. Of course, there have also been some epic scams, such as the Satyam case in 2008. But the time has come for the industry to mirror its own hiring practices.
With the global recession the growth rate has slowed down and the concept of outsourcing is now facing challenges as more and more companies are opting to set up their own Global Competence Centers (GCCs). In fact, the GCC hired more IT workers than the IT industry in FY2013. The sector can no longer afford to hire commodities, which means it cannot compromise on quality. TCS is cleaning house but the entire industry needs to follow suit.
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UPDATE: June 27, 2023, 12:14 PM IST