The alleged recruitment scam at one of the most venerated companies in India, Tata Consultancy Services or TCS, has shocked many of us- the diehard fans of the Tata group. But the good thing is that the alleged scam has reportedly been unearthed and will definitely be stamped out by TCS.
The various media reports hint that a few TCS officials may have received bribes amounting to One hundred crores from the private hiring companies who carry out a major role in the initial selection process at the company.
A Business standard report suggests that TCS, acting on the complaint of a whistle-blower, acted swiftly and launched an investigation that led to the sacking of at least three of its (TCS) executives. Link here: https://www.business-standard.com/amp/companies/news/bribes-for-job-scam-uncovered-at-tcs-rs-100-crore-involved-123062300176_1.html
There are other media reports (including part of the report by Business Standard quoted above), that put forth strong denial by TCS officials of any kind of scam.
Some reports quote TCS officials claiming that the alleged scam has no financial impact on TCS. This position puts me in a quandary. Either there is a scam or there is no scam. A scam that may not lead to a financial loss to a company still remains a scam. It may lead to a loss to other shareholders.
The exact nature of TCS scam is not known to us but if indeed what is being reported in the media is true then it is indeed a scam, a corrupt practice of high magnitude. The recruitment scams in private sectors are not commonplace. They are often highly covert operations and the saving grace is that the chain starts from the HR and ends at the staffing agencies. It doesn’t exploit the job seeker.
The land-for-jobs scam (under investigation) didn’t lead to any loss to the Railway ministry and yet Mr. Lalu Prasad Yadav, the former Railway minister, is facing the heat from the Central Bureau of Investigation (CBI). The scam, it is alleged, forced job aspirants to transfer the title of land parcels, owned by them or their close relatives, to entities with close link to the former railway minster in order to get jobs in the Railway ministry. Just because the railways faced no loss of revenue, can we stop calling it a scam? Nothing can be more atrocious that such deceitful logic.
The half-reports and sometime conflicting reports in respect of the so-called TCS scam may have left our readers confused. If the company claims no loss and the media claims bribes worth one hundred crores in recruitments, then what exactly is the truth?
Another point that may have puzzled many is that there has been no case of reported bribe being sought from job aspirants. So, if the staffing companies (or staffing agencies) didn’t seek bribes from candidates then how is it that they allegedly bribed the TCS officials who were part of the TCS recruitment group?
This takes me back to the early part of this century when a private company, that had entered the hydrocarbon sector, was looking to recruit talent in its mega downstream venture.
The technical talent available in the country was already absorbed in the public sector undertakings (PSU). Retired top officials of the PSU companies were hired for poaching the talented PSU employees. New joiners from PSUs were offered three to four times salary package as compared to their existing packages.
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For sales and marketing positions, the new company hired many staffing agencies whose job was to scout for talent across various FMCG/ consumer durables/petrochemical/sectors. The staffing agencies conducted phone interviews and sent the prospects for physical interview with the principal company. If a shortlisted candidate was eventually selected, the staffing companies received a commission/fees that was around 6 – 8% of the annual compensation package of the hired employee.
Now let come to the scam part of the process. While almost the entire first recruitment cycle was facilitated by the staffing agencies, the situation changed dramatically thereafter. The HR department started getting inundated with CVs from many job aspirants who wanted to be a part of this new aspirational hydrocarbon company. The company after all was paying salaries that were unheard of at the junior level in Sales and Marketing.
Young guys in their twenties with maximum three years of frontline selling experience in companies like HUL, Godrej, Phillips, ITC were being headhunted for a CTC of Rs five to six lakhs per annum. I am referring to a period, twenty year back in time.
When the first set of new employees joined the company, they spread the word to their erstwhile colleagues, who in turn emailed them their CVs. The new joiners shared the CVs with the company’s local HR. Ideally the local HR should have contacted the candidates on their own but they passed the CVs to the staffing agencies instead.
This led to a scramble in staffing agencies and they started approaching the HR executives for getting a lion’s share of such CVs. All that the staffing agencies had to do was coordinate with the candidates and set up their interviews and if ‘their candidates’ were selected, they earned their 6- 8% commission/ fees.
Some of the staffing agencies started a covert incentive program for a few unscrupulous local HR guys. The HR guys would share a candidate’s CV with the staffing agency informally, from the referrals received from the new joiners. The agency would contact the candidate and set up his/ her interview and upon selection of that candidate, the agency collected its commission/ fees. The agency also shared the spoils with its ‘ally’ in the HR department.
In this clear case of unethical practice, the number of recruitment’s were under one thousand. I mean the magnitude of scam was very small. It didn’t create much hullaballoo till a guy in the Finance who was at loggerheads with the HR raised it up. One of the candidates recommended by the Finance guy joined the company and a staffing agency raised an invoice for successful hiring of this candidate. The Finance guy was livid. How could a staffing agency bill the company for a service that it didn’t provide? The guy dug deep and found out that there were many such cases. He spoke to the staff of one or two agencies and they confided in him that some kind of illegitimate gratification was carried out in the process.
An enquiry was set up what happened thereafter is something of an anti-climax. Things were settled with just warnings and reprimands as the ‘incentives’ part of the unofficial process couldn’t be validated. Or may I say, no one really bothered about it.
Did it cause any loss to the company?
Well there are two ways of looking at it. One way is to think that there was no loss to the company since paying fees to the staffing agencies was inbuilt in the HR budget of the company. The rationale behind engaging the staffing agencies was that the principal company lacked the resources to carry out end-to-end hiring on its own.
The other way of looking at it is that the HR executives who were passing on the organically generated CVs to the agencies, should have informed the top brass of HR and should have suggested modifications in the terms of engagement with the agencies in such cases. It is likely that the top brass of HR would have reduced the agency fees in such cases.
The bribes or the ‘incentives’ that some of the corrupt HR executives received from the agencies definitely fell under the ambit of unethical practices but since nothing could be proven, no action was taken. Those were the days when corporate governance was just a fashionable thing. Something to be discussed at seminars but not to be implemented in real life.
The exact nature of TCS scam is not known to us but if indeed what is being reported in the media is true then it is indeed a scam, a corrupt practice of high magnitude.
It is reported that TCS has sacked a few top officials and this is in line with the ethos of TCS. It is a great organisation and it has done well by removing the corrupt elements.
In respect of the reports that TCS has denied any scam, all I can say that any company that has recruited over 3 lakh employees in the last three years would issue such a denial.
The scam if proven has the potential to tear down the sheen of good governance around TCS. The recruitment scams in private sectors are not commonplace. They are often highly covert operations and the saving grace is that the chain starts from the HR and ends at the staffing agencies. It doesn’t exploit the job seeker.
TCS as the second biggest Indian company in terms of market capitalisation and as a worthy poster boy of corporate governance is morally bound to weed out all corrupt practices that may have pervaded its network. The most precious asset of TCS is its people and the alleged scam involves that very asset.
I trust TCS to carry out a surgical operation to stop the spread of this malicious malady.
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