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April 15, 2024

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BENGALURU: Tata Consultancy Services Ltd (TCS), known for its consistent annual addition of approximately 50,000 employees over the past three years, has been hit by a scandal involving senior executives accepting bribes from staffing firms. This compromising act has raised serious concerns regarding the integrity of TCS’s recruitment process.

While specific details about the scandal remain unclear, two knowledgeable executives revealed that a whistleblower contacted TCS’s CEO and COO, accusing E.S. Chakravarthy, the global head of TCS’s resource management group (RMG) responsible for recruitment, of accepting commissions from staffing firms for an extended period. In response to the complaint, TCS promptly initiated an investigation led by a team of three executives, including Ajit Menon, the company’s chief information security officer.

After several weeks of investigation, TCS took action by placing the head of recruitment on leave, terminating the employment of four RMG executives, and blacklisting three staffing firms. The extent of the irregularities is yet to be determined, but one of the aforementioned executives suggested that those involved in the scam may have earned commissions amounting to at least ₹100 crore.

Mint, unable to independently verify the information, could not provide the names of the blacklisted staffing firms.

Chakravarthy, who holds the position of vice president and joined TCS in 1997, reported to the chief operating officer, Natarajan Ganapathy Subramaniam. Although Chakravarthy has been barred from entering the office, his email ID remains active, according to the executive. An email seeking comment sent to Chakravarthy on Monday went unanswered, and a message sent to Arun G.K., another executive who headed a function in the RMG division and was terminated, did not receive a response on LinkedIn.

In response to the incident, a TCS spokesperson stated, “While there are occasional complaints regarding code of conduct violations, the company has robust processes in place to investigate and resolve them thoroughly.”

The RMG division, estimated to have a workforce of 3,000 employees, places nearly 1,400 engineers, including new hires, on projects daily, averaging one placement per minute. TCS, with 614,795 employees, reported $27.93 billion in revenue for the previous year.

For IT services firms like TCS, the primary methods of hiring experienced executives are through employee referral programs and staffing firms. Even temporary workers and contractors are hired via staffing firms.

This scandal, the first of its kind to hit TCS’s recruitment process, occurred shortly after K. Krithivasan assumed the role of chief executive on June 1. “The entire senior leadership is shocked,” said an anonymous executive, noting the lack of authorization to speak with reporters. “This incident raises concerns about the adequacy of internal safeguards and how such a situation could have transpired.”

“The unsettling aspect is that we don’t know the extent and duration of this scam. In the last three years alone, we hired over 300,000 people, including contractors. Assuming that 10% of the recruitment was facilitated through selected staffing firms, with commissions given for each hire, the scale of this scandal is staggering,” the executive added. “I estimate it to be at least ₹100 crore.”

This development is surprising as major corporations are expected to have stringent measures in place to prevent corruption that could impede operations and tarnish their reputation. “While such incidents may be common in smaller firms with perceived lax corporate governance, the news of this recruitment scandal at a company like TCS is astonishing. Large corporations typically have robust audit practices and restrict the authority of individual executives to prevent abuses of power,” commented an executive from a Bengaluru-based company.

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