N Chandrasekaran, Chairman, Tata Sons
Image: Vikas Khot
Tata Consultancy Services (TCS) has “banned” six employees and six “business associate firms”, and an investigation of three more employees is ongoing in relation to allegations of jobs-for-bribes at the company, Chairman N Chandrasekaran told shareholders at the company’s 28th annual shareholder meeting on Thursday. He was speaking via videoconference.
Here's the full transcript of Chandrasekaran’s comments:
“We received two whistleblower complaints towards end-February and March, and both the whistleblower complaints were investigated. The complaints were about certain favouritism being done and favours being received in recruitment of Bas (business associates).”
“The company has two departments. One is the HR and talent acquisition, which hires people. The second is the Resource Allocation Group, which is about deployment of the available resources into projects. And whenever there is a talent shortage or a particular skill that is not available at that point in time in the location where we need them, the company has a set of, we call them business associate firms, the firms to get contract employees.”
“At any point in time in the overall deployment of resources, about two to three percent are such BA associates or contractors.”
“And this complaint was related to certain individuals in the company working with certain BA firms to be recruiting in their favour.”
“Two things I want to say. There are a large number of BA firms who do business with TCS. There is a rigorous process in the company to recruit a firm or qualify a firm or empanel a firm to be called as a BA firm. And there are about a little over 1,000 such firms across the globe because we need resources in 55 different countries, and each one of them does certain amount of business depending upon the skill availability.”
“And in this case, we found two whistleblower complaints, one related to India, one related to the US. The investigation in India is done by a senior officer in the company and in the US market, we had an external firm to be able to do that.”
“And we found six employees who did not follow the ethical conduct. And while we cannot quantify what favours they got, they certainly behaved in a way that they were favouring certain firms.”
“So, we have banned all those six employees and also the six companies, six such BA companies. There are investigations pending on three more employees. That's all I want to say with respect to that. But the company will look at the whole BA supplier management process and see what the weaknesses are. And we'll completely tighten the process to ensure that we do not have such incidents. So that's the job that we have to do at this point.
The news of the investigation was revealed by Mint newspaper on June 23, in which it claimed that some executives with a say in hiring may have benefited to the tune of as much as Rs100 crore over a number of years.
TCS denied the allegations in a statement to the stock exchanges, while acknowledging that a complaint was made and that the company “reviewed” it.
Also read: The TCS annual report shows women continue to pay a price for flexibility
In its June 23 statement to the stock exchanges, TCS had said “the recruitment activities in TCS are not handled by the Resource Management Group (RMG) as alleged, therefore the reference to the alleged scam in recruitment process is incorrect,” TCS said in that statement.
RMG is responsible for allocation of available resources to various projects and in case of any shortfall, fill such requirements through contractors. The complaint referred to in the (Mint, which TCS didn’t name in its statement) article relates to hiring of such contract resources employed by the contractors, according to the statement.
On receipt of the complaint, the company launched a review to examine the allegations in the complaint. Based on the review, it was found that there was no fraud by or against the company and there was no financial impact, according to the statement.
“The issue relates to breach of company's code of conduct by certain employees and vendors providing contractors and no key managerial person of the company has been found to be involved,” according to the statement.
Kamal Karanth, co-founder of Xpheno, a staffing company in Bengaluru, which doesn’t count TCS as a customer, told Forbes India on its ToThePoint podcast on June 28 that instances of IT company executives asking for bribes or recruitment firms offering them in a highly competitive environment were much more “rampant” than is generally known.
Separately, at the AGM, CEO K Krithivasan, who took over the top job in June, and Chandrasekaran, in their prepared speeches earlier, highlighted the company’s efforts to attract and retain top talent during the last fiscal—a period of intense competition and growing economic uncertainty.
TCS is “focusing on building talent for the future”, Chandrasekaran said in his speech. “New technologies require talent with the right skill set. We onboarded over 110,000 lakh fresh engineers in FY22 and over 44,000 in FY23.”
This was an “unprecedented” number, Krithivasan said in his speech. The company closed the year ended March 31 with a workforce of 614,795, a net addition of 22,600 recruits over the prior year—a reflection of the high levels of staff churn last year, and the slowdown in hiring in the second half implemented by the country’s top IT companies amid the worsening global economic scenario.
Attrition in IT services on a last-12-months basis is still high at 20.1 percent, but as the company exited the fiscal, the quarterly annualised figure had fallen significantly from the peak figure in September, he added.
“Over the years, we have been steadily localising our workforce, bringing on board local talent in each of our major markets,” Krithivasan said.
TCS today has people of 150 nationalities represented and with over 220,000 women. The company has a focussed leadership development programme to increase the number of women in senior management. Over the last five years, that number has grown by 60 percent, he said.
On training, Krithivasan said that cumulatively, TCS’s staff logged 48.3 million learning hours in FY23, and acquired six million competencies. Five lakh “TCSers” have been trained on digital technologies and over 110,000 of them are certified on “hyperscaler” (Amazon Web Services, Microsoft Azure, Google Cloud Platform and others) cloud technologies, making TCS a Tier 1 partner to the top three cloud providers, he said.
A big driver of employee interest in upskilling and cross-skilling has been the TCS Elevate programme which links learning to career growth, he said. Some 400,000 employees have participated in it and 22,000 of them were identified as “high talent,” qualifying for higher pay.