MC Explains: What is TCS bribe-for-job probe all about?

TCS clarified that recruitment activities in the company were not directly handled by the RMG.

India’s largest IT services company, Tata Consultancy Services (TCS) has taken action against 19 employees and banned six staffing firms in relation to the bribe-for-job scandal after completing the investigation, a case which opened a can of worms on recruitment malpractices happening at an industry level in the IT sector.

TCS’ case first came into light on June 23, 2023, through media reports claiming that the IT services major had blacklisted three staffing firms that were involved in bribing senior executives overseeing recruitment processes in the Resource Management Group (RMG) of the company to get business. While the investigation was underway, there were speculations that four employees too were immediately sacked.

A few internal names that came up include ES Chakravarthy, the global head of RMG who was sent on leave. Arun GK, who had headed one of the functions in the team, was one of the four other employees sacked.

On the same day, TCS clarified through exchange filings that recruitment activities in TCS were not directly handled by the RMG. Instead, RMG was only responsible for allocating available resources on various projects in case of talent shortfall, and it would fill in such positions through contractors.

Here’s a primer on all you need to know about this case:

What TCS chairman N Chandrasekaran has said

On June 29, during the company’s annual general meeting, TCS chairman N Chandrasekaran detailed how the issue unfolded for the senior management at the company.

At that time, the investigation was still on and Chandrasekaran had said that around six employees were then found to be not following ethical conduct. He added that the company couldn’t “quantify what favours they got but they certainly behaved in a way that they were favouring certain firms.”

TCS had also started examining its entire business associates (BA) supply management process to determine weaknesses and clean up the hiring process.

What transpired behind the scenes and TCS’ findings?

According to Chandrasekaran, the senior management was first alerted about the wrongdoings by two whistleblowers in February and March 2023.

“The complaints were about certain favouritism done and favours received in the recruitment of business associates,” he had said.

The whistleblowers informed the company’s CEO K Krithivasan and COO Natarajan Ganapathy Subramaniam. TCS immediately started running an internal investigation into these charges.

Based on the initial findings, TCS had earlier said that 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."

The company ultimately found two similar cases, one in India and the other in the US. The India cased was investigated by a senior executive within the company while the US one was conducted by an external official.

How does TCS work with staffing firms?

TCS uses two departments to acquire and deploy talent. The HR and talent acquisition team is the main department hiring employees and then there is a resource allocation group that deploys available resources on projects or sources talent from staffing firms. In the case of talent shortage or a particular skill requirement at a given location, the company would use a set of staffing firms to get contract employees.

But Chandrasekaran explained that at any given point, employees hired on a contractual basis from such staffing firms would account for only 2-3 percent of the overall deployment of resources.

There’s in fact a large pool of staffing firms which TCS works with. These firms had to go through a rigorous process and checks to qualify to work with TCS.

“There are about a little over 1,000 such firms globally because we need resources in 55 such countries. And each one of them does a certain amount of business depending on their skill availability,” Chandrasekaran said.