TCS Finds Breach Of Code By Certain Employees, Vendors In Subcontractor Hiring

Tata Consultancy Services Ltd. called media reports of an alleged recruitment scam "incorrect" even as it found breach of code by certain employees and vendors in subcontractor hiring.

“Recruitment activities in TCS are not handled by Resource Management Group as alleged, therefore the reference to alleged scam in recruitment process is incorrect," India's largest private employer said in an exchange filing on Friday. "RMG is responsible for allocation of available resources to various projects and in case of any shortfall, fill such requirements through contractors."

"The whistleblower complaint referred to in the article relates to hiring of such contract resources employed by the contractors," the filing stated.

TCS did launch a review to examine the allegations in the whistleblower complaint on the purported “recruitment scam”, and found that:

• This does not involve any fraud by or against the company and no financial impact.

• The issue relates to breach of the company’s code of conduct by certain employees and vendors providing contractors.

• No key managerial person of the company has been found to be involved.

On Friday, the Mint newspaper reported that TCS discovered within its ranks a multi-crore recruitment scam, compromising the hiring process at the Tata Group firm.

A whistleblower, in a communication to TCS’s chief executive officer and chief operating officer, a senior executive at Resource Management Group had been accepting bribes from staffing firms for years, the Mint reported, citing two executives aware of the developments.

Following receipt of the whistleblower complaint, TCS promptly set up a team of three executives, including the firm’s Chief Information Security Officer Ajit Menon, to probe the allegations, the report stated.

After weeks of investigation, TCS sent the head of recruitment on leave, sacked four executives from the Resource Management Group, and blacklisted three staffing firms, the report stated.

Although the company is yet to ascertain the scale of the irregularities, one of the two executives cited above said people involved in the scam may have earned Rs 100 crore through commissions, Mint reported.

Although most of the organisation’s activities are performed by full-time employees, TCS uses contractors, especially for short-term assignments or those requiring skills not internally available.

With supply-side challenges easing, incremental cost of lateral hiring is trending lower. That gives TCS an opportunity to bring down subcontractor expense, Chief Financial Officer Samir Seksaria said in the company’s annual report for 2022-23.

At the end of fiscal 2023, TCS had 614,795 employees, with an attrition rate of 20.1% on trailing twelve-month period. The company added a net 22,600 employees in the previous fiscal.

On Friday, shares of Tata Consultancy Services fell 0.66% to Rs 3,217.45 apiece on the BSE even as the benchmark Sensex ended the day 0.41% lower at 62,979.37 points.