Speaking at the TCS annual general meeting, chairman Chandrasekaran detailed the entire investigation process adding that three more employees are still being investigated and the company is currently auditing its entire recruitment supply chain.
Tata Consultancy Services (TCS) banned around six employees and six business associate (BA) firms or staffing firms in relation to the recruitment bribe case, said chairman N Chandrasekaran, addressing several reports and shareholder queries on the issue that came up during the IT services major’s annual general meeting (AGM) on June 29.
This was the first time that the senior-most executive from the company openly spoke about the entire investigation process in the case and the way forward, coming after nearly a week of discussions and speculations on the case.
Speaking to the shareholders, Chandrasekaran said, “We found six employees who did not follow ethical conduct. While we cannot quantify what favours they got but they certainly behaved in a way that they were favouring certain firms. We have banned all those six employees and six such BA companies. There are investigations pending on three more employees.”
The company is also looking at the whole BA supply management process to examine what the weaknesses are, and will completely tidy the process to ensure that we do not have such incidents, he said.
“For a Tata Group company, the most important thing expected of every employee is ethical conduct and integrity in operations. That comes ahead of any financial performance. So whenever there is a violation of ethical conduct by any employee, it pains me and all the leaders very deeply. We take it extremely seriously and will take very strong actions,” Chandrasekaran added.
What transpired?
According to Chandrasekaran, the wrongdoings were first pointed out by two whistle blowers in February and March.
“The complaints were about certain favouritism done and favours received in recruitment of business associates,” he said.
TCS has two departments for acquiring talent: the HR and talent acquisition which hires people and resource allocation group which deploys available resources into projects. Whenever there is a talent shortage or a particular skill is not available in a location, the company has a set of BA firms to get contract employees.
“At any point in time in the overall deployment of resources, about 2-3 percent of them are such BAs or contractors. The complaint was related to certain individuals in the company working with certain BA firms to be recruiting in their favour,” Chandrasekaran said.
He added, “There are a large number of BA firms that TCS works with. There is a rigorous process in the company to recruit or qualify a firm to be called a BA firm. 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.”
TCS ultimately found two such cases: one in India and the other one in the US. The India one was investigated by a senior executive in the company and the US one by an external official.
No key managerial person involved
Over the past few days, TCS had reportedly blacklisted several partnering staffing firms and sacked employees from its Resource Management Group (RMG) division in relation to allegedly charging commissions from the staffing firms in return of preferential treatment by giving them business.
Sources had earlier told Moneycontrol that the RMG division brought less than 1 percent of the company’s overall workforce and the financial impact arising out of these violations is likely to be minimal.
TCS later denied the allegations in a statement. “The recruitment activities in TCS are not handled by the Resource Management Group (RMG) as alleged, therefore the reference to alleged scam in recruitment process is incorrect,” it said.
The company had run an internal investigation on these charges after a whistle blower alerted CEO K Krithivasan and COO Natarajan Ganapathy Subramaniam. Sharing the findings of the same, TCS 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.”
It does not involve “any fraud by or against the Company and (has) no financial impact,” it added.
