Bribe-For Jobs Scandal: TCS Finds 19 Employees Involvement, Fires 16 Of Them; 6 Vendors Debarred

The infamous bribe-for-jobs scandal has finally reached its outcomes at the tech giant Tata Consultancy Services (TCS). After carrying an investigation, TCS found the involvement of 19 employees under the probe, and hence, it took stern action against them. They weren't the only ones, TCS has also debarred 6 vendors from doing business with them.

As per the regulatory filing on October 15, TCS said, regarding the company launching a review to examine allegations pertaining to the Resource Management function, "We would like to inform that TCS has concluded its investigation and the following actions have been taken."

TCS investigation found that 19 employees were involved in the bribe-for-jobs scandal. Accordingly, TCS took action against all of them. Of the total 19 employees, 16 employees have been separated from the company for code of conduct violations, and 3 employees have been removed from the Resource Management function.

Also, TCS said that 6 vendor entities, their owners and affiliates have been debarred from doing any business with TCS.

The bribe-to-jobs scandal involved staffing firms bribing the senior personnel who were overseeing the recruitment process in TCS. The intention was to get business in TCS through these bribes.

The first time the scandal came to light was on June 23, 2023, after a media publication released an article.

At that time, TCS intimated to the stock exchanges that the recruitment activities in TCS are not handled by the Resource Management Group (RMG) as alleged, therefore the reference to the alleged scam in the recruitment process is incorrect. It added, that RMG is responsible for the allocation of available resources to various projects and in case of any shortfall, fills such requirements through contractors.

TCS stated that the article referred to the hiring of contract resources employed by the contractors.

However, TCS also said on June 23 that it launched a review to examine the allegations in the complaint. Based on the review: (i) this does not involve any fraud by or against the Company and has no financial impact; (ii) the issue relates to a breach of the Company's Code of Conduct by certain employees and vendors providing contractors; and (iii) no key managerial person of the Company is involved.

But later on June 29, just a few days after the article, Tata Sons' chairman, Natarajan Chandrasekaran told shareholders during the 28th annual general meeting that he was deeply pained over the finding of six TCS employees taking favours from staffing firms to recruit contractual workers.

Chandrasekaran also assured the shareholders that stringent measures will be in place to tighten the bolt of how TCS engages with the entire network of over 1,000 staffing firms to ensure that no such incidents occur again.

Coming back to the latest filing, on October 15, TCS further said that it "would continue to enhance its governance measures including:

Regular rotation of personnel performing key roles in the Resource Management function,

Enhanced analytics on supplier management,

Periodic declarations by vendors on compliance with the Tata Code of Conduct and know your supplier process to cover additional declarations, and

Vendor management process audits.

On BSE, TCS share price traded at Rs 3,564 apiece, marginally down by 0.2%. The company erased a market cap of Rs 13 lakh crore and had an m-cap of nearly Rs 12.97 lakh crore at the current price level.

Between July to September 2023 quarter, TCS also let go of a total of 6,333 employees, taking its total headcount to 608,985 as of September 2023, compared to the headcount of 6,15,318 as of June 30, 2023.

Also, the company's IT services' attrition was at 14.9% for the last twelve months, declining sharply from the rate of 17.8% in Q1FY24 and 21.5% in Q2FY24.