Article: Why Due Diligence is so crucial for companies today

Background Verification

Why Due Diligence is so crucial for companies today

The due diligence process is necessary to uncover any concerns prior to recruiting new talent
Why Due Diligence is so crucial for companies today

It is critical to evaluate a candidate not just against competency and experience grids, but also against the cultural framework of the organization


The Indian economy is one of the largest untapped markets in the world. Despite the obstacles and pitfalls, foreign investors find India to be an attractive destination. The raw numbers alone make it easy to understand why. Factors like a 1.2 billion person population, 300 million middle class and a rapidly growing but still far from developed economy are difficult to ignore. Low cost labour, the size and growing purchasing power of the domestic market, and a still nascent manufacturing sector are additional reasons making the country attractive to foreign companies.

Keeping this in mind, and the ever-evolving job landscape, companies need a talented workforce which is dynamic and driven. To keep up with the competition and stay relevant, companies have to ensure they hire talent with a fresh and new perspective. Fortunately, the majority of the Indian talent pool is educated and English-speaking, and the country has produced many innovative companies, leading many international businesses to capitalize on the growing employee market there. However, the vastness of the country also presents many risks.

India’s complex economy means threats and opportunities go hand in hand and job seekers and employers face cut-throat competition, making talent acquisition a major issue faced by corporations. It, then, becomes very important to weed out unfeigned talents and find the appropriate candidate.

With a sharp rise in fraud and scam cases, background checks and due diligence have gained increasing acceptance and prominence amongst corporate India. Verifying the candidate’s credentials has become mandatory in the current context.  It is critical to evaluate a candidate not just against competency and experience grids, but also against the cultural framework of the organization.

As Indians are doing everything possible to get into the workforce, and companies around the world are doing whatever it takes to find cheap suppliers and employees, this risk has risen significantly. To ensure that this risk is mitigated as much as possible, we recommend that companies should screen all candidates and employees, permanent and contract workers, regardless of their level of seniority. It is also important that an organisation’s screening policy extends to any vendor, BPO or service agencies they work with.  

The due-diligence process can be a chaotic and daunting task for anyone, especially with today's added global complexities. However, it is necessary one to uncover any concerns prior to recruiting new talent. Without proper and comprehensive background verification, companies risk employing people who are unqualified for the jobs they’ve applied for. This can have legal consequences, lead to lost revenue and clients, and seriously damage reputation. Furthermore, failure to undertake appropriate background checks can leave companies vulnerable to employee fraud risks, theft and data security breaches.

The types of checks done depend on the needs of a company and the industry it’s in, as well as the availability of information. Basic checks should consist of verification of employment and educational qualifications. More comprehensive checks include criminal record, identity and professional reference checks.

These pre-employment background checks will ensure that the person the company is hiring is truly the one he claims to be.  They also help uncover if a person has committed corporate fraud or other unlawful activities previously.

The screening process can be efficient, without sacrificing quality. With background screening technology available now, the process can be efficient without sacrificing quality. It can also be integrated with any Applicant Tracking System a company may use, significantly automating the process for HR professionals. Organisations have to also ensure they comply with relevant local laws and regulations and that the applicants are informed. With a screening process that is robust, transparent and auditable, businesses can reduce the time taken to hire without sacrificing quality of employees.  

Disclaimer: This is a contributed post. The statements, opinions and data contained are solely those of the individual authors and contributors and not of People Matters and the editor(s).

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Topics: Background Verification, HR Analytics, #HRInsights

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