In its recent BSE exchange filing, leading IT firm TCS has terminated 16 employees, removed 3 employees from HR management function and blacklisted six recruitment vendors in connection with a 'bribe for jobs' scam.

The IT subsidiary of Tata Group stated, “This is further to the filing dated June 23, 2023, regarding the Company launching a review to examine allegations pertaining to the Resource Management function. We would like to inform you that TCS has concluded its investigation and the following actions have been taken. 

Our investigation found 19 employees to be involved and action has been taken against all as detailed here - 16 employees have been separated from the Company for the code of conduct violations and 3 employees have been removed from the Resource Management function. Also, 6 vendor entities, their owners and affiliates have been debarred from doing any business with TCS.”

The IT firm also confirmed that the hiring scam did not implicate any internal or management-level employees and had no impact on the company's financial statements.

“As a Tata Group company, we have a zero-tolerance policy towards such unethical conduct and the actions of these individuals do not reflect our values. We expect all our stakeholders and our employees to strictly adhere to the Tata Code of Conduct, which forms the bedrock of our integrity,” stated the IT subsidiary of the group. 

Impact of bribe-hiring scams

These hiring scams can have far-reaching consequences, impacting not only the organizations themselves but also skilled job seekers aspiring to work in tech giants like TCS. Some of the identified impacts of such practices include

Rise in Unethical Practices - While not all vendors and senior employees engage in such behaviour, some may be inspired to follow in the footsteps of scammers. Vendors may exploit the talent pool claiming to have 'connections’. This can establish a worrying trend where jobs are seemingly secured through vendors and bribery for references.

Talent Disruption - These scams disrupt the hiring landscape, making it challenging for skilled and deserving candidates to access legitimate job opportunities. In some cases, they may lose out to less qualified candidates who are willing to pay bribes, leading to an unjust hiring environment.

Financial Risk - While TCS didn't experience direct financial losses from this scam, there is a substantial risk of financial setbacks. Vendors may charge fees to the company while simultaneously facilitating hiring through bribery with 'less-skilled' candidates.

Stringent Work Culture - In order to safeguard themselves from such scams, companies collaborating with staffing vendors may need to implement rigorous screening policies. However, these strict governance measures, aimed at eliminating hiring scams, have the potential to result in higher talent turnover.

For example, as evidenced in the case of TCS, the discontinuation of its work-from-home policy coincided with a wave of mass resignations, a development that occurred around the same time as the scandal was brought to light by a whistleblower. On June 29, 2023, In a BSE exchange filing TCS Chairman N Chandrasekaran announced, "RMG (Resource Management Group) had no involvement in TCS recruitment activities. Instead, the RMG's responsibility was solely the allocation of available resources to different projects. In the event of any staffing shortages, they would address these gaps by engaging contractors. The company had already initiated an investigation, resulting in the termination of six employees and the removal of staffing firms from their engagements."

How to combat bribe-hiring scams?

In response to the hiring scam, the IT firm has taken strict actions against all stakeholders involved and has implemented the following governance measures:

1. Regular rotation of personnel performing key roles in the Resource Management function - This measure aims to reduce the risk of potential scams and promote transparency and accountability in the hiring process. 

2. Enhanced analytics on supplier management - Using data-driven analytics to monitor and verify vendors at the early stages of the recruitment process. 

3. Periodic declarations by vendors on compliance with the Tata Code of Conduct and knowing your supplier process to cover additional declarations - Background checks, though rigorous, will ensure that vendors adhere to ethical conduct and compliance standards. 

4. Vendor management process audits - To safeguard the integrity of the hiring process by identifying and addressing potential vulnerabilities and early corrective actions.

Likewise, all organizations partnering with staffing vendors should tackle these issues by implementing robust talent acquisition and management strategies to avoid becoming targets of such scams. They should hire talent after rigorous skill assessments and thorough screening and periodically rotate staffing vendors and recruitment team members to ensure the company's code of conduct is obeyed.