TCS sacks 6 employees, bans 6 staffing firms in recruitment bribery case

Tata Consultancy Services (TCS) has sacked six employees after finding them guilty of accepting favours from certain staffing firms in the appointment of contractual workers, Tata Sons Chairman N Chandrasekaran said on June 29.

The largest IT services exporter is investigating the role of three more of its employees, Chandrasekaran said while speaking at the TCS annual general meeting (AGM). "We have banned six employees and also six companies," he said in response to questions from shareholders.

Also Read: Bribes-for-jobs scandal rocks TCS, four sacked for corruption

He said the company received two separate whistleblower complaints -- one pertaining to appointment of business associates or contractual workers in the US, and one in India, in late February and March, after which it investigated the allegations.

Chandrasekaran said he cannot quantify the favours these employees got but the banned employees behaved in such a way that they were favouring certain firms. "The company will look at the whole BA (Business Associate) supplier management process and see what the weaknesses are and will completely tighten the process to ensure that we do not have such incidents," he said.

Mint first broke the story on June 23 that TCS discovered a few senior executives entrusted with hiring thousands of critical personnel accepted bribes from staffing firms, compromising the recruitment process.

On June 26, Mint reported again that TCS has named a new head to oversee the hiring of temporary workers amid an internal probe into the bribes-for-jobs scandal that led to the sacking of some executives and the blacklisting of few staffing firms.

The company denied that bribes were sought to recruit people, but said that unethical behaviour was observed in the resource allocation group which deploys talent and fills up shortfall through BAs. With a lot of shareholders asking about the demand environment for IT services, Chandrasekaran made it clear that there may be volatilities in the near term.

“When there is an uncertainty in the global economic situation on higher inflation or slowing of growth, companies (clients) will calibrate their spending… (in) nearby quarters, there will be volatility in different markets on the customer spend especially on discretionary projects and it will go across sectors,” he added.

Spending can get impacted in the banking, financial services and insurance sector which is its largest by revenues, or manufacturing, or even retail as companies conserve cash amid a dip in consumer spending.

“All those things will happen in the coming immediate months and quarters but overall whether it is cloud, whether it is IoT (internet of things), whether it is predictive AI (artificial intelligence), or Generative AI etc, these are all trends which augur extremely well for the company,” he said.

He added that the world is witnessing three broad themes, including generative AI, new energy systems and resilient global supply chain. Technology has a critical role to play across all three and hence, IT services companies will have a good run, he said. Till now, AI was predictive and depended on the data inputs but with generative AI, algorithms can also deliver text or contextual information, Chandrasekaran explained.

“Countries across the globe will come up with regulations to make sure that generative AI is used responsibly,” he said, stressing that adoption of technology will be very helpful for businesses, society, citizens and the poor.

TCS invested ₹2,500 crore in generating intellectual property in FY23 and has a corpus of ₹50,000 crore which can be utilized for growth requirements, he said. Chandrasekaran, who is also a central board member of RBI, said cryptocurrency is a “difficult area” and that it will take time because every regulator is having a view on it.

TCS will focus on efforts to reduce attrition this year, Chandrasekaran said, adding that the women attrition is lower or at par with the company average in IT services. It will also be working on reducing employee costs going ahead through arriving at an optimum mix of localization versus outsourcing and upping the utilization, he said.

On June 28, shares of TCS settled 0.57 per cent higher at ₹3,214.75 apiece on the BSE.