Lessons of the TCS scandal for corporate governance
Behavioural aspects of decision making can help devise mechanisms for firms to contain corruption
The ‘bribes-for-jobs’ scandal at TCS is only one of India Inc’s several scandals in recent times, albeit it involves a venerated institution, the Tata Group. A senior executive (not a key managerial person) and other employees tasked with hiring contract workers were found to have accepted bribes from six business associates or staffing firms, compromising the tech major’s recruitment process. Let us consider some numbers to understand the misconduct and its impact. The 3,000-strong Resource Management Group (RMG), at the heart of the scandal, places about 1,400 engineers (including new recruits) on projects daily, which averages a placement per minute. Tata Sons Chairman N. Chandrasekharan stated that TCS hires at most 2-3% of its human resources through such contractors. More than 1,000 vendor firms service TCS operations across 55 countries; 19 TCS employees were found guilty in the scandal, while six vendor firms were involved. TCS’s 2022-23 revenue was $27.93 billion and it had 614,795 employees. Internal sources have placed the amount involved in the scandal at ₹100 crore over the last three years. So, all it took was the involvement of 0.002%-0.003% of its employees and just about 0.01% of its annual revenue to put the reputation of TCS built over 55 years at stake.