Ethics Breach in Recruitment at Tata Consultancy Services
| Case Code: HROB265 Case Length: 11 Pages Period: 2022-23 Pub Date: 2024 Teaching Note: Available |
Price: Rs.300 Organization: Tata Consultancy Services (TCS) Industry: Automotive Countries: India Themes: Recruitment & Selection, Ethics in Business |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The HR Policies
TCS gave utmost importance to its human resource function. The company believed in the premise that “good ideas can come from any level of the organization and teams can do better than the individuals.” The mission statement of HR division at TCS stated, “The role of HR is to provide the context for energizing and developing people to play effective roles in ensuring that TCS becomes one of the top global consulting firms. Towards achieving this we will identify, develop, facilitate, and measure the human and technological processes in the pursuit of excellence. We will foster the values of the TATA group.”..
Whistle Blower Policy at TCS
TCS, like other Tata Group companies, maintained high standards of ethics and professionalism. The company adopted the Tata Code of Conduct, which specified the principles and standards that governed not only the company, but also the employees (Refer to Exhibit I for the Tata Sons Code of Conduct). TCS also had a whistleblower policy in place, which specified that a whistleblower (the Employee, Director, or Stakeholder reporting a Violation) could report any violation to the Chief Ethics Counsellor of TCS by sending a mail to specific email ids..
About the Resource Management Group
At TCS, the permanent staff were recruited by the Talent Acquisition Group (TAG), which functioned as a part of the HR department. The majority of the recruitments at TCS were done through campus placements by TAG. TCS handled huge projects for clients, and often needed to deploy human resources on projects within a short span of time. From time to time, people with specific skills were deployed in projects at very short notice. At any given point of time, 90% of the employees were working in billable projects, while 10% remained idle. A high utilization rate meant staff were being used optimally. Apart from the regular employees, TCS also relied on contract employees..
Chakravarthy – The RMG Global Head
Over the years, Chakravarthy’s role and responsibility had become crucial and he was acknowledged as one of the key human resources of the organization. He joined TCS in 1997 as an engineer and climbed the ladder to become Global Head of RMG in a short span of time. Prior to his appointment as Global Head of RMG in the year 2018, Chakravarthy was working as the Head of the Bangalore Center of TCS. He was widely acknowledged for his hardworking nature. He was described as a ‘nuclear reactor’ by the former CEO of the company, Rajesh Gopinathan (Gopinathan)..
The Whistleblower’s Complaint
In the last week of February 2023, a whistle blower sent a mail to Gopinathan about some irregularities being committed in the RMG. The whistle blower said that some people from RMG were accepting commissions and other monetary benefits from some specific staffing agencies for recruiting contractual staff. Before any action could be taken, Gopinathan received another mail which gave more information and details on the irregularities and unethical practices at the RMG unit saying that some individuals from RMG were favoring certain staffing firms in India and the US..
The Background of The Scam
Though it was a common practice for companies to associate themselves with staffing agencies for recruitment , the demand for employees grew during the pandemic. As the demand for contactless activities went up, companies across the world started to explore and move toward contactless operations by leveraging information and communication technologies. There was a sudden spurt in the projects offered to IT companies to go in for contactless activities and to redefine the business processes during and after the Covid-19 pandemic..
Management’s Response
After initiating the probe and taking action against the accused personnel, the management of the company denied any financial irregularities and loss to the company. The management said that the issue was related to the employee code of conduct, and to a breach of trust by the employees in dealing with the staffing firms. A statement released by the management of the company, stated, “This does not involve any fraud by or against the company and (has) no financial impact. The issue relates to breach of the company's code of conduct by certain employees and vendors providing contractors”..
Industry View
The job recruitment scam at TCS came as a complete shock to many and raised questions about the compliance procedures in the recruitment of subcontracting employees in the IT industry. While it was considered to be a common phenomenon across the Industry, the fact that it had happened at the IT behemoth impacted the reputation of the company. Observers were perplexed at the failure of the well-established and reputed company to detect loopholes in the system. This was especially because after engaging the staffing firms, the IT companies regularly conducted compliance audits and process audits every quarter..
Exhibits
Exhibit I: TATA Sons Code of Conduct
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