‘Deeply pained’ over TCS’ job scam, says Chandrasekaran

Tata Sons Ltd chairman, Natarajan Chandrasekaran, said he is ‘deeply pained over the discovery that six employees of Tata Consultancy Services (TCS) Ltd received favours from staffing firms to recruit temporary workers.

Chandrasekaran, who is also the chairman of TCS, assured shareholders of stringent measures to tighten the way it engages with the entire network of over 1,000 staffing firms and ensure such incidents do not happen again.

“Let me first say that for a Tata group company, the most important thing that is expected of every employee is ethical conduct and integrity in operation. That comes first ahead of any financial performance,” he said in response to shareholders’ quizzing the management following the Mint report on the bribery scandal involving some staffing firms and TCS employees.

“So whenever there is a violation of ethical conduct by any employee, it pains us. It pains me and all the leaders very deeply. And we take it extremely seriously. We deal with it very strongly.”

“We received two whistleblower complaints in end-February and March. And both the whistleblower complaints were investigated. The complaints were about certain favouritism being done and certain favours being received in the recruitment of BAs (business associates or contract workers).”

Chandra, as he is addressed by colleagues, explained that the two whistleblower complaints were pertaining to the US and, in India, the company has sacked six employees and blacklisted six staffing firms even as a probe continues against three other employees. “We cannot quantify what favours they got, but they certainly behaved in a way that they were favouring certain firms,” Chandra said.

Chandra’s comment is the first comment by a Tata group leader after Mint reported on 23 June that the company sent E.S. Chakravarthy, the former head of Resource Management Group (RMG), on leave and sacked four employees.

RMG is the arm of TCS that recruits contract employees and deploys its engineers across various projects.

TCS has appointed Sivakumar Viswanathan, a veteran of about 30 years, as the new head of RMG, Mint reported earlier this week.

Speaking at the 28th Annual General Meeting through video conferencing, Chandra also assured shareholders that the company’s outlook in the medium to long term remains strong, although, in the short-term, there could be some volatility on macroeconomic challenges.

TCS, which went public in 2004, clocked an 8.6% dollar growth to end with $27.9 billion in revenue. The company’s new chief executive officer, K. Krithivasan, who took over from Rajesh Gopinathan on 1 June, has a challenging task as he steers the firm to retain an industry-leading operating margin of 24.1% and to grow faster than its peers, according to analysts.

“(IT firms) face the twin pressure of maintaining profitability and on growth as more cost-takeout large deals take centre stage,” said a Mumbai-based analyst at a foreign brokerage.

“For this reason, we believe both Infosys and HCL Technologies have lowered their profitability. It remains to be seen if TCS can retain its profitability.”

TCS does not offer forecasts on growth and profitability even as Infosys Ltd and HCL Technologies Ltd are guiding for lower profitability in the current financial year. Infosys clocked an 11.6% growth to end with $18.2 billion in revenue, while HCL Technologies reported a 9.6% growth to end with $12.58 billion in revenue last year.