TCS to revise rates for staffing cos to enhance transparency, better talent

The changes in rate cards are for contract staffing employees and not for permanent employees. TCS is revamping its hiring mechanism

The country's largest information technology firm, Tata Consultancy Services (TCS), is restructuring the rates it pays to the staffing firms for every engineer deployed, a Mint report has said. The revision comes after a gap of six years. The company has told the staffing firms that the new pricing structure for deploying engineers with TCS will come into force in January, the report cited two officials familiar with the development.

An executive at one of the staffing firms told Mint, "The vendor contracts get renewed every September/October and are valid for a year. However, TCS informed us that our existing contracts will apply until December 2023, and a new one will come into effect in January 2024."

The company's rates include the cost of candidate placement, which comprises salary, vendor costs, insurance, etc. The new pricing structure aims to improve transparency and is likely to benefit both staffing firms and TCS, as an industry expert said that a higher rate for staffing firms could result in companies attracting more qualified candidates.

One of the executives cited above told Mint, "Over the last few years, skill sets like artificial intelligence (AI), full stack development, and candidates with knowledge of multiple programming languages became popular, and while other IT firms revised costs every couple of years, TCS has not done the same."

The changes in rate cards are for contract staffing employees and not for permanent employees. Employees working on such contracts form a significant of the workforce for IT companies.

Why is TCS making these changes?

The new pricing structure comes after the company's employees were found to be involved in the "bribes-for-jobs" scam. TCS is putting efforts to make specific changes in its hiring process, and this may be a part of it. After the scam came to the fore, the company instituted an enquiry in February and March about how some of its executives were favouring some staffing firms over others and allegedly took money to offer jobs at TCS.

Following this, the company sacked its former head of the resource management group, E S Chakravarthy, and eight other executives involved in the hiring process. TCS has also blacklisted six staffing firms, the Mint report stated.

What was the TCS "bribes-for-jobs" scam?

Allegations were made that senior officials involved in the hiring process at TCS were accepting bribes to favour candidates. The incident was discovered following a whistle-blower complaint near the end of April or the first week of May. The company launched an investigation to look into the matter. In a regulatory filing, the company accepted that some employees and vendors breached the company's Code of Conduct.

Clarifying the matter, the company issued a statement and said, "The recruitment activities in TCS are not handled by the Resource Management Group (RMG) as alleged, therefore, the reference to the alleged scam in the recruitment process is incorrect. RMG is responsible for the allocation of available resources to various projects and in case of any shortfall, fills such requirements through contractors. The complaint referred to in the article relates to the hiring of such contract resources employed by the contractors."