Run recruitment anti-virus in our IT

Tata Consultancy Services (TCS) is tightening oversight of recruiting agencies that feed its enormous manpower requirements after investigating whistle-blower complaints of unethical practices. Indian IT companies have built their business model on work outsourced from clients using wage arbitrage. This involves quality assurance on labour productivity that can be eroded by unlawful favours during the hiring process. Since a big chunk of hiring is done through recruitment agencies, IT firms need to safeguard brands against abuse. Attrition and skilling are top-of-mind issues. These are extraneous risks, linked to the business environment and technology transition. Ethical hiring practices fall well within the purview of corporate controls.

Risk mitigation needs to be intensified industry-wide to be able to deliver value to clients in an era of generative artificial intelligence (AI) that threatens to replace elementary-level coding. Companies like TCS intend to build AI capabilities and face another set of ethical challenges over its deployment. AI can help IT companies to bridge the skill gap that keeps attrition high and erodes competitiveness. Margins are also under pressure as corporate clients in advanced economies cut down on technology spending during an economic downturn.

Demand for Indian IT services is being affected by companies the world over seeking sustainability, supply chain resilience and digital transformation. To catch the next wave, Indian service providers must tweak their recruitment and training processes to cater to evolving demand. Big players will set the bar on both counts. But the industry as a whole will need to address the issue of ethical hiring to retain its brand image. Given the size of infotech in white-collar jobs and services exports, some degree of external oversight on hiring may not be out of place. The industry, however, must come up with its own best practices.