Shares of Tata Consultancy Services (TCS) were under stress on Monday, in an otherwise muted broader market, amid allegations of fraud in the recruitment process at the country’s most valued software and services firm. The Tata Group company has clarified that “the issue relates to breach of the company's code of conduct by certain employees and vendors providing contractors”. However, the company denied the involvement of any key managerial person of the company in the alleged job scam.

In a clarification to exchanges, TCS on June 23 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 allocation of available resources to various projects and in case of any shortfall, fill such requirements through contractors.”

The IT major further stated that the complaint was related to the hiring of such contract resources employed by the contractors. On receipt of the complaint, the company launched a review to examine the allegations in the complaint. “Based on the review: (i) this does not involve any fraud by or against the Company and no financial impact; (ii) the issue relates to breach of Company's Code of Conduct by certain employees and vendors providing contractors; and (iii) no key managerial person of the Company has been found to be involved,” it said.

As per the report, the company has sacked as many as seven employees for violating the company's code of conduct, while ES Chakravarthy, the global head of its resource management group (RMG), has been sent on leave. The IT major has also reportedly blacklisted three staffing firms that provide staff on a contractual basis to the company.

However, the news cannot be confirmed as there is no official statement issued by the company on this development. Fortune India has written a mail to the company and response is awaited for the same.  

Meanwhile, Pune-based labour union Nascent Information Technology Employees Senate (NITES) has reportedly written to the Ministry of Labour and Employment, Government of India, to look into the matter. 

Reacting to the news, TCS shares opened lower for the third straight session at ₹3,202, down against Friday’s closing price of ₹3,217.45 on the BSE. The stock declined as much as 1.4% to hit an intraday low of ₹3,172.45 during the session so far. The market capitalisation of the country’s second most valued firm stood at ₹11.65 lakh crore at the time of reporting.

In a separate development, TCS informed exchanges that it has entered into a strategic partnership with Standard Life International DAC (SLIDAC), a wholly-owned subsidiary of the Phoenix Group, to transform its operating model and enhance the customer experience for its policyholders in Europe, using TCS’ digital platform for life and pensions, powered by TCS BaNCS. The company, however, didn’t reveal the financial transaction involved in the deal.

TCS has had a long-standing partnership with the Phoenix Group in the U.K., where its U.K. subsidiary Diligenta, has digitally transformed the operating model and administers more than 10 million policies for the latter.

As per the deal, TCS will set up a customer operations center in Germany, and a future-ready Life and Pensions Digital Platform for Germany and Austria, with capabilities to extend into other European markets. The IT major will initially transform and migrate more than 400,000 policies comprising SLIDAC’s German and Austrian life and pension books to its platform, and create comprehensive, omnichannel, journey-based digital experiences for policyholders and advisors.

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