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Monday, December 07, 2009

Corruption in the Indian Private Sector - II

As I had written earlier, although government servants are the ones generally accused of bribery, there, apparently, is no dearth of scams in the private sector either.

In the Information Technology Enabled Services (ITES) and Business Process Outsourcing (BPO) industries, among others with a high turnover rate i.e. where people change jobs quite frequently, employees are encouraged to refer suitable candidates for any vacancies that may arise in the companies that they work for and given cash incentives if any such candidates are selected.

The benefits for the employers are two-fold. Firstly, they save on recruitment expenses, since the incentive given is often far less than the fee that may have to be paid to a placement agency (or recruitment consultancy, which is the more commonly used nomenclature in India) or the cost of advertising online or through the print-media and then short-listing resumes. Secondly, since employees generally refer their friends or relatives, the scheme helps in retention of talent.

However, some unscrupulous placement agencies and employees have found a loop-hole that they can exploit to their advantage. Such agencies pay cash bribes to employees of the companies that they wish to place candidates with, in order to get them to submit resumes of their clients through the referral schemes. If any of the candidates then gets appointed, he or she pays an amount equivalent to one month's salary to the agency.

A lawyer would be more competent to comment on the laws that their actions are in contravention of, but these definitely amount to breach of the employment contracts. Companies are well within their rights to take disciplinary action against the erring employees and to black-list the placement agencies.


Sidhusaaheb said...

Phew! One month’s salary docked for the privilege of working??

There are loads and loads of recruitment agencies here too, many organisations ( public and private sector)seem to use them. In these cases, the organisation pays a fee to the Recruitment agency…though in turn an individual applying via an agency ( eg for temp work ), may find themselves with a lower hourly rate of pay than were they to find employment direct through the organisation ( something to watch out for, though sometimes useful for breaking into a new field ).

Certainly seems to be ‘big business’, there are tons of agencies to wade through on-line.

Recruiting via recommendations happens here ( more subtly…sort of ) and is all well and good, though things actually seem more ‘open’ and ‘honest’ in India than here…there’s many a folk here gone through sometimes quite nerve racking interviews, only to find that so n’ so’s cousin…aunty Alice, etc got the job.

The policy is meant to keep things ‘above board’, but I think if an employer already has someone suitable in mind for the job, then they shouldn’t really be wasting unsuspecting candidates time by advertising.
Fi | Homepage | 12.07.09 – 7:33 pm | #

Thanks for sharing this one, I was not aware of it.
Mridula | Homepage | 12.08.09 – 5:08 pm | #

Hi Sidhu-
I read this article in the outlook and found it interesting. I do not have blog of my own. May be you might want to post and share it with others.
Ashar | 12.08.09 – 8:12 pm | #

@Fi: That sort of recruitment goes on here as well. The ‘referral scheme’ route is different in the sense that the candidate has to go through the normal selection procedure and the only advantage that he or she has is that of being introduced to the company through a friend/relative. However, as I have written in the blog-post, dishonest means have become a part of it as well.

@Mridula: I wasn’t either, until a few days ago.

@Ashar: Thanks for the link! Let me have a look. :)
Sidhusaaheb | Homepage | 12.13.09 – 8:14 am | #

Sidhusaaheb said...

wow..i was not aware of this..we have this system in our office also…
cyberkitty | Homepage | 12.22.09 – 9:46 am | #