When the fraud at Pune involving former MphasiS employees threatened to blow into an international controversy, Nasscom (National Association of Software and Service Companies) announced plans to re-build client confidence by creating a national database of all BPO (Business Process Outsourcing) companies, which would track people over multiple job changes.
Although the BPO fraud caused Nasscom to reveal its plans, the database has apparently been under discussion for over six months and it hoped to address several key issues relating to hiring Information Technology (IT) professionals in India.
No other industry has felt the need for a national database of employees. But in case of BPO companies, the shortage of skilled manpower, the ferocious growth in job opportunities, and an exceptionally high attrition rate has imposed a huge cost on companies merely on training, reference checks and verification of employee credentials. This forced the industry to seek innovative solutions.
So far, neither the verification of employee credentials nor the reference checks have worked very well despite the money spent on these functions. Nasscom says a shocking 30 to 35 per cent of bio-datas in the IT and BPO business are inflated. Although employee credentials are not completely fabricated, they are hugely doctored. For instance, students of lesser-known professional colleges and management schools have happily claimed to be from the IITs or IIMs. Many have forged certificates to establish these false claims and land better salaries.
This is not only a sad reflection on the quality of people entering the job market, but is embarrassing for the industry as well as individual companies. US visa centres have often discovered such fraudulent claims while processing H1B visas and reported them to employers. According to Nasscom, US visa offices in India now paste original degree certificates from top professional institutions, in order to catch blatant fraud and forgeries.
In-house verification systems have been sloppy because corporate HR (Human Resources) departments are over-burdened with organising fresh recruitment and dealing with high attrition rates. Some companies have tried to outsource reference checks, but this too has often raised hackles. An IT chief tells me that he has always provided reference checks to employees as a matter of reciprocal courtesy. However, when a professional firm handles references, it becomes a business arrangement that has to be mutually beneficial. This only raises the cost of reference checks for companies.
Nasscom hoped that a national database, on the lines of the Market Participants Information Network (MAPIN) created by the Securities and Exchange Board of India (Sebi) would be the answer. It even wants the controversial biometric finger printing included in order to be able to track employees in case of fraud. However, such a database is easier planned than implemented. Employers cannot ‘persuade’ potential employees to submit to a database entry and verification process unless every one of the top 200 to 300 IT companies agree to make it a mandatory requirement for employment.
Currently, the manpower shortage is so acute, that even employees caught fudging their qualifications are not necessarily sacked. If they are reasonably competent, they get away with a slap on the wrist. The situation is more acute at BPOs. An anecdotal story says one employee switched jobs eight times without doing a day of real work. Each time, he bagged a better job even before he had completed basic training.
Clearly, companies cannot afford the high cost attached to such capricious job-hopping. At the same time, a BPO job is no picnic. Employees often describe the long working hours, lack of access to mobile phones (for security and to maintain discipline) and short breaks as air-conditiond labour camps that happen to pay well.
The very nature of the work, they say, leads to exits. While Nasscom’s database is intended to save reference and verification costs, it must ensure that it does not encroach on individual rights, or make it difficult for them to seek alternative employment.
According to Nasscom, the National Share Depository (NSDL) is going to implement its database, but NSDL says it is premature to talk about it and several issues related to its structure have still to be worked out. What is clear is that the individual (or employee) will always have full right over his/her personal details entered into the database even after they submit to entry and verification. Once entered, the database simply cannot be changed without appropriate authorisation. The employee alone can seek to update the database by submitting fresh details for verification.
As in the Market Participants Database (MAPIN) created for stock market intermediaries, the Nasscom database envisages a panel of six or more companies who will undertake the job of verifying and updating data. The information will not be in the public domain, nor will it be accessible to all Nassocm members. Each individual will have to explicitly authorise data access to his/her employer.
Such a system will indeed strike a balance between the employee’s right to privacy and the employer’s need for quick and authentic verification of information. On the other hand, it does not answer the issues raised by the Pune BPO fraud since it cannot possibly create a clear trail of employee movement across jobs. Moreover, it loses the trail altogether if they switch to non-BPO jobs. For instance, if a BPO employee commits fraud after moving to a bank job (as happened in the Pune case), there will be no data trail to his subsequent job.
While data verification and cost saving is one objective of the Nasscom database, the Pune fraud highlighted the needs to track of former employees in case of fraud. If employees block data access while switching to a non-BPO job, the second objective will fail. Nasscom will have to figure out a way of making this work, because data security and employee fraud is a growing concern around the world.