New Delhi: Corporate India is under attack and this time, the attack is from within. Much to their horror, companies are discovering a large number of their workforce has made its way in on the back of forged documents for experience and other qualifications.
Some estimates say every third curriculum vitae, CV that is coming in, could be fake or forged. Many employees are now being sacked and at least two leading IT companies have filed criminal complaints.
But the malice may run much deeper and corporates have reason to worry. On March 22, 2006, Wipro, one of the biggest Indian IT firms sacked 25 employees. But this had nothing to do with their performance.
A day later, Wipro lodged police complaints against not just the employees, but also the placement agencies that were responsible for them being there in the first place.
The employees in their CVs had given incorrect information about their work experience. An internal investigation by Wipro revealed a nexus with employment agencies. They had helped the employees provide false certificates and letters of previous employment - 10 such recruitment agencies have been dragged to the cops and another 20 have been blacklisted by Wipro.
Wipro found to its horror, that in some cases, employees had shown in their work experience records, having worked for companies that did not even exist.
Vice President, Strategic Sourcing, Wipro Technologies, Achuthan Nair had never expected a routine internal audit to turn this ugly. The human resources, HR department at Wipro was checking its CVs of employees. Suddenly, Nair noticed a pattern among the CVs.
"The language and the kind of education backgrounds they had, their work experience and even the companies where they had worked - everything was similar," says Nair.
So much so, that even the spelling mistakes in many resumes were the same. It was enough to make Nair suspicious and he dug deeper. The trail led him to over 30 placement agencies from whom Wipro had hired some of its employees.
Further investigations revealed the entire plot. The organisations from where these employees had claimed to have worked for two years did not even exist. What's more, Wipro had been relying on these very agencies for its pre-employment background checks. The placement agencies had created these fake software firms, which existed only on paper. And for a price, they were accreditating the work experiences of the employees.
Indian corporates have a reason to worry. A KPMG study on fraud says 15 per cent-24 per cent of CVs in India are fake and one out of three CVs misrepresent facts. Entities that fight this menace say the number could be as high as 30 per cent.
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KPMG released its India Fraud Survey Report 2006, that had covered over a thousand organisations across India. The findings of the KPMG report and the Wipro incident confirmed the reality on ground zero. Scrutiny revealed that close to 24 per cent of CVs comprised forged documents, outright lies about previous employment and incomplete degrees.
KPMG survey found the IT, financial entertainment and telecom sectors face the highest risk and as is the case with Wipro, the largest exposure to fraud was from their own employees. In 13% of the cases observed, the fraud risk was because no background checks had been conducted on the employees.
Anil Roy has spent over thirteen years as an expert in fraud management and forensics. He says only 20% of the industry is doing proper background checks. Practice director, forensic services, Grant Thornton, Anil Roy says, "The top firms are doing their checks but fly-by-night ones are cutting costs. They open up 'mom and pop' shops and then work on background checks using a team of two people. How can it be possible, that two people are doing background checks for two hundred employees? These agencies performing checks for low costs, do not do due dilligence."
He adds,the reason why BPOs have come under the spotlight is because they are the ones driving background checks in India. "There are fake CVs in all industries but only BPOs are under spotlight because they are conducting checks seriously."
But the past has a way of catching up wih people - criminal pasts, forged documents, loan defaults - all skeletons come tumbling out of the closet, as background check agencies investigate employees' pasts.
Zaheer Khan who normally battles counterfeiters has off late, been busy with complaints from companies, about the forged CVs they have been receiving. And most requests are from IT firms, BPOs and financial firms, who are currently hiring around 300,000 employees every year.
Chairman and Managing Director, EIPR/IVS, Zaheer Khan, "A guy with an arrest warrant out on his name, found he was wanted for assault charges and this is a guy who was a junior management level employee with a printer development multinational company."
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While requests for background checks are still trickling in, he says corporates need to realise the danger of having within the system, someone who's very fundamentals are forged. Khan feels, the industry should realise the threats of hiring people with a criminal past.
Lakhs of individuals want to ride the wave of India's successful IT and BPO story and what makes background checks difficult, according to First Advantage Quest Research, a global agency is the lack of networks among Indian enforcement agencies.
Managing Director, First Advantage Quest Research, Yogesh Bhura agrees and says, "Background checks still have a long way to go because systems are not yet in place. In the US, one only has to run a check on fingerprints etc but here it's not that simple. Systems to facilitate background checks are not in place in India."
Three months ago, Uncovered found someone who was willing to go through the entire exercise and prove how easy it is to subvert the system. A 23 year old who faked his CV and worked with three BPOs. He came back with horror stories of zero background checks and placement agencies endorsing misrepresentation of facts.
And really it is that easy - in October 2005, Ramesh Sharma set out with a CV, services to render and an ulterior motive. He got jobs with BPOs and then find out what damage can really be done by an insider. Sharma says, "Placement agency asked me to fake employment details. I have worked in an ad agency and a TV production house but then I showed them in my CV that I was working for my uncle's firm for two years. I'm also a postgradute but in the CV I showed myself to be a Bcom graduate but no one checked my original documents."
So-called placement agencies have sprung up all over the country with offices in narrow bylanes and advertisement splashed across papers. But Sharma landed up at a reputed placement agency for screening level number one. He landed his first BPO job. A month later and no one had contacted the organisation, where he had claimed to have worked. What's more, he found the company dealing with high security data, credit card numbers etc. Now, you know why BPOs are ripe grounds for scams.
Sharma says, "I got a job with the first BPO and there the sales sheet and other valuable documents were just lying around. No background checks were done on me and I was told that only after six months, do they do any checks on people." So the result was that in two months, he got two jobs. And then he decided to try just one last time. The organisation was Verve Communication and the firm made calls to customers in the United States for satellite TV connections.
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He spent three months in Verve but no one called to check on his past and sharma was shocked by security conditions inside. Sharma recalled, "It was very easy to take the data home. Everyone used to do it. I was there only for two months and within two months itself I had access to all kinds of data. and of course there were no background checks done on me." So in three months and three BPOs later, Sharma has an entire database of customers in the US and UK, their credit card numbers, phone numbers and passport details.
Another solution to keeping tabs on employees of BPOs is finding it difficult to take off. A national database of BPO employees launched by Nasscom and depository NSDL. An employee would have to add himself to the database after a mandatory background check organised by NSDL. He would then have to reveal his records to every new employer. The success of the database depended on participation, which is something that has not yet happened.
Roy explains, "There will actually be two parallel lines for employing people for the industry. One from the database and one from the open market. Those people, who are fudging their databases will go to the organisations who are not making it mandatory for people to become a part of this database. So there will still be fake CVs floating around."
Sources in the industry reveal that, many software firms are silently firing employees with problem CVs and yet Wipro and IBM are one of the few organisations, that have taken the first step to bring an end to this racket. But what's to stop employees from the rest of the organisations, who have been fired from quietly slipping into their next job?
Corporate India will need to nip what seems to have already become a problem that is fast spiralling out of control. Otherwise, industries that are heavily dependant on human capital, could be facing anything from malpractice to a lot of embarrassment.
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