Tata Consultancy Services Ltd has hired a US-based firm to deal with its third-party staffing vendors as India’s largest IT services provider boosts transparency in its recruitment processes.
Pontoon Solutions, a managed services provider, will become a bridge between TCS and its two-dozen-plus vendors, ensuring that they do not have direct contact with the IT giant’s resource management group (RMG), a team of employees involved in hiring and placing candidates from staffing firms on contract.
“We were informed two months ago that we will now have to work with Pontoon Solutions. Until now, we interacted with TCS directly; there used to be quarterly interactions where RMGs and TCS employees from HR teams were there. We discussed our grievances, and they updated us on their latest needs and changes in hiring mandates. Now that will stop,” said a senior executive at one of the staffing vendors for TCS.
TCS’s hiring mandates will be uploaded to Pontoon’s platform. Once the vendors submit their candidates’ profiles against these openings, Pontoon will conduct the first level of screening, and TCS will take the final call. Pontoon is a unit of staffing firm Adecco.
TCS and Pontoon did not respond to Mint’s queries sent on Saturday.
Industry executives aware of the matter have told Mint that over the past few years, TCS has become stringent about its recruitment methods.
Vendors are no longer allowed to contact company officials for any queries regarding their mandates. Instead, the mandates are posted on a portal, and vendors are required to feed the resumes. But these portals were managed by TCS. Now that changes as well.
The IT giant’s resource management group tracks vacancies and deploys candidates in different profiles based on their skills.
“The RMG’s importance is slowly getting phased out. This will ensure complete transparency, but not all vendors will be on board with this change,” said a second TCS staffing vendor.
Hiring through Pontoon and staffing firms will make up 8-10% of TCS’s recruitment. Contract staffers are hired for six months to a year and are on the payrolls of the vendor.
The company hires for full-time positions from campuses and through its HR team. TCS also works with headhunters to fill C-suite vacancies. In the June quarter, TCS recruited 5,090 employees, bringing its total to 613,069.
Mint could not ascertain independently if other IT firms have done away with or are in the process of establishing a similar process for vendors will work via a single managed service provider. Allegis Global Solutions, KellyOCG, TAPFIN are some of Pontoon’s rivals.
Service fee hurdle
TCS’s vendors have another concern. Mint has learnt that the hiring agents may have to pay a 2% service fee to Pontoon if the candidate gets shortlisted.
TCS uses three rate slabs for its hiring vendors, and the billing amount can range between ₹30,000 and ₹100,000 for every employee placed on contract, depending on the profile, its uniqueness and talent scarcity.
“We have asked TCS to respond on the fee structure. Vendors who have worked with the IT firm for decades are upset that they will now have to work via a third party,” said a senior executive working with a Bengaluru-based hiring firm.
In a series of meetings held a couple of months ago, TCS had urged its third-party vendors to raise their game, and promised a sweetener to help them step up.
The changes in how TCS deals with staffing vendors come when the Mumbai-based IT firm’s revenue declined 0.59% sequentially to $7.42 billion in the June quarter. This drop was on account of slow business from India, which drove much of its revenue last year. A contributing factor was the slowdown in foreign markets as companies across the world navigate macroeconomic uncertainty because of geopolitical tensions and a trade war started by US President Donald Trump.
TCS was the slowest performer last quarter among the top five homegrown IT outsourcers, including Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd. TCS has also decided to lay off about 12,200 or 2% employees this year, citing global uncertainty and AI-related disruption.
