The Wall Street Journal
July 2, 2007

With a central database on employees not in place, firms rely on third parties, headhunters for clean recruits
Abhinav Ramnarayan and Shilpa Shree Chennai/ Mumbai: When Nadeem Kashmiri was arrested in June last year for data theft worth Rs1.75 crore from his employer, HSBC Electronic Data Processing India Pvt. Ltd, it transpired that he wasn’t everything he had promised. He had joined the company after giving false records and misrepresenting his credentials. Information technology companies in India have been taking the pre-employment background verification process seriously since then, forcing an increasing dependence on external firms and head hunters for the screening process. But the millions they spend on vetting candidates may be money ill-spent as they are dependent on a largely unorganized sector to screen their employees. Top providers charge anywhere between Rs1,500 and Rs5,000 per employee check, said Chiranjit Banerjee, a partner at People Plus Consulting Partners, a high end recruitment boutique. That means for every 20,000 people an IT firm recruits, it could end up spending as much as Rs10 crore for background checks. None of the top IT firms was willing to divulge this amount to Mint. “Very few back-check firms have a robust infrastructure— this business is essentially operated as a cottage industry with no self-regulatory mechanism,” said Banerjee, who responded through email.
India currently has about 1.6 million employees in IT and ITeS, according to a survey by software industry body Nasscom, with approximately 1,000 companies in the business of checking background, according to Banerjee. Hexaware Technologies, for example, uses both FAQ (First Advantage Quest Ltd) and KPMG (Forensic Ltd) for background checks, and also asks the headhunters to do a check, particularly at the middle and senior level, said Deependra L. Chumble, the company’s chief people officer. “We cannot expect the same level of sophistication as in the UK and the US. We don’t have a centralized database system in place,” said Vivek Govilkar, senior vice-president, human resources and training, I-flex Solutions. “Culturally, it is a tricky issue, people get offended if we do a background check. But there are people who do lie or exaggerate.”
In the last few years, the situation has worsened, said Banerjee, with mounting pressures to complete verification with shrinking deadlines. “Back check firms are known to be cutting corners…which leads to unfair methods(of conducting the checks),” he added.
Thomas Simon, vice-president of human resources at Tata Consultancy Services Ltd (TCS), said issues such as governance, physical and personnel security are becoming key factors for both customersand suppliers. Data theft is a common problem, and not just in India. In the US, pharma company Pfizer Inc. suffered when information on an employee’s laptop was exposed to potential unauthorized access, with secure information of about 17,000 employees becoming available in the public domain.
International companies and country laws require stringent checks from vendors located in India Joel Perlman, president of Copal Partners, a Mumbai-based global financial research firm, said, “We will be breaching compliance norms of the US and the UK governments if we don’t do background verification. We have no choice.” The company stands to lose clients if the process does not comply with the norms. In India, Simon said, some clients actually review the backgrounds of the personnel working on any given project. “We maintain the same level of sophistication of background checks for all our clients, but of course, some are more demanding,” he added. In the absence of a centralized database system, TCS relies on its own as well as third-party resources to collate relevant information. However, Simon is upbeat about the National Skills Registry initiative of Nasscom, which aims to create, operate and maintain a national database of employees working in IT and business process outsourcing firms. Still, companies such as KPMG that offer back check services, have to do it manually—such as going to the police station to obtain criminal records of employees, and going to the residence stated in each resume, to see if the individual actually resides there, said Arpinder Singh, the company’s executive director. This is unlike in the US, where the social security number of the person concerned is enough to access all the relevant information online, he added. “It’s just a matter of a couple of years (before this happens in India),” said Nasscom chairman Lakshmi Narayanan. He said more than 10,000 employees across India have already been assessed and added to the registry on a voluntary basis.