Second such incident in India this year.
By R. Chandrasekaran
CHENNAI: The pulls and pressures of achieving specific targets has cost two dozen personnel their job in International Business Machine’s (IBM) India operations. The company has reportedly fired them for overstating the revenue a year back as they fell short of achieving the targets set by the top management.
The Indian staff overstated revenues of minimum $8 million during the year 2011-12 in the software services segment from different customer accounts. The persons charged with fraud were in the sales, finance, and operation departments stationed in Bangalore, a report appearing in Live Mint said quoting people who are familiar with the developments but did not want to be identified.
The financial overstatement was found in February in the current year. The company conducted an internal investigations and found production of false orders besides overstating revenues from even the existing customers.
In the current year itself, this is the second such incidence in IBM India to find its staff in the midst of a fraud following the sacking of three senior executives for their alleged involvement of malpractices.
IBM is also seemed to have scrapped its famous Easy Sell, stock-and-sell program as they appeared to have found that these are the main culprits for committing the alleged malpractices.
This is a sorry state of affairs in India’s $108 billion IT industry even as they struggle for revenue growth and the competitors are waiting in the wings to push themselves aggressively for market share gains given the pressures being applied on top executives to deliver specific targets. There is every possibility that the current conditions could force more struggling executives to indulge in such malpractices to beat the heat.
Investors cannot forget the amount of financial overstatement done by Satyam Computer Services, which was ranked third after TCS and Infosys.
Meanwhile, Ernst & Young, a global accounting firm, has reportedly said that the unpredictable economy during the last two years has aggravated the condition thus recording a significant increase in frauds, both in terms of value and volumes, in the IT and IT enabled services sector.
Another accounting company, KPMG International, too echoed similar views stating that economic downturn is the cause for individuals to resort to committing such fraud. However, it pointed out that such frauds come to the fore only during economic uncertainty as the management scrutinizes carefully, in an effort to ensure profits and margins.
To contact the author, email to rchandrasekaran@americanbazaaronline.com