IT services firm TCS has acted against six employees after finding them favouring a few staffing companies, Chairman N Chandrasekaran said on Thursday.

The Tata Group's cash cow feels the next few quarters will be volatile due to business uncertainties in the developed world but the company has good prospects in the medium to long term, he told shareholders.

In February and March, it received two whistleblower complaints alleging misconduct by certain employees from the resource allocation group, which is entrusted with appointing contractual employees from empanelled staffing firms, he said, adding that the issues were in India and the US.

About 2-3 per cent of the overall resources it deploys are such business associates (BAs), Chandrasekaran said, adding that there are 1,000 such staffing firms empanelled with the company across 55 countries.

“We found six employees who did not follow the ethical conduct…we have banned all those six employees and also the six companies,” he said, pointing out that the action has been taken following investigation.

The company is investigating the role of three more employees, Chandrasekaran said, without giving any details about the employees or their designations.

“We can't quantify what favours they (the employees) got but they certainly behaved in a way that they were favouring certain firms,” he added.

Earlier this month, there was a media report alleging a 'bribes-for-jobs' scandal at the Tata Group firm and that people involved have earned at least Rs 100 crore.

The company denied that bribes were sought to recruit people, but said that unethical behaviour was observed in the resource allocation group which deploys talent and fills up shortfall through BAs.

With a lot of shareholders asking about the demand environment for IT services, Chandrasekaran made it clear that there may be volatilities in the near term.

“When there is an uncertainty in the global economic situation on higher inflation or slowing of growth, companies (clients) will calibrate their spending… (in) nearby quarters, there will be volatility in different markets on the customer spend especially on discretionary projects and it will go across sectors,” he added.

Spending can get impacted in the banking, financial services and insurance sector which is its largest by revenues, or manufacturing, or even retail as companies conserve cash amid a dip in consumer spending.

“All those things will happen in the coming immediate months and quarters but overall whether it is cloud, whether it is IoT (internet of things), whether it is predictive AI (artificial intelligence), or Generative AI etc, these are all trends which augur extremely well for the company,” he said.

He said the world is witnessing three broad themes, including generative AI, new energy systems and resilient global supply chain.

Technology has a critical role to play across all three and hence, IT services companies will have a good run, he said. Till now, AI was predictive and depended on the data inputs but with generative AI, algorithms can also deliver text or contextual information, Chandrasekaran explained.

“Countries across the globe will come up with regulations to make sure that generative AI is used responsibly,” he said, stressing that adoption of technology will be very helpful for businesses, society, citizens and the poor.

TCS, which invested Rs 2,500 crore in generating intellectual property in FY23, has a corpus of Rs 50,000 crore which can be utilized for growth requirements, he said.

Chandrasekaran, who is also a central board member of RBI, said cryptocurrency is a “difficult area” and that it will take time because every regulator is having a view on it.

The company will be focusing on efforts to reduce attrition this year, Chandrasekaran said, adding that the women attrition is lower or at par with the company average in IT services.

It will also be working on reducing employee costs going ahead through arriving at an optimum mix of localization versus outsourcing and upping the utilization, he said.

To questions on working from home, he said the number of people coming to offices has increased but they are coming for limited number of days.

Replying to a specific query on the timeline for achieving the USD 50 billion revenue mark declared by former chief executive Rajesh Gopinathan, Chandrasekaran said the company has an excellent potential and it will be a high-growth company in the future as well.

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