Shadow Firms, Shattered Trust: India’s IT Pride Under Fire

New Delhi, July 2 || A recent wave of allegations involving unethical practices by a handful of Indian IT firms is raising serious concerns about India’s image as a trusted global talent hub. These reported actions, allegedly driven by nepotism and insider manipulation, risk undermining international partnerships at a time when India is expanding its presence in the global digital economy.

The 2023 bribes-for-jobs scandal at TCS, India’s largest IT services firm, highlighted serious vendor favouritism. As per TCS’s internal investigations at the time, Hyderabad-based Foray Software Pvt Ltd and Bengaluru-based Taltech Technologies Pvt Ltd reportedly gained undue advantage in contract staffing by leveraging personal connections and bribing senior officials.

These firms allegedly received insider information and were made aware of staffing requirements ahead of others, allowing them to bypass fair competition and unfairly win business from 1,000+ other TCS sub-vendors. TCS responded by blacklisting and permanently removing Foray Software, its founder Vasu Babu Vajja, Taltech, and its implicated executives. Several other Indian IT services MNCs followed by blacklisting Foray Software and its founder Vasu Babu Vajja as well. However, the rot runs deeper.

Foray Software continues to operate under the radar, both in India and abroad, by “exploiting loopholes in vendor systems and recruitment channels to mislead Fortune 500 companies, inflate costs, and deny opportunities to deserving professionals said a Bengaluru-based industry observer who has worked closely with staffing compliance audits.

Foray Software’s partnership with ES Search Consultants, a Texas-based firm owned by Madhu Koneni and Mrudula Munagala (husband and wife), has also come under scrutiny. Former insiders allege that once ES Search employees begin working with a client, they gain influence over hiring panels and interview processes. These employees then reject many suitable candidates (including US citizens) to create an artificial impression of scarcity and then present their favoured candidates at higher billing rates.

Frequently, ES Search hires these favoured candidates from Foray Software on an H1B visa and pays lower wages to these candidates to improve profit margins. Such practices could mislead client companies and unfairly distort market access for other vendors.

ES Search Consultants has been accused by former recruiters of managing hiring and interviewing processes in ways that disadvantage US-based candidates in favour of H1B visa holders from India. These claims may be violating US immigration norms.

According to available public H1B petition data, ES Search listed companies like WW Grainger and 7-Eleven as ‘secondary entities’. In H1B terms, a secondary entity refers to a third-party site where the worker is placed. Interestingly, Madhu Koneni is reportedly employed full-time by WW Grainger, a detail that raises ethical questions about recruitment transparency.

Foray Software and ES Search Consultants manage to hide their business practices by only working with people from their friends and family network – insiders refer to it as their “Telugu Mafia”. Critics argue this model sidelines deserving engineers from other regions in India and restricts fair competition.

“India’s IT industry was built on credibility and competence. A few bad actors focusing on profit over principle risk the hard-earned trust of millions of ethical engineers and thousands of legitimate firms,” said a technology entrepreneur who claims to have lost a US contract due to such hiring practices.

These issues arise at a crucial moment. India is strengthening partnerships with the United States on skilled workforce mobility, digital governance, and technology cooperation. Any breach in trust—whether real or perceived—can set back years of diplomatic and business progress.

Industry experts and analysts are calling on regulatory bodies and international clients to Conduct audits of sub-vendor recruitment processes. Increase transparency in candidate sourcing. Blacklist firms found violating ethical and fair hiring norms.

A trade compliance board advisor said that “this is not just a matter of business integrity. It is a matter of national trust and the future of India’s global tech leadership”.