Fake Employment Scams: The Cost of an Education System Structured Around Placements

Mousumi Padhi (mousumi.ximb@gmail.com) teaches at Xavier School of HRM, Xavier University, Bhubaneswar and S Senthil Ganesh (ssganesh@gmail.com) teaches at Amrita School of Business, Amrita University, Coimbatore.
19 February 2018

In the light of increasing instances of fake appointment letters, deferred job-offers and revoked job-offers, the article discusses the issues of unmatched expectations of campus placements. It highlights the social and financial costs of such offers on the student and students’ family against the backdrop of increasing student educational loans. The article deliberates on the role of technical and professional educational institutes, employers and government in addressing the issue and mitigating its effects. 

Tension escalated in the capital city of Bhubaneswar Odisha as more than 300 engineering students of ITER college of Siksha 'O' Anusandhan (SoA) University had fake placement offers from a fake campus recruitment drive. Fifty students returned after a company had denied having made any employment offer to the university’s students. Fraudsters had cleverly hoodwinked the students and the university with offers from companies such as Huawei, Magneti Marelli, Mitsubishi, TTDL, Supertech, Ircon (Singhal 2017a). This led to protests and agitations by the concerned students and their parents. The student-ed wings of political parties and civil society also picked up this cause and held large-scale demonstrations and protests in the state. Consequently, the government and administration moved swiftly and three persons were arrested (Odisha Sun Times 2017).

States such as Andhra Pradesh (Reddy 2013; Telengana Today 2017), Odisha, Jharkhand (Deogharial 2012; Gupta 2017) and Chhattisgarh have been a successful hunting ground for many swindlers masquerading as job consultants. Recruitment rackets in these states flourished with the active collusion between these job consultants, HR managers of companies and college placement officers (Das and Sharma 2012). However, what makes the ITER college case unique is that the SoA University took moral responsibility for the fake offers of placements. The university subsequently offered an option of taking up teaching assistantships in the university with a stipend of `20,000 or a waiver of their tuition fees if they pursued M Tech or MBA courses for higher education in the university, to those affected. (Firstpost 2017).


Dealing with Fake Offers

Even the government sector has not been spared from the menace of fake appointment letters. In 2016, the Odisha government launched the “Ujjwal” scheme to improve the quality of elementary education in government-run schools. A year later, the state government asked the Odisha crime branch to probe the fake appointment letters issued to school teachers by an agency—Diligence Learning Focused Society (DLFS) (Singhal 2017b). According to news reports, the agency had given appointments to teachers by sending letters to the district education officers by forging the signature of the joint secretary of the department.

With increasing incidences of fake employment offers, is there a way of dealing with it? Some companies have tried to deal with this issue in their own way. For example, Tata Consultancy Services (TCS) on its website lists various “checkpoints” to ascertain what a valid offer letter looks like (Campus Commune 2016). Indigo, an airline company, advises readers to be wary of fake appointment letters through its inflight magazine. Some organisations have also spent lakhs of rupees on advertisements in national dailies to advise aspirants to exercise caution against cheats who might take money to offer appointment letters (Sengupta 2013). However, these responses have been sporadic and it is necessary to develop a more systematic response.

Can there be a centralised repository, at least at the firm level, that can help validate whether a candidate has a genuine offer and verify the credentials of the recruitment executives who make the offers? Industry associations such as CII, NASSCOMM, FICCI should champion this cause to bring in greater transparency in hiring. While a technology-enabled solution might seem feasible, it is also important to raise ask questions about the ways in which technical and professional educational institutes position themselves in India, which might be the root of the issue.


Misrepresentations as Marketing Strategy

The success of a technical and professional educational institute in India is gauged by the success of its campus placement programme. Not surprisingly, institutes also position themselves in the academic market likewise. Campus hiring helps firms in attracting the best candidates by increasing the applicant pool, enabling better opportunities to assess the soft-skills of candidates, securing the commitment of talented candidates before they graduate and reducing the competition from other firms in the open labour market. However, student’s overreliance on social networking websites for placement information is a key drawback of campus placements. Placement information is supplied to various news and social media by technical educational institutes themselves. Through this, the institutes aim to advertise their success in placements and hope to attract prospective students. The inherent conflict of interest in this process increases the likelihood that facts may be misrepresented.

For instance, while India is the world’s largest provider of management education (Economist 2016) and has at least 5,500 business schools (Assocham 2016), there are hardly five to six business schools who publish the CRISIL audited placement reports regularly in accordance to the Indian Placement Reporting Standards (IPRS), a framework that aims at standardising of placement reports to make business school aspirants make a well-informed choice, thereby resulting in more realistic expectations on their part when they join a business school (CRISIL 2017).

Misrepresented information about placements does not sit well with the expectations of student applicants, leading to situations where the institute then becomes honour-bound to provide placements to all students registering in these courses.


Regulating Deferred or Revoked Job Offers

While the issue of fake offer letters and job aspirants left without jobs needs attention, at the same time, deferred and revoked job offers leave the aspirants no better off. For example, in a recent case filed against Grofers (Agarwal 2016), a job aspirant after receiving an offer letter and communicating his acceptance relocated to take up his job with the company. To his surprise the company had revoked the offer when he turned up to join. While aspirants can invoke detrimental reliance and seek legal remedy, it is a time-consuming process and the core issue of student debt and no-employment still remains. In a related case, when 135 students across IITs were affected by companies revoking offers or deferring offers, the IITs jointly through the All India Placement committee took a harsh stance against these companies. In August 2016, the IITs blacklisted 31 companies which had either deferred or revoked job offers in the previous placement season (Rao 2016). In a similar case, when Flipkart deferred the joining dates of students, IIM Ahmedabad asked for compensation for the students who needed to repay student loans and had turned away other campus opportunities. Flipkart offered a compensation of `1.5 lakh which was deemed to be unacceptable by the IIM-Ahmedabad placement committee (Basu and Chanchani 2016).

Perhaps, a policy decision is needed and it may need wider debate as with the current automation wave affecting IT companies, issues such as this can only skyrocket. On the other hand, there should be some guidelines to check employer behaviour in the inevitable circumstance when an employer has to revoke or defer job offers as recommended by the National Association of Colleges and Employers (NACE) in US (NACE 2001). The overlying principle in the recommendations being, that if conditions change which require employers to revoke their commitment to candidates, they need to pursue a course of action that is fair and equitable to the candidate to mitigate direct and indirect damages. In the first instance, alternatives that do not require revoking job offers need to be considered such as: changes in job responsibilities, reduced salary or reduced work-weeks, changes in job locale and delayed starting dates. In the worst case that an offer must be revoked, the candidate may be reimbursed for expenses associated with employment such as travel, relocation etc. Short-term financial assistance may be provided and career advisory services may also be provided to help secure alternate employment.

In the event that the start date gets delayed by more than three months, short-term financial assistance and regular contact with the candidate may keep the candidate well-disposed towards the employer. In our view, the employer should categorically mention these options in the “letter of intent” and secure acceptance from the job candidate to face the uncertainty with more clarity.


Should Institutes Be Liable for Unpaid Student Loans?

The need for a system to prevent fraudulent offers becomes obvious and urgent when one examines the social and financial cost for the students and their families. The sight of loan booths with banks queuing up to provide educational loans at the beginning of the academic season is a common sight across reputed educational institutes of higher learning. It is this promised dream of securing a job after completing education that makes enthusiastic parents and students eagerly avail loans for pursuing higher education. The opportunity cost of a fake placement offer is not only the financial cost of an unpaid loan amount hanging like a Damocles’ sword over the heads of the student and their parents but also the social cost of this burden over the student and his/her family. It is this unseen and implicit liability of a student loan that might have also spurred the SoA University into providing the option of a stipend and waiver of tuition fees on admissions into MBA and MTech courses.

In countries such as South Africa and Chile, students can avail loans only if their test or credit score is above a minimum requirement (Dynarski 2014). While this helps prevent the issue of student debt, perhaps a policy change is necessitated to address the issue of existing student debts. Even in India, the central government may need to intervene and play a more active role in reducing the financial burden of unplaced students. Through the Reserve Bank of India (RBI), the central government can advise all the banks to start the repayment of loan after one year of completion of the professional education or six months from the date of employment whichever is earlier. It would also do a world of good to the students if the central government could direct the banks to fix the interest rate for the education loan at par with the home loan rates and provide for longer repayment duration and lower monthly instalments. Here, it is worthwhile to point out Hillary Clinton’s proposal during the last presidential election in the US. Hillary Clinton had proposed to cap the repayment of educational loans at maximum 10% of income over 20 years and if by then the loan is still not fully paid off by the government should pick up the bill (Petersen 2016). In the face of increasing student debt in US, it seemed to be a reasonable solution. But a policy such as this may also invite wilful defaults and increase the government’s burden. To counter this, the central government should also invite a policy discussion on the merits of blacklisting the universities/institutes where the student loan default rises beyond a certain percentage point and making the universities/institutes liable for a share of unpaid student debts. In our view, this could well be one of the key metrics in determining the selection (or rejection) of Institutions of Eminence (IoE) with reference to providing financial autonomy under the UGC (Institutions of Eminence Deemed to be Universities) regulations, 2017 since institutions selected under these regulations will be free of UGC’s restrictive inspection regime, the regulatory control over fee and curriculum. 

Mousumi Padhi (mousumi.ximb@gmail.com) teaches at Xavier School of HRM, Xavier University, Bhubaneswar and S Senthil Ganesh (ssganesh@gmail.com) teaches at Amrita School of Business, Amrita University, Coimbatore.
19 February 2018