I'm asking this question on behalf of a friend who works for a large IT company.

The company has a large contract with one of their clients. Within this contract, they get a number of smaller contracts for change requests, etc. on a Time and Materials basis.

The management inflates their estimates to the client, and get resources who don't work on this project to book their time to these contracts.

My friend has an excellent working relationship with the client, and has been working with them for years. As this is a large portfolio of work, she is worried that bringing this up would have a significant detrimental impact to her employer, but she knows it is morally wrong. Loss of this contract would probably bring down the company.

How should she approach this situation?

  • Has she tried approaching other colleagues about it – Twyxz Aug 10 at 9:09
  • Yes understandably no one wants to get involved – andtodd Aug 10 at 9:10
  • Is the price known beforehand? If it's an estimate I'd say it's expected to not be 100% exact... also, how are you sure this is not "healthy bargaining"? Unless there was some regulating entity or union, how is this not Differential pricing? – DarkCygnus Aug 10 at 16:50
up vote 12 down vote accepted

Overbilling the client is unethical and illegal. The management probably knows that already. Nonetheless, you could start by expressing your concerns to your manager, and point out that they are exposing the company to the risk of a lawsuit, bad publicity, and potentially other troubles.

If/when that doesn't help, you would usually escalate to the next level of management, but in this case, if you suspect the higher management is also complicit, that is unlikely to be useful.

The next course of action would be to take this to HR, because protecting the company from potential lawsuits is one of HR's responsibilities.

You should be prepared to deal with any potential fallout. (Disclaimer: Not a Lawyer) Depending on local laws, whistleblower protection might apply. Get in touch with a lawyer to explore legal implications of your complaint and for legal advice on protecting your job.

It would also be prudent to look for a new job on the side, in case the incident takes an unexpectedly dramatic turn.

  • I think your answer is correct, but it may be worth adding explicitly that no matter what approach she decides do take this definitely should not be discussed with the client. Doing so could open OP's friend up to all sorts of additional trouble, after all the only reason she is at that company is on behalf of her employer. – Phueal Aug 10 at 20:05
  • @Phueal Thanks, that is indeed an important point. "Don't take up the matter directly with client." Would you mind posting that as a separate answer? You can refer to my answer and say that you are adding to it. I could, of course, edit it into my own answer, but I feel it is inappropriate to "steal" such a significant point. – Masked Man Aug 13 at 14:00
  • 1
    Thank you :) Done. – Phueal Aug 13 at 14:32

I think Masked Man's answer is completely correct, but I would add one thing: no matter what approach you decide to take, don't discuss this with your client. Doing so could open you up to significant trouble, especially given that the only reason you're at that client is as a representative of your employer.

Double check and then again

I happened to work with large organizations that used this method (not correct, not clear, under the table, you name it) to address some 'shortcoming' of the decision makers at both ends.

An example: a side project of a few thousand € was required to get a huge technical advantage but there was no chance to have it funded. Ordinary maintenance was always approved automatically. The side project got a fake name in the monthly payment for almost a year to get the correct amount and the supplier worked on it on day 1.

Maybe something similar is happening there?

  • Definitely not. It was to prevent resources from being ‘on the bench’ – andtodd Aug 10 at 14:00
  • I kind of feel like the described situation would be unethical as well? – Bwmat Aug 10 at 19:24
  • @Bwmat I call it borderline. The management of both parties waa on the same page, the requirement was there but bureocracy was on the way... – Paolo Aug 10 at 19:37

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