Telangana Audit Uncovers Rs 1,100 Crore PF Irregularities in Outsourcing

HYDERABAD — A government audit and Aadhaar-based verification of approximately 1.6 lakh outsourcing employees across departments and institutions in Telangana has uncovered alleged irregularities involving over Rs 1,100 crore in provident fund (PF) contributions.

The findings have put hundreds of private manpower agencies under official scrutiny and pointed to the presence of suspected ghost employees across various state departments.

According to preliminary findings, more than 60 percent of the verified outsourcing staff either did not possess provident fund accounts or had not received regular deposits of their PF contributions. The discrepancies emerged during an audit of department payments made to private manpower agencies alongside an Aadhaar seeding exercise designed to confirm worker identities.

Under Telangana's outsourcing model, government departments release payments directly to private agencies to cover employee salaries, agency commissions, Goods and Services Tax (GST), and statutory contributions for the Employees' State Insurance (ESI) and provident fund. The agencies are also responsible for deducting the employee's share of PF and ESI from monthly wages before transferring them to the relevant authorities.

However, the state review revealed that in numerous cases, both the deducted employee contributions and the employer's share released by the government were never deposited with the Employees' Provident Fund Organisation (EPFO). Over several years of examined records, this diverted sum is estimated to exceed Rs 1,100 crore.

For a worker earning a basic monthly salary of Rs 15,600, the combined monthly PF contribution is approximately Rs 3,900, amounting to Rs 46,800 annually per employee without interest. Applied across the thousands of affected staff, the unremitted amount could exceed Rs 31 crore each month, or more than Rs 375 crore annually.

The Aadhaar verification process also revealed major mismatches between the names listed on agency payrolls and individuals physically working, raising concerns that bogus names were used to claim state funds.

Following the intensification of the scrutiny, several outsourcing agencies reportedly shut down or ceased operations, complicating recovery efforts. The state government has recommended legal action against non-compliant agencies and requested regional PF authorities to initiate recovery proceedings. Labour representatives have also called for accountability among department officials tasked with verifying monthly PF challans.