No regulator to filter fraud IT companies.

While Andhra Pradesh boasts of being a major information technology hub, competing closely with Bengaluru, its IT sector, of late, has been plagued by sham companies. There have been four cases of fraud registered by the police in the last two months, the latest being of Teleonto Techno-logies Private Limited, an IT company operating out of Gachibowli. There is no regulatory authority in place to filter out the fly-by-night companies. Although the Software Technology Parks of India is responsible for clearing registration of companies, it mainly plays the role of promoter, not regulator.

“There is no regulatory authority that can take action against such companies or filter out the fraud companies. STPI has the power to accept registration of companies, but most of the fraud companies do not even apply for registration and start operating from any address,” indicated a member of Nasscom.
Many fraudulent companies try to seek business opportunities under government schemes on the basis of the number of people employed. They take money from potential employees as a deposit or training fee and once they have collected a reasonable amount, they just vanish. In fact, it is pretty easy to float an IT company — all you have to do is show an office address. There are enough people eager to land an IT job without looking too closely at a company’s credentials.

Source : DC