Satyam Computer Services Ltd.: A curse to Indian IT industry or not.

The Satyam saga exemplifies the classic paradox that exists in Indian business even today. Year after year, quarter after quarter fraudulent reports and balance sheet adjustments. As a result what we see today? The founder-chairman Mr. B Ramalinga Raju has resigned. This is probably the large corporate scam ever. This is not only a curse for the Indian IT industry, it is a shame for all of us directly associated in this profession and as an Indian.

I can't believe that Balance Sheet has inflated cash and bank balances of 5000 crore and 376 crore of interest non-existent?? What a shame and the injustice the Satyam's board has made not only with the employees, share holders, investors (both future and present), but also with us, The Indians. Operating margin reported 649 crores but actually 61 crores can you people believe what a bluff he is?

This pales our image in the world as Indians. I condemn the Satayam Saga, its foreplay and its consequences.

I am an utterly shocked Indian IT professional. Before we get into a discussion from a viewpoint of a salaried person, we need to understand the value system that Satyam has built over the years. The way we are brought up by our parents, it is the same way how an employee is growing with the company and the value system of it. Two very significant points in this context are:

1. Transparency in policies: If I am a salaried person, I should be confident about the transparency maintained by my company and, if not, I need to raise voices in different forums within the company. I need to point out the differences and work on those to bridge the gap. This can be done with meetings with the HR representative from my business domain in a quarterly basis or in a skip level meeting with senior management. Now my question is are the employees got these opportunities? If not why didn't they raise their voices? and if none has happened, then it shows the value system of Satyam which has led to the consequences we are seeing today.

2. Communication: As an employee of any firm, I should be aware of all the internal and external communications of my company. For ex: How many people in Satyam know that they don't have insurance license in US to work beyond 2008? Now how are they going to pay the US employees? This is critical information and should have been communicated to the employees. Let us assume that it is already communicated, then why there are no voices raised within the company about the biggest fallacy? and If not communicated, no need to say that this is the value system Satyam has built over the years.

Now being an employee, my responsibility doesn't end at the 9 hours job, it is much beyond that. I should be aware about what is called confidential, internal, and I should be aware of the data security and information security. Employees can't deny the fact they have not maintained all these at all, that's why a few months back itself there is a class action lawsuit filed by a British telecom services company (Upaid Systems Ltd.) against Satyam Computers in the court of Texas for forgery and fraud. Even after the debacle, the interim CEO has sent an e-mail to all Satyam folks (in an internal communication) and the mail was out to media within 30 minutes. Does it reflect a salaried employee's responsibilities to the company?

What is the road ahead for the Salaried employees of Satyam?

Very tough, very tough. As of now the company is in liquidity crisis, so salaries may not be paid on time, there might be job cuts to manage the operating cost. On top of that if there is any severe action taken against the company in India or in US (already 4 cases are running, World Bank has blacklisted the company, NSE, BSE has removed the company, NYSE has stopped its trading), the future may be worse. Already Infosys has declared that it would not hire Satyam employees. Other companies may come out with similar line of action.

Note: I don't want to mean that all the employees are corrupted, instead wanted to point out the corruption in the value system, as a result a large part of the employees are also corrupted in Satyam.

Satyam - A huge crisis for Indian industries

I am an economist and with my knowledge, it is very hard to realize the real fact of that crisis. Still I would say it is a great shame for Indian industries in the respect of the global market or the global investors. I have heard that Satyam has nearly 53000 employees in India. I think this is not the crisis for those employees only, it is far beyond that because Indian's IT industries are recognized all over the world and those organizations are mostly based on the world base clients. And there are very few countries like India who are corrupted. Clients from the overseas will not be impressed if these types of case continue again and again. That is why they could walk towards Chinese or Philippines industries. That is why to me , this is not only the Satyam crisis. I think this is the crisis for all industries . This is the critical moment for each and every employees of the India.

Of course, this is a great shame for India but this is not the competition between Satyam and Infosys or Wipro. This should be solved and co-operated by everyone otherwise this can face the crisis like the world faced after 2001 US attack. Indian government has realized that and they have taken proper action immediately after the incident and remember one thing that is not for only 53000 employees , indirectly for indian economy, foreign investors of India, share holders of all companies, foreign clients and so on. Did you see that the crash/crush of Indian stock exchange after this case? That had gone fall down by 700 points in a day. That is not only for Satyam , but also the scaredness to an investor in the Indian economy.

The proof is evident. If you are reading only Anandabazar Patrika or Bartaman or Times Of India you would not be able to know the global impact of this horrendous episode. As you know, Indian IT industry is 65-70% dependent on the US outsourcing companies. I would like to request you to please go through the "Wall Street Journal", "New York Times" and read through the statements made by "Smith Barney", "Morgan Stanley" about Indian IT governance. The Satyam episode has created a lot of doubt and confusion in the world about the corporate governance and practices by the Indian IT industry. So it is evident that this incident has come as a curse to the growing IT foothold of India.

But, as I am always optimistic and will love to add that one Satyam will not be able to defeat the reputation of Indian IT industry, as there are so many well governed companies in India and they have done noticeably well in the last decade. Good will always win over Bad, so the good companies will surely win over the Satyam.

Was the scam due to the CEO and the top management but not because of the company as a whole?

Obviously a company is built by them, not by you and me, they formed it, they helped it to grow [I doubt, as there are lot of confusions about Satyam's projected growth] and they are so shameless that they have played with public money. Top management is the face of any company, please name 5 employees from Microsoft will be difficult question for you, but please name the CEO of Microsoft will be a cakewalk. Obviously it is because of the top management and the company they are integral part of each other, you just can't detach them, they have made the mockery of the companies name.

I support the uncorrupted employees of Satyam, but we don't know who all are they. But at the same time, I am with the people who have almost lost everything after the debacle, who are spending the sleepless nights as a loss of huge money. I am with those common people whose believes are shattered and dreams are murdered brutally. I will not support the corrupted employees and their support for Ramalinga Raju.

The former Satyam Chairman has always been in the center point of any political development in Andhra Pradesh. People support Ramalinga Raju so blindly that in their local news channel, 90% of people said that he has done no crime? This shows his popularity in that state and different political parties had tried to use that in the past. Now the Central Government has taken the right steps to re-establish the company in terms of management. But don't forget that AP government took 3 days to arrest him, even SEBI needed a special permission o interrogate him. I don't think Congress can make any profit out of this in the upcoming elections. This may help them in regionally but everyone knows about the Maytas and the link with Rajshekhar Reddy in the land distribution and the Metro rail project, so this may even backfire them if TDP can play a regional card and show that the whole episode had adverse affect on Telgu community as a whole.

More curse is yet to come I believe, as in the recession period, outsourcing companies will become more conservative about India and Indian IT companies. This is something we may get to see in the coming quarters, but I still believe that one bad company cannot defeat the promising IT sector , but it may slow down a lot, for which the good companies and their employees may need to fight hard to put things back on track

Will Satyam vanish from the IT market?

No. I do not think so that Satyam will vanish from the IT market and not all the employees will loose their jobs. I am saying this because of the Lok Sabha election in April/May. Congress party was loosing the ground due to the Mumbai terror attack and they have got a thing to make their base more strong. Andhra pradesh sarkar (Raj Shekhar Reddy) had discussed with central government for bailout for Satyam like USA did several times in the last year. But they are not doing that at this moment. They have employed neutral directors and new board. They will invest the matter properly and they will take the steps to re-establish the Satyam. And by doing that, they will make a goodwill in this voting time. It could be bad news for the upcoming employees of Satyam, could be for current employees for losing salary for a couple of months. But at the end of the day, Satyam will survive.