IT services company TCS (Tata Consultancy Services) has announced that it would revise the compensation package of campus recruits. Under the changed structure, TCS trainees will no longer be paid the variable component of the compensation - which works out at Rs. 5,000 per month or 19-20 percent of the total annual pay packet of Rs. 3.1 lakh - offered to them during their in-campus recruitment.
Ajoy Mukherjee, Global Head, Human Resources, TCS said, "As part of a compensation restructuring exercise, freshers joining the company this quarter onwards will not be eligible for variable pay during the training period. Restructuring trainees' salaries is being done from the point of view of productivity so that they get accustomed to the fact that variable pay depends on performance."
Last year, the company had made campus offers to 24,885 students. Of this, the company is expecting around 19,000-20,000 students to join. Going by this number, the company is expected to save around Rs. 10 crore per month by altering the variable part of salary for trainees. For six months, the savings would be Rs. 60 crore. Mukherjee said, "The company would be able to take on board all campus recruits in the current fiscal itself."
However, other IT giants like Infosys and Wipro are not fiddling with the compensation package of trainees. Infosys decides on the variables based on a test conducted after 18 weeks of initial training. Mohandas Pai, HR head, Infosys said, "Those who score four out of five are entitled to variables." Wipro claims to pay the variable part to its employees from the beginning of the training period.
Now, it would be interesting to see, what steps these companies take for campus recruitment in next fiscal. TCS is yet to decide on how these campus offers would be made in the next fiscal.
Agencies
Showing posts with label Satyam. Show all posts
Showing posts with label Satyam. Show all posts
Thursday, September 17, 2009
Monday, May 25, 2009
Will Satyam lay off 8,000 non-IT staff from June?
Satyam Computer is likely to sack most of its non-billable staff of up to 8,000 working in marketing, HR and administration wings,after Tech Mahindra takes charge of the company from June 1.
A Satyam official said there is no doubt that there will be large-scale sacking mostly of the support and non-billable staff (other than hardcore software engineers) once Tech Mahindra (the new owner of the company) directors come on board from June 1.
The surplus staff is about 10,000-12,000 and the 'least painful' ways of sacking is asking the bench, non-billable and support staff to go.
The company spokesperson, when contacted, said that at the moment these are mere speculations.
Sources also said the outsourcer may opt for "virtual pool" sacking method whereby the company would ask some of the staff to take 75 per cent of its salary and take one-year off and look for a job elsewhere with the fragile assurance that they would be recalled, if required.
Tech Mahindra CEO Vineet Nayyar, who will also come on board of Satyam from June after it acquired fraud hit company last month, had said last week that Satyam has about 10,000 surplus staff and "we are looking at the least painful ways to tackle the problem."
Satyam has already called back most of its onsite staff to avoid further costs and most of them may be asked to quit, said the official.
About 3,000 people are on the bench and there is a surplus manpower even in the R&D and engineering units, sources said.
Dwindling revenues are the primary reasons for Tech Mahindra to opt for such a cost-cutting measure, Tech Mahindra official said.
Kiran Karnik, chairman of Government-appointed board of Satyam, said revenues are falling and cost-cutting measures have to be taken up. But he had ruled out lay-offs.
Agencies
A Satyam official said there is no doubt that there will be large-scale sacking mostly of the support and non-billable staff (other than hardcore software engineers) once Tech Mahindra (the new owner of the company) directors come on board from June 1.
The surplus staff is about 10,000-12,000 and the 'least painful' ways of sacking is asking the bench, non-billable and support staff to go.
The company spokesperson, when contacted, said that at the moment these are mere speculations.
Sources also said the outsourcer may opt for "virtual pool" sacking method whereby the company would ask some of the staff to take 75 per cent of its salary and take one-year off and look for a job elsewhere with the fragile assurance that they would be recalled, if required.
Tech Mahindra CEO Vineet Nayyar, who will also come on board of Satyam from June after it acquired fraud hit company last month, had said last week that Satyam has about 10,000 surplus staff and "we are looking at the least painful ways to tackle the problem."
Satyam has already called back most of its onsite staff to avoid further costs and most of them may be asked to quit, said the official.
About 3,000 people are on the bench and there is a surplus manpower even in the R&D and engineering units, sources said.
Dwindling revenues are the primary reasons for Tech Mahindra to opt for such a cost-cutting measure, Tech Mahindra official said.
Kiran Karnik, chairman of Government-appointed board of Satyam, said revenues are falling and cost-cutting measures have to be taken up. But he had ruled out lay-offs.
Agencies
Monday, May 4, 2009
Will major clients continue to stay with Satyam?
In a news that could bring cheer to Satyam employees, three of their big clients Nestle, Nissan and CIBA who were on wait and watch mode have assured to continue business with the firm.
"Clients such as Nestle and Nissan has already expressed their confidence in the company and had assured us that they will continue with us," an official privy to the development said. Nestle have also given some additional business to the Satyam last month, the person added further.
One of the multi-million dollar SAP client of Satyam, Nestle, which was earlier keeping a tab on the developments. Analysts had feared that post the acquisition of the firm by Tech Mahindra clients of Satyam who were sitting on the fence would jump to other vendors.
However, post the acquisition some of the companies had expressed confidence in the entity and pledged to continue business with them. Auto major Nissan for whom Satyam provides application management had also said that they would continue business with the firm. The company has also got an endorsement from another SAP client CIBA.
Moreover, United Kingdom, Switzerland and Germany who have earlier imposed some strict norms on Satyam employees for getting Visa have eased them. Post Satyam crisis, employees of Satyam were asked to be present in person and appear for visa interviews.
However, now they have eased the norms and the employees need not be present for the interview in person. Satyam Computers plunged into crisis after its founder B Ramalinga Raju in January admitted to have cooked the books of the company for year.
In April, information technology firm Tech Mahindra announced to acquire a 51 per cent stake in the beleaguered firm for Rs 2,900 crore. Earlier, the government-appointed chairman of Satyam Kiran Karnik had said that though some clients have left the company but at the same time Satyam have got some new work as well.
Agencies
"Clients such as Nestle and Nissan has already expressed their confidence in the company and had assured us that they will continue with us," an official privy to the development said. Nestle have also given some additional business to the Satyam last month, the person added further.
One of the multi-million dollar SAP client of Satyam, Nestle, which was earlier keeping a tab on the developments. Analysts had feared that post the acquisition of the firm by Tech Mahindra clients of Satyam who were sitting on the fence would jump to other vendors.
However, post the acquisition some of the companies had expressed confidence in the entity and pledged to continue business with them. Auto major Nissan for whom Satyam provides application management had also said that they would continue business with the firm. The company has also got an endorsement from another SAP client CIBA.
Moreover, United Kingdom, Switzerland and Germany who have earlier imposed some strict norms on Satyam employees for getting Visa have eased them. Post Satyam crisis, employees of Satyam were asked to be present in person and appear for visa interviews.
However, now they have eased the norms and the employees need not be present for the interview in person. Satyam Computers plunged into crisis after its founder B Ramalinga Raju in January admitted to have cooked the books of the company for year.
In April, information technology firm Tech Mahindra announced to acquire a 51 per cent stake in the beleaguered firm for Rs 2,900 crore. Earlier, the government-appointed chairman of Satyam Kiran Karnik had said that though some clients have left the company but at the same time Satyam have got some new work as well.
Agencies
Monday, April 27, 2009
Will TCS move staff back to India?
As part of cost-cutting measures, India's largest outsourcing firm Tata Consultancy Services (TCS) said that it will relocate staff abroad into India.
"The company follows an onsite-offshore model. We will focus to do more work in India because it helps in saving cost and efficiency," TCS Chief Operating Officer N Chandrasekaran said.
However, the company would continue to do work onshore and relocation did not mean that it was winding up its operations abroad.
The company, which tried out its relocation in January-March this year, gained significantly in the last quarter of 2008-09. In Q4, the company brought back its US staff to India resulting in a cost saving of Rs 121 crore. The company did not give any figures on how many people were brought back. The relocation of staff could be in thousands, he said.
At the same time, the company would be hiring more people numbering 24,855 in India. It would hire 250 freshers in the US and a few in China, Chandrasekaran said.
But there would be no lateral hiring and there is a freeze on increments to its staff. He made it clear that TCS would not lay off people as a result of relocation. "There would be no lay offs," he said.
Bringing back the staff to India would not be restricted only to the US market, but across geographies.
"We have thousands of staff working in the US, UK, Europe and other geographies," he said. The company had decided not to hire Satyam staff after the scam broke out, but now it is open to it.
"When we hire laterals, whoever applies, we will look at them," Chandrasekaran said. Twice every year, the company sacks non-performers. This year, too, non-performers would go, he said.
"Non-performers will go and there is no plan to move non-performing staff to other subsidiaries," he said.
Agencies
"The company follows an onsite-offshore model. We will focus to do more work in India because it helps in saving cost and efficiency," TCS Chief Operating Officer N Chandrasekaran said.
However, the company would continue to do work onshore and relocation did not mean that it was winding up its operations abroad.
The company, which tried out its relocation in January-March this year, gained significantly in the last quarter of 2008-09. In Q4, the company brought back its US staff to India resulting in a cost saving of Rs 121 crore. The company did not give any figures on how many people were brought back. The relocation of staff could be in thousands, he said.
At the same time, the company would be hiring more people numbering 24,855 in India. It would hire 250 freshers in the US and a few in China, Chandrasekaran said.
But there would be no lateral hiring and there is a freeze on increments to its staff. He made it clear that TCS would not lay off people as a result of relocation. "There would be no lay offs," he said.
Bringing back the staff to India would not be restricted only to the US market, but across geographies.
"We have thousands of staff working in the US, UK, Europe and other geographies," he said. The company had decided not to hire Satyam staff after the scam broke out, but now it is open to it.
"When we hire laterals, whoever applies, we will look at them," Chandrasekaran said. Twice every year, the company sacks non-performers. This year, too, non-performers would go, he said.
"Non-performers will go and there is no plan to move non-performing staff to other subsidiaries," he said.
Agencies
Monday, April 20, 2009
Satyam to be standalone unit, says TechM
Tech Mahindra Ltd, which is taking over Satyam Computer Services Ltd, said on Monday the fraud-hit Indian outsourcer would continue to function as a standalone unit.
The mid-sized Indian IT services firm's immediate priority was to retain and win back lost clients of Satyam, a statement from Tech Mahindra said.
Tech Mahindra's deal to take over Satyam will propel it into the top tier of Indian IT firms and throw a lifeline to the firm at the centre of India's biggest corporate scandal.
Three months ago, Satyam's founder and chairman shocked investors by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's fourth-largest software services exporter.
The government quickly stepped in and sacked the board to limit damage to India's once-shining IT sector.
Agencies
The mid-sized Indian IT services firm's immediate priority was to retain and win back lost clients of Satyam, a statement from Tech Mahindra said.
Tech Mahindra's deal to take over Satyam will propel it into the top tier of Indian IT firms and throw a lifeline to the firm at the centre of India's biggest corporate scandal.
Three months ago, Satyam's founder and chairman shocked investors by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's fourth-largest software services exporter.
The government quickly stepped in and sacked the board to limit damage to India's once-shining IT sector.
Agencies
Thursday, April 2, 2009
Are Satyam employees set to join BoA?
About 250-300 employees at fraud-hit Satyam Computer Services are joining Bank of America, a newspaper said on Wednesday.
The employees were working on a Satyam project for Merrill Lynch, which was taken over by the US bank after it was hit by the subprime crisis last year, it said.
The project was not renewed by Merrill after Satyam was caught in country's biggest corporate scandal and the work of managing its database and providing infrastructure support would now be done in-house, the paper said.
The first of these employees will join Bank of America between April 2 and 8, it said, adding they have been given salary increases of around 10 per cent and joining bonuses.
A spokeswoman for Satyam said, "The report is speculative." An official at Bank of America-Merrill Lynch in India said she could not immediately comment.
Satyam, whose market value has slid to $505.6 million from $7 billion last May, is in the midst of a bidding process to find a new buyer. It plunged into a crisis in January after its founder quit as chairman revealing profits had been falsified for years.
Engineering conglomerate Larsen & Toubro and mid-sized outsourcer Tech Mahindra are among the suitors, and local media have said US private equity WL Ross & Co was also among the bidders.
Agencies
The employees were working on a Satyam project for Merrill Lynch, which was taken over by the US bank after it was hit by the subprime crisis last year, it said.
The project was not renewed by Merrill after Satyam was caught in country's biggest corporate scandal and the work of managing its database and providing infrastructure support would now be done in-house, the paper said.
The first of these employees will join Bank of America between April 2 and 8, it said, adding they have been given salary increases of around 10 per cent and joining bonuses.
A spokeswoman for Satyam said, "The report is speculative." An official at Bank of America-Merrill Lynch in India said she could not immediately comment.
Satyam, whose market value has slid to $505.6 million from $7 billion last May, is in the midst of a bidding process to find a new buyer. It plunged into a crisis in January after its founder quit as chairman revealing profits had been falsified for years.
Engineering conglomerate Larsen & Toubro and mid-sized outsourcer Tech Mahindra are among the suitors, and local media have said US private equity WL Ross & Co was also among the bidders.
Agencies
Wednesday, March 25, 2009
Will Infosys-Telstra deal cause job losses in India?
Bangalore-based software giant Infosys will pick up most of IBM Global Services’ multi-million dollar applications support contract with Australian software giant Telstra, after the latter’s deal with the former was scrapped following telco reducing its outsourcing partners from four to two.
According to The Australian, the decision to shift from IBM to Infosys could result in hundreds of job losses locally and in Bangalore, where IBM operates outsourcing centres.
IBM GS staff was told the scratching of the vendor’s software support would represent about 50 per cent of its one billion dollar, six-year deal with Telstra, signed in early 2006.
Telstra’s decision to drop IBM was a big surprise to IBM GS staff, who expected the contract to continue until 2012.
The deal was lost not because of performance issues but because Infosys low-balled the IBM offer, sources said.
Telstra has been reviewing its IT outsourcing contracts with Satyam, EDS, IBM GS and Infosys since last year, when the telco announced it would trim its list of major IT suppliers from four to two in an effort to reduce costs and streamline its providers.
Earlier, Telstra had ended one of its information technology outsourcing contracts with International Business Machines Corp (IBM). It has now roped in Infosys Technologies for the same.
IBM Global Services' multimillion dollar applications support contract with Telstra has been scrapped as a result of the telco reducing its outsourcing partners from four to two, as per an Australian media report.
The decision to shift from IBM to Infosys could result in hundreds of job losses locally and in Bangalore, where IBM operates outsourcing centres, the report said.
The Australian reported that IBM staff were told the scrapping of the vendor's software support would represent about 50% of its $1 billion, six-year deal with Telstra, signed in early 2006.
Less than a week ago, Telstra terminated its IT outsourcing contract with fraud-hit Satyam Computer Services. Telstra is the second major Australian company to do so after The National Australia Bank decided in February to suspend future work with the Indian outsourcer since the disgraced Indian outsourcer's accounting scandal came to light.
The IBM India spokesperson could not be reached for comment while the Infosys communication person said, "We are in our silent period and will not be able to comment on the issue."
Agencies
According to The Australian, the decision to shift from IBM to Infosys could result in hundreds of job losses locally and in Bangalore, where IBM operates outsourcing centres.
IBM GS staff was told the scratching of the vendor’s software support would represent about 50 per cent of its one billion dollar, six-year deal with Telstra, signed in early 2006.
Telstra’s decision to drop IBM was a big surprise to IBM GS staff, who expected the contract to continue until 2012.
The deal was lost not because of performance issues but because Infosys low-balled the IBM offer, sources said.
Telstra has been reviewing its IT outsourcing contracts with Satyam, EDS, IBM GS and Infosys since last year, when the telco announced it would trim its list of major IT suppliers from four to two in an effort to reduce costs and streamline its providers.
Earlier, Telstra had ended one of its information technology outsourcing contracts with International Business Machines Corp (IBM). It has now roped in Infosys Technologies for the same.
IBM Global Services' multimillion dollar applications support contract with Telstra has been scrapped as a result of the telco reducing its outsourcing partners from four to two, as per an Australian media report.
The decision to shift from IBM to Infosys could result in hundreds of job losses locally and in Bangalore, where IBM operates outsourcing centres, the report said.
The Australian reported that IBM staff were told the scrapping of the vendor's software support would represent about 50% of its $1 billion, six-year deal with Telstra, signed in early 2006.
Less than a week ago, Telstra terminated its IT outsourcing contract with fraud-hit Satyam Computer Services. Telstra is the second major Australian company to do so after The National Australia Bank decided in February to suspend future work with the Indian outsourcer since the disgraced Indian outsourcer's accounting scandal came to light.
The IBM India spokesperson could not be reached for comment while the Infosys communication person said, "We are in our silent period and will not be able to comment on the issue."
Agencies
Tuesday, March 24, 2009
Satyam Continues To Lose Major Customers
Satyam Computer Services is on a 'losing spree', having so far lost outsourcing contracts from large customers to rivals such as IBM Corp., TCS, Infosys Technologies and Wipro Ltd. Now, a US property and casualty insurer is seeking to replace its outsourcing contract with Satyam.
US based Selective Insurance Co., which has reportedly outsourced about a quarter of its IT staffing requirements to Satyam, is said to be looking for alternate arrangement in light of Satyam latest woes.
In papers filed with the Securities and Exchange Commission (SEC) last month, Selective is quoted to have said: "We believe we would be able to manage an efficient transition to a new vendor and not experience a significant negative impact to our operations in the event that we no longer retain Satyam in their current capacity due to the financial issues they are currently experiencing."
Satyam chairman Ramalinga Raju on January 7 admitted falsifying the company's cash position by as much as $1 billion while overstating quarterly earnings and revenue by up to 28%. Sources indicate that Satyam may also have faked employee numbers and other data.
Since then increasingly nervous Satyam customers are looking for alternatives in case the scandal-scarred outsourcer is unable to restore internal stability or find a buyer with pockets deep enough to see the Indian company through its current crisis.
Many customers have either completely exited, or are in the process of moving their outsourcing contracts from Satyam to rival tech firms such as IBM, TCS, Wipro, Infosys and Accenture.
Some of the customers, including Telstra, Emerson, Nissan, State Farm Insurance, Applied Materials, Kansas State Bank, and Sony, have either moved out their projects completely, or are in the process of migrating current Satyam work to other outsourcing vendors.
iGATE, which was keenly bidding for the 51% stake of Satyam, has now pulled out from the bidding process mainly due to the loss of Satyam customers. Phaneesh Murthy, CEO of iGATE Corp, said, "We know that there are customer exits happening at Satyam. While the value erosion and the extent of liabilities were a concern, it was the totality of concerns that influenced our decision."
However, some large Indian players like BK Modi's Spice Telecom, Tech Mahindra, and L&T are among the companies to move to the second stage of bidding for the fraud-ridden IT outsourcer.
CXOtoday
US based Selective Insurance Co., which has reportedly outsourced about a quarter of its IT staffing requirements to Satyam, is said to be looking for alternate arrangement in light of Satyam latest woes.
In papers filed with the Securities and Exchange Commission (SEC) last month, Selective is quoted to have said: "We believe we would be able to manage an efficient transition to a new vendor and not experience a significant negative impact to our operations in the event that we no longer retain Satyam in their current capacity due to the financial issues they are currently experiencing."
Satyam chairman Ramalinga Raju on January 7 admitted falsifying the company's cash position by as much as $1 billion while overstating quarterly earnings and revenue by up to 28%. Sources indicate that Satyam may also have faked employee numbers and other data.
Since then increasingly nervous Satyam customers are looking for alternatives in case the scandal-scarred outsourcer is unable to restore internal stability or find a buyer with pockets deep enough to see the Indian company through its current crisis.
Many customers have either completely exited, or are in the process of moving their outsourcing contracts from Satyam to rival tech firms such as IBM, TCS, Wipro, Infosys and Accenture.
Some of the customers, including Telstra, Emerson, Nissan, State Farm Insurance, Applied Materials, Kansas State Bank, and Sony, have either moved out their projects completely, or are in the process of migrating current Satyam work to other outsourcing vendors.
iGATE, which was keenly bidding for the 51% stake of Satyam, has now pulled out from the bidding process mainly due to the loss of Satyam customers. Phaneesh Murthy, CEO of iGATE Corp, said, "We know that there are customer exits happening at Satyam. While the value erosion and the extent of liabilities were a concern, it was the totality of concerns that influenced our decision."
However, some large Indian players like BK Modi's Spice Telecom, Tech Mahindra, and L&T are among the companies to move to the second stage of bidding for the fraud-ridden IT outsourcer.
CXOtoday
iGATE Pulls Out of Satyam Bidding Process
Fremont-based iGATE has decided not to go ahead with the bidding process for acquiring 51% stake in India's scam-tainted Satyam Computer Services (SATYAMCOMP), based on further analysis.
Talking to CXOtoday, Phaneesh Murthy, CEO of iGATE, said, "While there is no one particular reason, it's the totality of concerns like sliding revenues, unknown margins and large liabilities that made us pull out of the race."
Murthy said, "We know that there are customer exits happening at Satyam. While the value erosion and the extent of liabilities were a concern, it was the totality of concerns that influenced our decision."
The company had earlier announced its participation in the bidding process last week, competing against some of the large Indian investors.
However, our PE fund partner had no role or influence in our decision to pull out. We had prepared our own model of financials and in that model it was difficult to get a reasonable return for any investor, said Murthy.
Satyam has been struggling for survival since January 7, when its founder and former chairman, B. Ramalinga Raju, confessed to filling the company's balance sheets with $1 billion in fictitious assets and nonexistent cash.
March 20 was the deadline set by the government-appointed Satyam Board for bidders to respond to the request for proposals the IT firm had sent out on March 13.
Sources indicate that potential bidders are concerned about the lack of clarity about the financial status of Satyam, as well as the implications of the class action suits and other legal troubles that the company is facing.
CXOtoday
Talking to CXOtoday, Phaneesh Murthy, CEO of iGATE, said, "While there is no one particular reason, it's the totality of concerns like sliding revenues, unknown margins and large liabilities that made us pull out of the race."
Murthy said, "We know that there are customer exits happening at Satyam. While the value erosion and the extent of liabilities were a concern, it was the totality of concerns that influenced our decision."
The company had earlier announced its participation in the bidding process last week, competing against some of the large Indian investors.
However, our PE fund partner had no role or influence in our decision to pull out. We had prepared our own model of financials and in that model it was difficult to get a reasonable return for any investor, said Murthy.
Satyam has been struggling for survival since January 7, when its founder and former chairman, B. Ramalinga Raju, confessed to filling the company's balance sheets with $1 billion in fictitious assets and nonexistent cash.
March 20 was the deadline set by the government-appointed Satyam Board for bidders to respond to the request for proposals the IT firm had sent out on March 13.
Sources indicate that potential bidders are concerned about the lack of clarity about the financial status of Satyam, as well as the implications of the class action suits and other legal troubles that the company is facing.
CXOtoday
Thursday, March 5, 2009
Is US new threat to India in BPO sector?
A downturn in worldwide economy, Satyam's fraud case and the terrorist attacks in Mumbai and supply chain and shipping cost issues in China are causing US technology companies to pull back from the two traditional outsourcing locations.
Citing these three global factors, an annual survey by BDO Seidman, LLP, one of America's leading accounting and consulting organizations, suggested several technology firms would choose US as future outsourcing location over India and China.
"While last year may have produced an outsourcing bubble, 2009 will see companies retrench to survive in the face of reduced demand. The US has become a far more viable option for them," said Douglas Sirotta, a Partner in BDO Seidman's Technology Practice.
"This year we are seeing three global factors that are causing US technology companies to pull back from traditional outsourcing locations, led by the recent boom and bust of the worldwide economy.
"Satyam's fraud case and the terrorist attacks in Mumbai are causing a lot of companies to reconsider operating in India. And supply chain and shipping cost issues in China are negatively impacting the attractiveness of outsourcing technology operations to the Far East."
Currently nearly two-thirds (62 per cent) of chief financial officers (CFOs) at leading US technology businesses say that their companies outsource services or manufacturing, it said.
However, the survey results point to a likely decline in international outsourcing in 2009: 22 percent say the United States is the outsourcing destination they are most likely to consider in 2009, compared to 16 per cent for China and 13 per cent for India. Another 19 per cent report no interest in additional outsourcing.
The survey conducted in January 2009 examines the opinions of 100 chief financial officers at leading technology companies located throughout the US. Other major findings:
Less than half (42 per cent) of the CFOs indicate that they have operations outside the US, compared to nearly double that amount (79 per cent) last year.
Nearly a third (29 per cent) of respondents say their primary concern regarding international growth is an uncertain business or political climate.
About a quarter (26 per cent), cite international business and tax regulations, with 21 per cent citing currency risk, 14 per cent intellectual property risk and exploitation, and 10 per cent training of international employees as their primary concern.
Currently the most common non-US locations for outsourcing are India (50 per cent), Southeast Asia, including the Philippines (31 per cent, down from 50 per cent in 2008), China (19 per cent, down from 46 per cent in 2008), and Western Europe (19 per cent).
For future outsourcing, the CFOs most frequently cite the United States (22 per cent), followed by China (16 per cent), India (13 per cent), Southeast Asia, including the Philippines (7 per cent), Latin America (7 per cent), Western Europe (6 per cent), Canada (5 per cent) and Eastern Europe (3 per cent).
Of those outsourcing, the most common functions being off-shored currently are: manufacturing (54 percent), IT services and programming (46 percent), research and development (35 percent), distribution (35 percent) and call centres (35 percent).
Agencies
Citing these three global factors, an annual survey by BDO Seidman, LLP, one of America's leading accounting and consulting organizations, suggested several technology firms would choose US as future outsourcing location over India and China.
"While last year may have produced an outsourcing bubble, 2009 will see companies retrench to survive in the face of reduced demand. The US has become a far more viable option for them," said Douglas Sirotta, a Partner in BDO Seidman's Technology Practice.
"This year we are seeing three global factors that are causing US technology companies to pull back from traditional outsourcing locations, led by the recent boom and bust of the worldwide economy.
"Satyam's fraud case and the terrorist attacks in Mumbai are causing a lot of companies to reconsider operating in India. And supply chain and shipping cost issues in China are negatively impacting the attractiveness of outsourcing technology operations to the Far East."
Currently nearly two-thirds (62 per cent) of chief financial officers (CFOs) at leading US technology businesses say that their companies outsource services or manufacturing, it said.
However, the survey results point to a likely decline in international outsourcing in 2009: 22 percent say the United States is the outsourcing destination they are most likely to consider in 2009, compared to 16 per cent for China and 13 per cent for India. Another 19 per cent report no interest in additional outsourcing.
The survey conducted in January 2009 examines the opinions of 100 chief financial officers at leading technology companies located throughout the US. Other major findings:
Less than half (42 per cent) of the CFOs indicate that they have operations outside the US, compared to nearly double that amount (79 per cent) last year.
Nearly a third (29 per cent) of respondents say their primary concern regarding international growth is an uncertain business or political climate.
About a quarter (26 per cent), cite international business and tax regulations, with 21 per cent citing currency risk, 14 per cent intellectual property risk and exploitation, and 10 per cent training of international employees as their primary concern.
Currently the most common non-US locations for outsourcing are India (50 per cent), Southeast Asia, including the Philippines (31 per cent, down from 50 per cent in 2008), China (19 per cent, down from 46 per cent in 2008), and Western Europe (19 per cent).
For future outsourcing, the CFOs most frequently cite the United States (22 per cent), followed by China (16 per cent), India (13 per cent), Southeast Asia, including the Philippines (7 per cent), Latin America (7 per cent), Western Europe (6 per cent), Canada (5 per cent) and Eastern Europe (3 per cent).
Of those outsourcing, the most common functions being off-shored currently are: manufacturing (54 percent), IT services and programming (46 percent), research and development (35 percent), distribution (35 percent) and call centres (35 percent).
Agencies
Saturday, February 14, 2009
Satyam top executive resigns
IT major Satyam Computer's head of automotives division, Subbu D Subramanian, has quit, a company spokesperson said.
Subramanian, who was serving as the Vice-President of the Hyderabad-based company, has put in his papers to seek career opportunities abroad, the spokesperson told media here.
He would be succeeded by another Satyam senior official, Keshab Panda, who was in the charge of the firm's energy and utilities vertical.
Agencies
Subramanian, who was serving as the Vice-President of the Hyderabad-based company, has put in his papers to seek career opportunities abroad, the spokesperson told media here.
He would be succeeded by another Satyam senior official, Keshab Panda, who was in the charge of the firm's energy and utilities vertical.
Agencies
Friday, February 6, 2009
iGATE Pulls Out of Race to Acquire Satyam
With Satyam's financial statement still not available and government yet to cap its liabilities, iGATE has all but given up its interest in Satyam.
With Satyam's financial statement still not available and government yet to cap its liabilities, iGATE has all but given up its interest in buying stake in Satyam. The new Satyam board has recently appointed a new CEO and CFO.
The company had earlier said it was waiting for the new financial statement before deciding its next step, as the Satyam board had ruled out any part buy option.
Talking to CXOtoday, Phaneesh Murthy. CEO of iGATE, said, "Our interest in Satyam is weaning now. If a portion of the company is not being sold, then it does not attract me."
Over the last few weeks, reports indicate that Satyam has lost several of its top employees and many clients are also moving away, thereby making the value proposition no longer interesting for iGATE. "I believe that delay in decisions will erode the value of the company because of migration of customers and employees," said Murthy.
It is believed that iGATE was keenly looking at acquiring the manufacturing and EPR verticals of Satyam that were dominant over the years. But with the board not likely to issue Satyam's financial restatement in the near future, many of the other suitors are likely to pull out as well.
iGATE was among the early prospects, along with Larson & Turbo (L&T) and Essar, to express interest in acquiring the fourth largest software service provider. Since then the board has received three Expressions of Interest (EoI) from Mahindra Group, Hindujas and Spice Communications.
CXOtoday.com
With Satyam's financial statement still not available and government yet to cap its liabilities, iGATE has all but given up its interest in buying stake in Satyam. The new Satyam board has recently appointed a new CEO and CFO.
The company had earlier said it was waiting for the new financial statement before deciding its next step, as the Satyam board had ruled out any part buy option.
Talking to CXOtoday, Phaneesh Murthy. CEO of iGATE, said, "Our interest in Satyam is weaning now. If a portion of the company is not being sold, then it does not attract me."
Over the last few weeks, reports indicate that Satyam has lost several of its top employees and many clients are also moving away, thereby making the value proposition no longer interesting for iGATE. "I believe that delay in decisions will erode the value of the company because of migration of customers and employees," said Murthy.
It is believed that iGATE was keenly looking at acquiring the manufacturing and EPR verticals of Satyam that were dominant over the years. But with the board not likely to issue Satyam's financial restatement in the near future, many of the other suitors are likely to pull out as well.
iGATE was among the early prospects, along with Larson & Turbo (L&T) and Essar, to express interest in acquiring the fourth largest software service provider. Since then the board has received three Expressions of Interest (EoI) from Mahindra Group, Hindujas and Spice Communications.
CXOtoday.com
Friday, January 9, 2009
Satyam CFO attempts suicide
Srinivas Vadlamani, CFO of Satyam, who is thought to be involved in one of the major IT company's scam, has attempted a suicide in a house in Ameerpet near Hyderabad.
Significantly, in Raju's letter to Securities and Exchange Board of India (SEBI) and the company's board of directors, the name of CFO is missing from the list of those who were 'unaware of the real situation'.
Meanwhile the Andhra Pradesh state police may register a suicide case today. K. Arvind Rao, Addl DG, (intelligence) declined to comment, when CXOtoday contacted him over phone. "I can't speak on this issue right now," said Arvind.
Srinivas Vadlamani, has been reported 'missing' from his home in Malkajgiri for the last couple of days. However, interim CEO -- Ram Mynampati in a press conference on Thursday said that Vadlamani had put in his papers. The decision on his resignation will be taken in board's meeting to be held tomorrow, the media had been informed.
Source: CXOtoday
Significantly, in Raju's letter to Securities and Exchange Board of India (SEBI) and the company's board of directors, the name of CFO is missing from the list of those who were 'unaware of the real situation'.
Meanwhile the Andhra Pradesh state police may register a suicide case today. K. Arvind Rao, Addl DG, (intelligence) declined to comment, when CXOtoday contacted him over phone. "I can't speak on this issue right now," said Arvind.
Srinivas Vadlamani, has been reported 'missing' from his home in Malkajgiri for the last couple of days. However, interim CEO -- Ram Mynampati in a press conference on Thursday said that Vadlamani had put in his papers. The decision on his resignation will be taken in board's meeting to be held tomorrow, the media had been informed.
Source: CXOtoday
Thursday, January 8, 2009
Satyam likely to layoff 10,000 employees in 2009
With a big questions mark on its cash position and a minimum outgo on salary estimated at Rs 500 crore a month, Satyam may lay off over 10,000 employees next month, says a recruitment firm.
"It is most likely that Satyam will cut 10,000 jobs next month as the company is left with no cash to pay the salaries. The current fiasco is likely to put pressure on salaries, which may reduce by 10 per cent due to the surplus of about 20,000 people in the jobs market," Headhunters India CEO Kris Lakshmikanth said.
Satyam interim CEO Ram Mynampati while admitting that the cash position is not encouraging, the company, however, has taken care of salary for December.
Lakshmikanth said till Tuesday evening there were about 7,800 people from Satyam who had posted their resumes on job sites and by Wednesday afternoon, it has gone up to 14,000.
The uncertainty about jobs is killingly painful for the 53,000 employees of Satyam, especially when the industry is going slow on recruitment.
Further, possibility of a takeover too looks distant as the accounting fraud done by the company would make it difficult for any firm to evaluate its correct market value, which is compounding the worries of the employees.
IT-BPO union Unites Professionals general secretary Karthik Shekhar said, "In case of any lay off at Satyam, we may take legal action."
"We have received over 7,000 hits since the news break. Yesterday, in one hour we have seen over 800 hits (no of people visiting the site) from Hyderabad. People have been enquiries on how the union can help them," Shekhar added.
Agencies
"It is most likely that Satyam will cut 10,000 jobs next month as the company is left with no cash to pay the salaries. The current fiasco is likely to put pressure on salaries, which may reduce by 10 per cent due to the surplus of about 20,000 people in the jobs market," Headhunters India CEO Kris Lakshmikanth said.
Satyam interim CEO Ram Mynampati while admitting that the cash position is not encouraging, the company, however, has taken care of salary for December.
Lakshmikanth said till Tuesday evening there were about 7,800 people from Satyam who had posted their resumes on job sites and by Wednesday afternoon, it has gone up to 14,000.
The uncertainty about jobs is killingly painful for the 53,000 employees of Satyam, especially when the industry is going slow on recruitment.
Further, possibility of a takeover too looks distant as the accounting fraud done by the company would make it difficult for any firm to evaluate its correct market value, which is compounding the worries of the employees.
IT-BPO union Unites Professionals general secretary Karthik Shekhar said, "In case of any lay off at Satyam, we may take legal action."
"We have received over 7,000 hits since the news break. Yesterday, in one hour we have seen over 800 hits (no of people visiting the site) from Hyderabad. People have been enquiries on how the union can help them," Shekhar added.
Agencies
Has Satyam duped many US investors?
In separate lawsuits filed in US courts, Satyam Computer has been charged with duping thousands of American investors of billions of dollars by artificially inflating share price.
Demanding trial by jury against Satyam Computer, its chairman Ramalinga Raju, managing director and CEO B Rama Raju, the complainants have said that each of them is "liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit..."
The IT firm has also deceived the investing public regarding Satyam's business, its finances and the intrinsic value of shares, leading investors to purchase shares at artificially inflated prices, said the class action suit filed by lawfirm Vianale & Vianale LLP on behalf of shareholders.
Another lawfirm Izard Nobel LLP also filed an identical class action suit on the issue at the US District Court for Southern District of New York.
"A lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of those who purchased the ADRs of Satyam Computer between January 6, 2004 and January 6, 2009," Izard Nobel LLP said in a statement.
The class action complaint filed by Vianale & Vianale LLP in Manhattan Federal Court said that there are thousands of such shareholders throughout the US who have been affected by "a series of false and misleading statements, containing materially inaccurate financial information about the company, which served to artifically inflate the value of its ADSs.
Trading on Satyam ADRs was suspended yesterday after it plunged by over 90 per cent to 0.85 dollars in pre-market trade in US following Satyam founder and chairman B Ramalinga Raju's confession to a Rs 7,800 crore fraud in the company.
"When the truth was revealed the company's ADSs lost nearly their entire value and investors lost billions of dollars as a result," the suit filed by Vianale said.
The suits also charged Raju and his brother B Rama Raju with having engaged "in such a scheme to inflate the price of Satyam ADSs in order to 1) protect and enhance their executive positions and the substantial compensation and prestige they obtained thereby; and 2) enhance the value of their personal holdings of Satyam stocks."
"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to the Board of Directors yesterday, while announcing his resignation as chairman.
Agencies
Demanding trial by jury against Satyam Computer, its chairman Ramalinga Raju, managing director and CEO B Rama Raju, the complainants have said that each of them is "liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit..."
The IT firm has also deceived the investing public regarding Satyam's business, its finances and the intrinsic value of shares, leading investors to purchase shares at artificially inflated prices, said the class action suit filed by lawfirm Vianale & Vianale LLP on behalf of shareholders.
Another lawfirm Izard Nobel LLP also filed an identical class action suit on the issue at the US District Court for Southern District of New York.
"A lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of those who purchased the ADRs of Satyam Computer between January 6, 2004 and January 6, 2009," Izard Nobel LLP said in a statement.
The class action complaint filed by Vianale & Vianale LLP in Manhattan Federal Court said that there are thousands of such shareholders throughout the US who have been affected by "a series of false and misleading statements, containing materially inaccurate financial information about the company, which served to artifically inflate the value of its ADSs.
Trading on Satyam ADRs was suspended yesterday after it plunged by over 90 per cent to 0.85 dollars in pre-market trade in US following Satyam founder and chairman B Ramalinga Raju's confession to a Rs 7,800 crore fraud in the company.
"When the truth was revealed the company's ADSs lost nearly their entire value and investors lost billions of dollars as a result," the suit filed by Vianale said.
The suits also charged Raju and his brother B Rama Raju with having engaged "in such a scheme to inflate the price of Satyam ADSs in order to 1) protect and enhance their executive positions and the substantial compensation and prestige they obtained thereby; and 2) enhance the value of their personal holdings of Satyam stocks."
"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to the Board of Directors yesterday, while announcing his resignation as chairman.
Agencies
Satyam saga developments on Thursday
The developments of the Satyam Saga continues even on Thursday with the following highlights:
* Satyam assures its customers that business is as usual
* Where is Ramalinga Raju, former chairman of Satyam Computers
* Satyam top leaders pledge to stay on
* SAP, Oracle Assure Customer Support
* Foreign Firms Wary as Satyam Trial Looms
* YSR Urges Team to Manage Satyam Affair
* Infosys Will Not Buy Tainted' Satyam
To read the actual statement drafted by Ramalinga Raju of Satyam Computers click on the link below
http://online.wsj.com/public/resources/documents/Satyam.pdf
And to follow up on interesting issues like what drove to this extreme situation at Satyam, continue to browse through
http://editor-manu-sharma.blogspot.com/ on a regular basis.
* Satyam assures its customers that business is as usual
* Where is Ramalinga Raju, former chairman of Satyam Computers
* Satyam top leaders pledge to stay on
* SAP, Oracle Assure Customer Support
* Foreign Firms Wary as Satyam Trial Looms
* YSR Urges Team to Manage Satyam Affair
* Infosys Will Not Buy Tainted' Satyam
To read the actual statement drafted by Ramalinga Raju of Satyam Computers click on the link below
http://online.wsj.com/public/resources/documents/Satyam.pdf
And to follow up on interesting issues like what drove to this extreme situation at Satyam, continue to browse through
http://editor-manu-sharma.blogspot.com/ on a regular basis.
Wednesday, January 7, 2009
Probe into Satyam market operations: SEBI
Startled by the disclosure of fudging of accounts by Satyam founder B Ramalinga Raju, market regulator SEBI on Wednesday ordered probe into share market operations and inspection of the IT company.
"SEBI has ordered an investigation into the affairs relating to buying, selling or dealing in the shares of Satyam Computers," it said in a release.
The probe follows a letter written by Raju in which he disclosed that "accounts provided to the stock exchanges were not true".
The investigation, SEBI said, will ascertain whether any provision of the Act or regulation has been violated.
As a first step, SEBI today ordered an investigation into affairs relating to buying, selling or dealing in shares of Satyam to ascertain if any regulatory provision was violated. Besides, it ordered inspection of Satyam Computer (books).
Giving details of the irregularities, Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books)."
It also carries "an accrued interest of Rs 376 crore which is non-existent, understated liability of Rs 1230 crore on account of funds arranged by me, overstated debtors position of Rs 490 crore (as against Rs 2651 crore in the books."
The USD 2-billion Satyam also reported a revenue of Rs 2700 crore for the September quarter and an operating margin of Rs 649 crore (24 per cent of revenue) as against the actual revenue of Rs 2112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue).
"This has resulted in artificial cash and bank balances going up Rs 588 crore in Q2 alone," Raju said, adding that the gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years.
Satyam, meanwhile, said Board member Ram Mynampati has been appointed interim CEO. "We are obviously shocked.. immediate priorities are to protect interest of shareholders, protect the careers and security of its approximately 53,000 associates..," Satyam said in a statement.
A shocked industry called for deeper regulation. "This fraud on the investors and employees... shows a systemic breakdown in audit and board oversight... questions will need to be asked," FICCI President Rajeev Chandrasekhar said.
FICCI and CII, however, said the Satyam episode should not be seen as a blot on all the Indian firms.
Corporate Affairs Minister Prem Chand Gupta said stern action would be taken under the law.
Agencies
"SEBI has ordered an investigation into the affairs relating to buying, selling or dealing in the shares of Satyam Computers," it said in a release.
The probe follows a letter written by Raju in which he disclosed that "accounts provided to the stock exchanges were not true".
The investigation, SEBI said, will ascertain whether any provision of the Act or regulation has been violated.
As a first step, SEBI today ordered an investigation into affairs relating to buying, selling or dealing in shares of Satyam to ascertain if any regulatory provision was violated. Besides, it ordered inspection of Satyam Computer (books).
Giving details of the irregularities, Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books)."
It also carries "an accrued interest of Rs 376 crore which is non-existent, understated liability of Rs 1230 crore on account of funds arranged by me, overstated debtors position of Rs 490 crore (as against Rs 2651 crore in the books."
The USD 2-billion Satyam also reported a revenue of Rs 2700 crore for the September quarter and an operating margin of Rs 649 crore (24 per cent of revenue) as against the actual revenue of Rs 2112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue).
"This has resulted in artificial cash and bank balances going up Rs 588 crore in Q2 alone," Raju said, adding that the gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years.
Satyam, meanwhile, said Board member Ram Mynampati has been appointed interim CEO. "We are obviously shocked.. immediate priorities are to protect interest of shareholders, protect the careers and security of its approximately 53,000 associates..," Satyam said in a statement.
A shocked industry called for deeper regulation. "This fraud on the investors and employees... shows a systemic breakdown in audit and board oversight... questions will need to be asked," FICCI President Rajeev Chandrasekhar said.
FICCI and CII, however, said the Satyam episode should not be seen as a blot on all the Indian firms.
Corporate Affairs Minister Prem Chand Gupta said stern action would be taken under the law.
Agencies
Strong reactions by CXOs on the Satyam saga
The Satyam “Saga” took a dramatic turn on Wednesday with B. Ramalinga Raju, the chairman of Satyam Computer resigning from the company’s board. In a shocking disclosure, he admitted some financial irregularities in the company, including an inflated cash balance of Rs 5,040 crore.
So is it possible for one of world’s best known businessman to make mistakes? Or was it only greed or some compulsion. Well, it did happen at Satyam Computers.
Mean while reports indicate that at least 120 of Satyam's employees from the lower and middle rung management have resigned after the Satyam-Maytas fiasco broke out and as many as 100 more, including the senior level management, are waiting to take a decision after the board meeting expected to take place on January 10. Meanwhile, DSP Merrill Lynch has terminated all its engagement with Satyam.
IT companies across the country were shocked at the incident and have strongly reacted to the episode. Here are some of the reactions from top-notch CXOs from various companies.
Kehav Murugesh, President of Syntel Inc, a global outsourcing company reacting to the Satyam saga said, “It is unfortunate that there is so much attention on the company now for the wrong reasons. It is difficult for their employees and clients to ignore the situation and there could be an impact on performance as a result. Good governance, transparency and following not just the letter but also the spirit of the law must be the supreme endeavour at all times and that is not necessarily a learning from this episode alone. There has been talk of overseas investors painting all IT companies with the same brush but I am confident that investors and decision makers are very mature and insightful and will easily separate the wheat from the chaff. Syntel being a global organisation that is registered and listed in the US follows the highest governance standards and is SOX compliant.”
Regarding the Satyam story, Phaneesh Murthy, CEO, iGATE said, "An old moral - no amount of pressure should force dishonesty. This is where values should hold up. The market is bad enough. On top of this, visits are curtailed because of the Mumbai incident - this elongates and delays sales cycles."
Nagaraja (Naga) Prakasam, Managing Director of CDC Software (India) said the Satyam episode brings a number of lessons for organizations namely the importance of Corporate Governance. This will clearly have the beneficial effect of having all companies look at good governance processes, such as a enhanced role for independent directors.
V. Balakrishnan, chief financial officer, Infosys, said the developments at Satyam is shocking, unbelievable and sad it has happened in India. So, should one be concerned about the industry at large? "I don't think it is a reflection of the industry or India. It is an isolated case, just like Enron in US. The regulators should get into the case and punish them. It is important to bring back credibility."
Balakrishnan added that Satyam has cooking up the books for a very long time... "they have done it systematically... it is shocking that it has gone unnoticed."
He added that Infosys will address the concerns of clients. "It is for the regulators to address issues, and avoid any such thing in the future."
L. Subramanian, CEO of Chandamama.com, a children's website with stories on Indian Mythology said, "It (The Satyam episode) is probably one of the most serious cases of breach of fiduciary responsibility that has come to light in India. After all the recriminations, I hope that wisdom will dawn on the regulators to figure out how to prevent such incidents rather than react to them. I think it is the trust placed by over 50,000 employees of Satyam that has been shaken, besides that of the shareholders. My one single question is - 'where were the myriad auditors - financial, cost, management, quality systems auditors... surely someone knew that there was rot in the system and chose to keep quiet?"
Ramakrishna Voruganti, Managing Director of Barracuda Networks, a global leader in email and Web security said, “ I think Mr. Raju’s moving out will give Satyam a much-needed chance to take some hard decisions regarding restructuring, governance and their approach to customers.
It would’ve more difficult to take difficult and independent decisions, with Raju at the helm.”
Suresh Sambandam, founder & CEO of OrangeScape, a leading Chennai-based software product company said, “The sequence of events at Satyam is very shocking and unfortunate. While all of us appreciate the seriousness of the issue, it is important to treat this as an isolated failure of corporate governance. Media and industry forums should work closely and use all possible options to uphold the fame and reputation of the Indian IT / BPO industry.”
“The corporate governance needs to be stronger, said Ajay Dhir, CIO of Jindal Stainless Ltd. reacting strongly, he said and the role of the independent directors, who act as the watch dogs needs to be more assertive.”
R. Mohan, Director of Cache Technologies & Communication Ltd, a leading Singapore-based enterprise infrastructure solutions said, “The Satyam incident brings to light to need for proper governance and compliance that is not in place. To prevent such things from happening especially for family-held companies the government should impose stricter norms.”
Jagan Mohan Raju, executive of ADP India Private Ltd, a Hyderabad-based leading providers of business outsourcing solutions said, “Satyam is a very strong brand not only in India but also has a global identity. I think what has happened is very unfortunate. Organizations build over a period of time should be more responsible towards its stake holders including investors, employees and customers. They should be more ethical and should not bring their personal agenda to compromise at the stakeholders’ interest. More over, the issue has been kept away from the board is very unfortunate. I feel that Satyam’s employees’ campaign on Mr Raju is a very positive one.”
So is it possible for one of world’s best known businessman to make mistakes? Or was it only greed or some compulsion. Well, it did happen at Satyam Computers.
Mean while reports indicate that at least 120 of Satyam's employees from the lower and middle rung management have resigned after the Satyam-Maytas fiasco broke out and as many as 100 more, including the senior level management, are waiting to take a decision after the board meeting expected to take place on January 10. Meanwhile, DSP Merrill Lynch has terminated all its engagement with Satyam.
IT companies across the country were shocked at the incident and have strongly reacted to the episode. Here are some of the reactions from top-notch CXOs from various companies.
Kehav Murugesh, President of Syntel Inc, a global outsourcing company reacting to the Satyam saga said, “It is unfortunate that there is so much attention on the company now for the wrong reasons. It is difficult for their employees and clients to ignore the situation and there could be an impact on performance as a result. Good governance, transparency and following not just the letter but also the spirit of the law must be the supreme endeavour at all times and that is not necessarily a learning from this episode alone. There has been talk of overseas investors painting all IT companies with the same brush but I am confident that investors and decision makers are very mature and insightful and will easily separate the wheat from the chaff. Syntel being a global organisation that is registered and listed in the US follows the highest governance standards and is SOX compliant.”
Regarding the Satyam story, Phaneesh Murthy, CEO, iGATE said, "An old moral - no amount of pressure should force dishonesty. This is where values should hold up. The market is bad enough. On top of this, visits are curtailed because of the Mumbai incident - this elongates and delays sales cycles."
Nagaraja (Naga) Prakasam, Managing Director of CDC Software (India) said the Satyam episode brings a number of lessons for organizations namely the importance of Corporate Governance. This will clearly have the beneficial effect of having all companies look at good governance processes, such as a enhanced role for independent directors.
V. Balakrishnan, chief financial officer, Infosys, said the developments at Satyam is shocking, unbelievable and sad it has happened in India. So, should one be concerned about the industry at large? "I don't think it is a reflection of the industry or India. It is an isolated case, just like Enron in US. The regulators should get into the case and punish them. It is important to bring back credibility."
Balakrishnan added that Satyam has cooking up the books for a very long time... "they have done it systematically... it is shocking that it has gone unnoticed."
He added that Infosys will address the concerns of clients. "It is for the regulators to address issues, and avoid any such thing in the future."
L. Subramanian, CEO of Chandamama.com, a children's website with stories on Indian Mythology said, "It (The Satyam episode) is probably one of the most serious cases of breach of fiduciary responsibility that has come to light in India. After all the recriminations, I hope that wisdom will dawn on the regulators to figure out how to prevent such incidents rather than react to them. I think it is the trust placed by over 50,000 employees of Satyam that has been shaken, besides that of the shareholders. My one single question is - 'where were the myriad auditors - financial, cost, management, quality systems auditors... surely someone knew that there was rot in the system and chose to keep quiet?"
Ramakrishna Voruganti, Managing Director of Barracuda Networks, a global leader in email and Web security said, “ I think Mr. Raju’s moving out will give Satyam a much-needed chance to take some hard decisions regarding restructuring, governance and their approach to customers.
It would’ve more difficult to take difficult and independent decisions, with Raju at the helm.”
Suresh Sambandam, founder & CEO of OrangeScape, a leading Chennai-based software product company said, “The sequence of events at Satyam is very shocking and unfortunate. While all of us appreciate the seriousness of the issue, it is important to treat this as an isolated failure of corporate governance. Media and industry forums should work closely and use all possible options to uphold the fame and reputation of the Indian IT / BPO industry.”
“The corporate governance needs to be stronger, said Ajay Dhir, CIO of Jindal Stainless Ltd. reacting strongly, he said and the role of the independent directors, who act as the watch dogs needs to be more assertive.”
R. Mohan, Director of Cache Technologies & Communication Ltd, a leading Singapore-based enterprise infrastructure solutions said, “The Satyam incident brings to light to need for proper governance and compliance that is not in place. To prevent such things from happening especially for family-held companies the government should impose stricter norms.”
Jagan Mohan Raju, executive of ADP India Private Ltd, a Hyderabad-based leading providers of business outsourcing solutions said, “Satyam is a very strong brand not only in India but also has a global identity. I think what has happened is very unfortunate. Organizations build over a period of time should be more responsible towards its stake holders including investors, employees and customers. They should be more ethical and should not bring their personal agenda to compromise at the stakeholders’ interest. More over, the issue has been kept away from the board is very unfortunate. I feel that Satyam’s employees’ campaign on Mr Raju is a very positive one.”
Thursday, January 1, 2009
Is it tough times ahead for techies in 2009?
With sinking profits, eroding margins, cost-cuttings and an acquisition bid gone awry, 2008 was a year with more jeers than cheers for the country's over $50 billion IT sector, which has seen nearly a decade of uninterrupted boom.
However, as 2008 draws to a close, the sector is bracing up for a tough time ahead as the scars of global recession are showing up on the country's sunrise sector.
The sector, which has been charting a growth of over 30 per cent, had to settle for a growth rate of 20 per cent, as the global slowdown plunged the industry into unpredictable times.
In the year littered with economic disasters, the failed attempt of country's fourth largest software exporter Satyam Computer to botch up two family-promoted firms for $1.6 billion not only resulted in loss of face but also hit the reputation nurtured by the Indian IT sector over the years.
Faced with shareholder's revolt and heavy criticism over corporate governance issues, Satyam withdrew the offer within hours of making the proposal. But within a space of 24 hours, the scrip lost over 30 per cent in India and was down 55 per cent in New York Stock Exchange trade.
As a fallout, the Board size also shrank with four independent Directors resigning from the 10-Directors strong Board of the company in the wake of the fiasco.
The Satyam saga is likely to continue next year as well with the Board scheduled to meet on January 10.
If Satyam made it to the headlines for a failed deal, it was HCL Technologies, the country's fifth largest software exporter next to Satyam that made the country proud by inking the largest takeover deal in the software space overseas.
HCL piped rival country's second largest IT giant Infosys to bag UK-based SAP consulting firm Axon for $658 million. While Infosys had made 600 pence per share offer for Axon, HCL made a counter bid of 650 pence a share to acquire the UK-based firm.
The year was also some significant M&As on the IT front, such as the $13.9-billion acquisition of Electronic Data Services by HP. Back home
, Wipro acquired Citi Technology Services, Citigroup's IT arm in India, in an all-cash $127 million deal.
Earlier, TCS had bought out Citi's captive BPO arm Citigroup Global Services for about $505 million, which reiterates the strength of the Indian IT story. Another reason that will give the software services sector a reason to rejoice is the IT Amendment Bill.
The Lok Sabha passed the Information Technology (Amendment) Bill 2006 this month, which gives the government the power to tackle data theft. The bill might act as a shot in the arm for the BPO firms for whom data security is of utmost importance.
The Bill has provisions to deal with new forms of cyber crimes like publicising sexually explicit material in electronic form, video voyeurism and breach of confidentiality, leakage of data by intermediary and e-commerce frauds, among others.
The US is the world's largest technology market and accounts for between 50 per cent and 60 per cent of the revenues of the top Indian firms. Since September, however, the economic situation in the US and the rest of the world has worsened.
Country's software lobby group Nasscom had estimated that India's software and back-office services industry would grow by 21-24 per cent in the 12 months to March, but its president Som Mittal said recently that this number could be revised downward. With no signs of an early revival, all the IT biggies such as TCS, Infosys, Wipro and Satyam have revised their revenue guidance downwards.
The currency volatility has also compounded the woes of the Indian IT sector. If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September) impacted revenue realisation in dollar terms since 30 per cent of the billing is done in these currencies.
The sector also experienced slowdown in hiring. Already, under pressure to cut cost, most of the IT biggies had to freeze their hiring in the year. Moreover, the joining dates of the new recruits were also postponed, ringing the alarm bells in the job market. The top five IT companies posted a 36 per cent decline in their rate of manpower addition in the last quarter.
As for hiring by BPOs -- for long looked upon as poor the cousins of information technology companies -- also faced the heat.
However, BPOs remained a bit sanguine, as Nasscom's figures indicate that the BPO sector recorded revenue growth of 31.6 per cent whereas IT companies grew at 28 per cent.
In 2009, as the new administration led by Barack Obama takes a look at the outsourcing story vis-a-vis India, it is the efficiency and resilience of the IT sector which can help it sail through the troubled waters.
Source: Agencies
However, as 2008 draws to a close, the sector is bracing up for a tough time ahead as the scars of global recession are showing up on the country's sunrise sector.
The sector, which has been charting a growth of over 30 per cent, had to settle for a growth rate of 20 per cent, as the global slowdown plunged the industry into unpredictable times.
In the year littered with economic disasters, the failed attempt of country's fourth largest software exporter Satyam Computer to botch up two family-promoted firms for $1.6 billion not only resulted in loss of face but also hit the reputation nurtured by the Indian IT sector over the years.
Faced with shareholder's revolt and heavy criticism over corporate governance issues, Satyam withdrew the offer within hours of making the proposal. But within a space of 24 hours, the scrip lost over 30 per cent in India and was down 55 per cent in New York Stock Exchange trade.
As a fallout, the Board size also shrank with four independent Directors resigning from the 10-Directors strong Board of the company in the wake of the fiasco.
The Satyam saga is likely to continue next year as well with the Board scheduled to meet on January 10.
If Satyam made it to the headlines for a failed deal, it was HCL Technologies, the country's fifth largest software exporter next to Satyam that made the country proud by inking the largest takeover deal in the software space overseas.
HCL piped rival country's second largest IT giant Infosys to bag UK-based SAP consulting firm Axon for $658 million. While Infosys had made 600 pence per share offer for Axon, HCL made a counter bid of 650 pence a share to acquire the UK-based firm.
The year was also some significant M&As on the IT front, such as the $13.9-billion acquisition of Electronic Data Services by HP. Back home
, Wipro acquired Citi Technology Services, Citigroup's IT arm in India, in an all-cash $127 million deal.
Earlier, TCS had bought out Citi's captive BPO arm Citigroup Global Services for about $505 million, which reiterates the strength of the Indian IT story. Another reason that will give the software services sector a reason to rejoice is the IT Amendment Bill.
The Lok Sabha passed the Information Technology (Amendment) Bill 2006 this month, which gives the government the power to tackle data theft. The bill might act as a shot in the arm for the BPO firms for whom data security is of utmost importance.
The Bill has provisions to deal with new forms of cyber crimes like publicising sexually explicit material in electronic form, video voyeurism and breach of confidentiality, leakage of data by intermediary and e-commerce frauds, among others.
The US is the world's largest technology market and accounts for between 50 per cent and 60 per cent of the revenues of the top Indian firms. Since September, however, the economic situation in the US and the rest of the world has worsened.
Country's software lobby group Nasscom had estimated that India's software and back-office services industry would grow by 21-24 per cent in the 12 months to March, but its president Som Mittal said recently that this number could be revised downward. With no signs of an early revival, all the IT biggies such as TCS, Infosys, Wipro and Satyam have revised their revenue guidance downwards.
The currency volatility has also compounded the woes of the Indian IT sector. If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September) impacted revenue realisation in dollar terms since 30 per cent of the billing is done in these currencies.
The sector also experienced slowdown in hiring. Already, under pressure to cut cost, most of the IT biggies had to freeze their hiring in the year. Moreover, the joining dates of the new recruits were also postponed, ringing the alarm bells in the job market. The top five IT companies posted a 36 per cent decline in their rate of manpower addition in the last quarter.
As for hiring by BPOs -- for long looked upon as poor the cousins of information technology companies -- also faced the heat.
However, BPOs remained a bit sanguine, as Nasscom's figures indicate that the BPO sector recorded revenue growth of 31.6 per cent whereas IT companies grew at 28 per cent.
In 2009, as the new administration led by Barack Obama takes a look at the outsourcing story vis-a-vis India, it is the efficiency and resilience of the IT sector which can help it sail through the troubled waters.
Source: Agencies
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