Two months into the crisis since Ramalinga Raju imported Billion Dollar fraudulence into the untainted Indian Software industry and joined the ranks of Ponzi, Madoff and Nick Leeson. The initial shock and awe at the mammoth proportions of the scandal questioned the fundamental viability of the company and put to question many family-promoted businesses suspected to have fly-by-night operations. However, thanks to the resilience and some very strong spokesmanship of the Indian IT industry, any stigma that could have otherwise created colateral damage to 'India Offshoring' reputation have been strongly contended with.
As Raju continues to be grilled and his archives diligently scrutinised for the age and quantum of the overstatement, Satyam is picking up the pieces of its tattered reputation to reaffirm the fundamental solidity and be a compelling buy to its potential suitors. It might ultimately be one of the Second Tier IT vendors who would show the risk appetite to absorb Satyam with all its assets and liabilities. But with IBM, Tech Pacific, KKR, Fidelity rumored to have joined the initial race against L&T, Tech Mahindra and Spice there is no doubt of one fact - Satyam still has significant value to offset the cloud of unavailable wealth that was initially comprehended.
All this brings a fundamental assuring message to the customer fraternity. Their risks of services disruption would be contained and, pitching for Satyam business on one side and lambasting the India Offshoring story on the other - would tantamount to nothing less than 'sales hypocrisy' by an IT vendor.
As it turned out, the Great Global Depression that shared simultaneous but larger media space, created the right anti-story under the circumstances. And the Satyam scandal, in hindsight offered some very complimentary benefits to the market in general .
Enhanced Service Delivery : The first to be affected were Satyam customers and employees. In the first days of the scandal, as project teams and customers huddled into conference rooms to gauge the likely consequences of the admission, clients put maximum priority to ensure there was no immediate effect and project teams went out of the way to compensate a tarnished reputation with impeccable delivery. Service levels saw an unprecendented uplift while Client Managers turned more sympathetic in order to prevent the exodus of the familiar face. A stronger bondage was cemented to remain together in the crisis and wait till the storm blew over. Teamwork could not have better manifestation. The competitive lateral vendor smelling an opportunity, showed willingness to offer concessions on areas earlier avoided and some local vendors also went onboard with proactive bids for a transition. At a time when layoffs and shorter working hours were severely constraining clientside bandwidths, the last two months have proved - you can do more with less. At the end, Raju declaration was not what mattered - it the was the face of the individual whose continued commitment and motivation turned out to be crucial. In this aspect the last two months have experienced, the client could have never been more satisfied.
Cost Containment : Some customers initially went out of the way to pledge continued patronage (read Nestle). However, management decision on longterm fate of the relationship would have to taken after all. Desparate to hold the cluster together, Satyam offered clients myriad of options that focussed on significant cost reductions in lieu of a promise to continue stay onboard. Some agreed, some did not. Competitive vendors who were offered to bid for the Satyam pie got to do so with stricter boundaries of scope and price. The crisis offered a easier exit path for customers who were already struggling with significant budget cuts. Premature contract closures offered the cost containment drive to negotiate an additional lever .
Business Windfall : True, at the end some customers could not live with a potential uncertainty arising out of the scandal and started terminating contracts. Till date Satyam is supposed to have lost 46 customers. A few, like Sandisk, openly mentioned the episode in their latest Annual Report with a clear intention to move to as alternate vendor over time. With most Satyam clients, this alternate-vendor-route took the predicted path of approaching one or more vendors from the existing landscape. There was an even mix of one of the Global Top 5 and an India based one in the shortlist. Cumulatively, not only these IT vendors got access to potentially $2 B additional market, analysts and consultancies - mostly from UK, came up with classified Satyam information to advice the community - at a handsome price of course. As a result, in this period of shrinking budgets and delayed project takeoffs, the largest market that has emerged in the last couple of months is the 'Satyam Market'.
Churning the Job Market : The last two-quarter reports have shown attrition is not much a headache to the HR, as if to mock the lack of traction in the current job market. Headhunters in India, who were otherwise defocussing IT and diverting synergies towards unaffected sectors like Lifesciences and Retail, were suddenly flooded with request from thousand Satyamites - in fear of losing their livelyhoods. Lateral hiring within the India majors were strongly restricted by this time, however that did not prevent the qualified staff to get lucrative offers from the Global biggies expanding India operation and relatively senior positions in Tier II vendors and niche players. Layoffs in Satyam might still be a reality, but the crisis have opened newer vistas of opportunity to many Satyamites whose valuation is strong in specific domains and platforms. It signifies the fact, ability of the current market to create new jobs might be limited, but absorption of the right talent is not.
Fostering Entrepreneuship : Not a very repeated word in the Satyam family after sacking of a top honcho in the US. Yet the crisis have invariably made some the beleagured folks think of taking the surreptitiously desired but unbeaten path of self employment. And the latent willingness of the midsize US accounts probably catalysed a few of them into taking the jump. It is not Raju who ensured smooth day to day operations of many business critical applications in these companies - but the folks who managed the project and relationship did. Business continuity amidst the crisis needed those familiar faces to continue rendering services to the business - and clients striking a block deal to ensure that, was only obvious. The US markets are unofficially known to patronise entreprenuerial spirits and freelancing approaches, the scam only provided the right excuse to test the model with a few willing adventurers.
Only a few weeks later, one knows whether Satyam would cease to exist independently post takeover or exist without growth and limelight a la Bearing Point . Never before however, has this industry or Corporate India faced a turmoil where the threat of extermination balanced so well with the lure of opportunities.
Likewise, a 'bad' Raju would probably get Satyam a better deal what a 'good' Raju could have never done .
As Raju continues to be grilled and his archives diligently scrutinised for the age and quantum of the overstatement, Satyam is picking up the pieces of its tattered reputation to reaffirm the fundamental solidity and be a compelling buy to its potential suitors. It might ultimately be one of the Second Tier IT vendors who would show the risk appetite to absorb Satyam with all its assets and liabilities. But with IBM, Tech Pacific, KKR, Fidelity rumored to have joined the initial race against L&T, Tech Mahindra and Spice there is no doubt of one fact - Satyam still has significant value to offset the cloud of unavailable wealth that was initially comprehended.
All this brings a fundamental assuring message to the customer fraternity. Their risks of services disruption would be contained and, pitching for Satyam business on one side and lambasting the India Offshoring story on the other - would tantamount to nothing less than 'sales hypocrisy' by an IT vendor.
As it turned out, the Great Global Depression that shared simultaneous but larger media space, created the right anti-story under the circumstances. And the Satyam scandal, in hindsight offered some very complimentary benefits to the market in general .
Enhanced Service Delivery : The first to be affected were Satyam customers and employees. In the first days of the scandal, as project teams and customers huddled into conference rooms to gauge the likely consequences of the admission, clients put maximum priority to ensure there was no immediate effect and project teams went out of the way to compensate a tarnished reputation with impeccable delivery. Service levels saw an unprecendented uplift while Client Managers turned more sympathetic in order to prevent the exodus of the familiar face. A stronger bondage was cemented to remain together in the crisis and wait till the storm blew over. Teamwork could not have better manifestation. The competitive lateral vendor smelling an opportunity, showed willingness to offer concessions on areas earlier avoided and some local vendors also went onboard with proactive bids for a transition. At a time when layoffs and shorter working hours were severely constraining clientside bandwidths, the last two months have proved - you can do more with less. At the end, Raju declaration was not what mattered - it the was the face of the individual whose continued commitment and motivation turned out to be crucial. In this aspect the last two months have experienced, the client could have never been more satisfied.
Cost Containment : Some customers initially went out of the way to pledge continued patronage (read Nestle). However, management decision on longterm fate of the relationship would have to taken after all. Desparate to hold the cluster together, Satyam offered clients myriad of options that focussed on significant cost reductions in lieu of a promise to continue stay onboard. Some agreed, some did not. Competitive vendors who were offered to bid for the Satyam pie got to do so with stricter boundaries of scope and price. The crisis offered a easier exit path for customers who were already struggling with significant budget cuts. Premature contract closures offered the cost containment drive to negotiate an additional lever .
Business Windfall : True, at the end some customers could not live with a potential uncertainty arising out of the scandal and started terminating contracts. Till date Satyam is supposed to have lost 46 customers. A few, like Sandisk, openly mentioned the episode in their latest Annual Report with a clear intention to move to as alternate vendor over time. With most Satyam clients, this alternate-vendor-route took the predicted path of approaching one or more vendors from the existing landscape. There was an even mix of one of the Global Top 5 and an India based one in the shortlist. Cumulatively, not only these IT vendors got access to potentially $2 B additional market, analysts and consultancies - mostly from UK, came up with classified Satyam information to advice the community - at a handsome price of course. As a result, in this period of shrinking budgets and delayed project takeoffs, the largest market that has emerged in the last couple of months is the 'Satyam Market'.
Churning the Job Market : The last two-quarter reports have shown attrition is not much a headache to the HR, as if to mock the lack of traction in the current job market. Headhunters in India, who were otherwise defocussing IT and diverting synergies towards unaffected sectors like Lifesciences and Retail, were suddenly flooded with request from thousand Satyamites - in fear of losing their livelyhoods. Lateral hiring within the India majors were strongly restricted by this time, however that did not prevent the qualified staff to get lucrative offers from the Global biggies expanding India operation and relatively senior positions in Tier II vendors and niche players. Layoffs in Satyam might still be a reality, but the crisis have opened newer vistas of opportunity to many Satyamites whose valuation is strong in specific domains and platforms. It signifies the fact, ability of the current market to create new jobs might be limited, but absorption of the right talent is not.
Fostering Entrepreneuship : Not a very repeated word in the Satyam family after sacking of a top honcho in the US. Yet the crisis have invariably made some the beleagured folks think of taking the surreptitiously desired but unbeaten path of self employment. And the latent willingness of the midsize US accounts probably catalysed a few of them into taking the jump. It is not Raju who ensured smooth day to day operations of many business critical applications in these companies - but the folks who managed the project and relationship did. Business continuity amidst the crisis needed those familiar faces to continue rendering services to the business - and clients striking a block deal to ensure that, was only obvious. The US markets are unofficially known to patronise entreprenuerial spirits and freelancing approaches, the scam only provided the right excuse to test the model with a few willing adventurers.
Only a few weeks later, one knows whether Satyam would cease to exist independently post takeover or exist without growth and limelight a la Bearing Point . Never before however, has this industry or Corporate India faced a turmoil where the threat of extermination balanced so well with the lure of opportunities.
Likewise, a 'bad' Raju would probably get Satyam a better deal what a 'good' Raju could have never done .
