Trust: the Satyam Partnering Disaster

Trust: the Satyam Partnering Disaster

Summary: The images above, taken from Satyam's website, are now worthy of the fail blog.The shock waves rippling through the markets following Satyam's chairman and co-founder Ramalinga Raju's admissions of accounting fraud are world news, being dubbed 'India's Enron'.

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The images above, taken from Satyam's website, are now worthy of the fail blog.

The shock waves rippling through the markets following Satyam's chairman and co-founder Ramalinga Raju's admissions of accounting fraud are world news, being dubbed 'India's Enron'.

You can find punditry about it everywhere 24 hours a day, and depending on your location on the planet speculation about who will profit from picking up Satyams's clients as they collapse. Putting aside the gory financial details, which Dennis Howlett covered very well here on the 7th, Satyam - which ironically is Sanskrit for 'truth' - have severely damaged the outsourcing model at a time when the world economy is already buckling under the strain of massive problems.

After the financial low tide finally exposes all the Satyams, Madoffs, AIG's, Lehman Brothers, Enrons and entire financial systems - there are going to be more - we are going to have the challenge of rebuilding trust.

It's easy to forget that the relationships forged with companies like Satyam and their partners are the backbone of most businesses, as the New York Times described:

Satyam serves as the back office for one-third of the Fortune 500, including some of the largest banks, manufacturers, health care and media companies in the world — handling things like computer systems and customer service for companies that include General Electric, Nestlé, Ford Motor, Cisco and the United States government.

In some cases, Satyam even acted as clients’ outsourced finance and accounting departments.

In the modern globalized world, despite the glib talk of competitors angling for the $2 billion revenue now on the table (and ignoring the plight of Satyam's 53,000 workers in 66 countries) the reality is it's not that easy to pick up the complex relationships forged by these hard working people and get them working well again. The reason why IT partnering and outsourcing has grown into a $64 billion industry employing millions in India and many more elsewhere is due to these talented people's ability to execute. Amid the numbers - Indian economic growth slowing to 7 percent from 9 percent as the economy 'cools' for example - these same people will still be getting the often less glamorous work done, possibly for different employers.

Despite the apparent betrayal by Satyam senior management, not to mention the regulators and auditors, of their workforce, there is still a global war for talent - still a need for people who can execute. Service industries tend to be the unsung heroes of business, only becoming visible if they fail. The medical profession is a good example - thousands of procedures are performed every day, saving lives and solving problems, but the only time you read about the impact this has on people is if they cut off the wrong leg or a doctor assaults a patient.

I've written before about the management innovations taking place at HCL, whose CEO Vineet Nayar blogs for the Harvard Business Review. The Harvard Business School continues to teach the HCL case study as an example of best practice in Strategy and Leadership, and Business Week’s advisory panel of respected thought leaders has nominated HCL as among the top 5 companies to watch out for, recognizing “Employee First” as an example of management innovation.

It is this type of transparent management thinking that will propel us out of the crisis of confidence and trust we are currently experiencing, underpinned by a solid track record of credible performance, innovation, and robust corporate governance structure. I have no way of knowing, just as all business partners despite due diligence ultimately don't, how solid a company like HCL is.

As with all partnerships, trust is ultimately at the heart of a successful relationship which can grow and be dependable. Where Satyam have betrayed that trust to its employees, investors and clients, HCL and others will hopefully step into the breech to rebuild that trust and confidence.

HCL's agenda of management innovation will conceivably ultimately make the business world a better place than the unscrupulous period we are currently living through, and forge a new era of collaboration focused on honesty and transparency.

Topics: Enterprise Software, Banking

About

Oliver Marks leads the Global Digital Enterprise Team at HP, having previously provided seasoned independent consulting guidance to companies on effective planning of business strategy, tactics, technology decisions, roll out and enduring use models that make best use of modern collaborative and social networking tools to achieve their business goals.

These are Oliver's views and not those of his employer HP.

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2 comments
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  • When you trust your life's blood...

    to a third party you get what's coming.

    This is a tragedy for all involved and I hate to sound cold and callous. But outsourcing something that your business has to have to survive is just asking for trouble. This goes to show that once you outsource you lose total control of something that your company can't survive without. This is stupid decision making. Even though it may save you a few bucks at the outset it will almost always cost you in the long run.
    bjbrock
    • let them crash and burn

      it is time for the big bussines to get a taste of its own medicine for destroying the American workforce by outsourcing to India.
      Linux Geek