Clock ticks for Satyam as customers eye exit
Offshore outsourcing provider Satyam--now known as India's Enron--is looking for buyers, close to naming some new leadership and struggling to find its footing as a going concern. Meanwhile, customers are watching closely and readying plans to leap.
For instance, State Farm has said that it is leaving Satyam. Customers are predictably mum about their plans, but the anecdotes suggest that CIOs are planning to jump ship. Computerworld confirmed that State Farm is leaving Satyam, but did offer one ray of sunshine: General Electric is staying with Satyam for the time being. The operative words there are "time being."
Rest assured GE is pondering its options.
Satyam's rivals--Wipro for instance--say they aren't actively poaching Satyam customers, but will listen to potential clients that make inquiries. Yeah right. In fact, I talked to one CIO, who shall remain nameless, who is a Satyam customer. He says Wipro and others called him within minutes of the Satyam news.
He says that Satyam's fraud is worrisome to say the least. He's left with one question: If Satyam can't manage its internal processes and procedures how can it manage yours? (He's asking the same about his auditor, PriceWaterhouse, who happens to be the same as Satyam's).
Also see: Satyam: resignations, appointments and YouTube videos
- Satyam scandal: Arrests and new board members
- Satyam fallout: Should customers stick? Full text of chairman’s stunning letter
- Satyam – Can anything be trusted in Raju’s resignation letter?
So what is this CIO of a multinational company doing?
He's standing pat--for now. In a perfect world he would have bailed on Satyam already, but there are contracts, implementation roadmaps and plan Bs to be created. Satyam thus far is still meeting its obligations so he has some time. The best case is that Satyam gets acquired by another company that can service customers.
Although he hasn't looked at Satyam's legalese specifically, he was confident he could break the deal. A massive fraud can do that. The rub: He needs a plan B to move away from Satyam. Offshore outsourcing deals aren't like hot-swapping a Dell server for one from IBM or HP.
Simply put, there may be some pain involved with moving away from Satyam to another provider. And pain requires planning. The upshot: That contingency planning is happening as we speak. The Satyam exodus may have not started en masse just yet, but the months ahead are likely to be rocky for the outsourcing outfit.
Satyam obviously sees the train wreck ahead. That's why it is scrambling to hire new management, find a potential buyer and keep customers in the fold. Satyam's fraud caught customers by surprise, but the escape plans are being formulated. In other words, the clock is running out for Satyam.