Thursday, January 8, 2009

What will happen to Satyam now?

B.Ramalinga Raju - India Economic Summit 2008Image by World Economic Forum via FlickrIt is now beyond a shadow of doubt that the Raju clan will no longer be at the helm of Satyam. And very shortly, the representatives of the Raju clan will also be shunted out. So what does the future hold for this IT major that has won many projects and awards and had a team of over 50,000 talented people working across countries on countless critical projects?

Here is a quick run down of possible options.

1. New board and executive team takes over.
This would probably be the best thing that can happen - for the company, the employees and the clients. Things can go back to normal and the well-oiled project delivery machinery can continue to do what it has done successfully for nearly 20 years.

However, it is not that easy. New leadership has to emerge and should be able to grab the attention and support of the existing employees. More importantly, the new team must find some money, at least working capital, right away. And finally they have to convince the existing clients to stick around and continue to have faith in the company. After all, whatever has happened has not been at the cost of the clients, at least not yet.

The biggest down side is that the new team will have to face all the law suits and class actions that are being filed now, here in India and in the US. Can they manage to revive such a large company and take on all the legal issues at the same time?

2. Get taken over by some other company
This is probably the second best option. Very similar to the first option, except that a new management team, mostly from outside of Satyam will take over and run the show. There will be some collateral damage at the top management level of Satyam where some of the upper management people will be let go. The rest of the employees would be spared as, like in most Indian IT companies, the people are the main asset.

The down side is pretty much the same as in case 1. That is what makes this option unlikely.

3. Individual divisions carved out and sold
This is salvage time folks. This option holds a lot of promise and benefits for the new owners as well as the clients. Already Tech Mahindra is talking about taking the telecom division of Satyam. This will be good for the existing telecom clients of Satyam and for Tech Mahindra which will get a new set of clients and projects as well as a talented team.

However, this option is not so good for the employees. Time and again, we have seen that when this kind of a carve out happens, most of the employees are shown the door. I am sure Tech Mahindra already has very good people and spare resources for the Telecom sector and so, many of the middle management and programmer level resources will be let go.

The beauty of this option is that the company that takes the division(s) only gets the clients and possibly, the employees. The charges of corruption and the cases filed against Satyam will continue to remain with Satyam. All gain, no pain!

4. Close down/bankruptcy
The final option. Not good for anybody. Not even for the competitors - TCS, Infosys, Wipro and others. If this happens, the faith in the entire Indian Software industry will be shaken further. Questions about the auditing and financial practices will come up. Questions like, "who really knows the situation within these companies?" and "Satyam today, who next?"

The optimist that I am, I am hoping for option 1 to materialize. GO Satyam GO!

(No harm in updating your profile though, if you are a Satyam employee - try
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