Tiger Riding and the Indian SPs — Australian Impact? Ovum comments on Satyam

Thursday, 08 January, 2009


In his letter of resignation admitting to the fraud to the board of directors of Satyam Computer Services, B Ramalinga Raju said, "It was like riding a tiger, not knowing how to get off without being eaten."

An eye-catching line from  Raju's statement but the question is, should the tiger really have been ridden. It appears this 'gamble' has not paid off and may impact not only the Indian providers but any externals — it will raise even greater trust and ethical questions in buyers’ minds.

How will this affect Australian clients such as NAB, Telstra and Qantas will take some time to clear up. The Board has already set up a taskforce to assess the situation, but any contracts that are up for renewal in the near-term may be at risk of being handed to another provider.

Is this a takeover opportunity for some of the other Indian players or globals? Interestingly, it appears Tech Mahindra, the sixth largest joint venture with BT, has already approached Satyam.

Expect some instability, mixed messages and lots of governance talk to come out over the next few weeks, but it would be best to just sit tight and hope that key operational staff do not leave/get poached.

 

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