Delay in Satyam revival to cost clients faith

Written by Rachana Khanzode | Mumbai | Updated: Jan 13 2009, 05:16am hrs
The governments intervention and announcement of top notch board members is just a beginning. While the authorities have shown tremendous alacrity to revive Satyam, there is a lot yet to be achieved, prime among them being the need to restore clients confidence in the firm. Clients, who are already looking for a replacement of the service firm.

Analysts in the industry strongly feel clients are expecting action, which can help establish stability in terms of business and service continuity, key elements while choosing a high-profile service provider.

Following the then Satyam chairman Ramalinga Rajus confession on January 7 regarding the Rs 7,000-crore fraud, the Centre took three critical days to step into action, dissolve the board and elect three new members. Ten new directors will be appointed within another seven days, the government has assured.

However, according to analysts, delay in action from the government and appointment of new board might hamper the Satyams already-concerned clients, especially those who were depending on the firm for their mission critical work. Sudin Apte, senior analyst with Forrester Research, said, Before the government came in, we saw clients across the board looking out for options. Even after that, clients need to have confidence in the company. Clients are expected to poach Satyams employees, who have been working on mission critical projects for them, as they cannot afford to delay work, he adds.

However, the businesses might not be taken by the other top players as Satyam has been known for undercutting rates. Having extremely competitive rates with sound delivery was Satyams selling proposition. In such times, going beyond Satyams rates would be difficult, says an analyst.

Satyam has been boosting the moral of its employees by regularly communicating with them in terms of salary, lay offs and clients. Satyam employees say the firm is seeing renewal of contracts and clients are standing by them. Most of us want to stick to our company till everything is clear. We have been communicated that contracts from firms have been renewed. Companies like Oracle, FedEx, Qantas and others have confirmed that they will work with us, a Satyam employee says. However, analysts have contradictory statement. Clients from insurance, engineering services, retail and consumer-packaged goods are increasingly looking for options, they say. Kimberly Clark, Merill Lynch, General Electric are some of the clients that have been working with Satyam.

A senior Satyam employee working on an overseas project in Europe said he was finding it increasingly embarrassing to face his client. The client has started asking questions. This is the time when companies look at renewing contracts. If the response is not quick, we will lose our client. He, however, said he has developed a good rapport with the client and would explore possibilities of getting employed with the client in case he loses his job at Satyam. Terming the governments move as a good one he said, The short-term troubles are unimaginable. The top brass could not be trusted anyway and we were expecting that they would be wiped out by shareholders like L&T and LIC during the board meeting on January 12.