For the first time after Tech Mahindra formally acquired fraud-hit Satyam Computer Services, the company on Friday said that Satyam has 10,000 excess staff out of its total 40,000 employees.
“Satyam has 10,000 excess manpower. It has close to 40,000 employees. We are looking at least painful ways to take care of this issue,” said Vineet Nayyar, CEO, Tech Mahindra, without elaborating on the steps the company plans to take. The excess manpower in the company is on back of the key client losses that Satyam has had since the time its founder B Ramalinga confessed to cooking the company’s books for many years.
Some market estimates say Satyam has lost around 30% of its business since the fraud-broke out. Talking to FE, Kiran Karnik, chairman on the company’s board said that the company’s top-line has started diminishing now. “The revenues have started dropping now, as the project cancellations that took place over the last five months are coming into being,” he said. Karnik said that the company is not looking at layoffs and it is exploring sabbatical and virtual bench strategy.
“The customer front is good, stable. But costs are high… the revenues would be less,” said Karnik. In a board meeting on Friday, a host of cost-cutting measures were discussed between the existing board and Tech Mahindra. However, Karnik added that the company has not lost any key clients after the acquisition by Tech Mahindra. “The economic crisis and the fraud have taken a toll on the company’s topline. Things have started stabilising now, but the new projects will take some time to reflect on the company’s balance sheet,” he said.
Meanwhile, four nominee directors of Tech Mahindra, which acquired a 31% stake in the company in April this year, were appointed on the company’s board on Friday. The directors include Vineet Nayyar, chief executive officer, Tech Mahindra, while the other three on behalf of Venturbay Consultants (an arm of Tech Mahindra), are CP Gurnani, Sanjay Kalra and Ulhas N Yargop.
Karnik said that the nominee directors are expected to take over by June 1, 2009. “We are awaiting statutory approval from the US for inducting Tech Mahindra directors on Satyam’s board. We expect the approval to come by June 1, which is when the nominee directors will take over”. The six-member government board of the company will bow-out once all the legalities are completed.
On being asked about the future course of action for the government appointed board of Satyam, Karnik said that the transition has begun when the present directors will hand over the reigns of the company to Tech Mahindra. “Once all the legalities are sorted out like the open offer which is due in mid-June, either all of us or some of us will move out. We will make sure it is a smooth process,” he said.
Karnik also said the company’s accounts, which are being reinstated by KPMG and Deloitte, will take another three-to six months.