Jan
8
January 8, 2009 | 
Scandalous.
That’s one word to describe Ramalingam Raju, the chairman of India’s 3rd largest IT outsourcing company Satyam Computer Services, and his recent confession of ballooning the company’s September revenues by 76 percent, its profits by 97 percent and doctoring the balance sheets to reflect a false USD 1 billion in company assets.
Aside from apparently rocking the core of Indian business and economics, what does Ramalingam Raju’s recent activities could mean for IT outsourcing, outsourcing in general not only for India but for all?
In a letter Ramalingam Raju sent to Satyam’s board of directors and to the Securities Exchange Commission of India, he apologized for being unable to close the marginal gap between operating profits and the one reflected in the books of account and he is prepared to face the consequences of his actions.
I would like to ask, is corporate India ready to face the consequences of his actions?
At a time where world economies are finding themselves near-falling into recessive ruts, this news are a major blow to India’s business reputation as a leading outsourcing destination. It has already suffered from past international cases of fraud and illegal invasions of client privacy. This could be a major hit, a killer hit.
The venom of the bad press this generates is likely going to hurt India’s outsourcing industry. Clients would definitely demand more auditing, stricter regulation and monitoring.
One’s poison could be another’s meat as clients might consider other more able, reliable outsourcing companies and destinations.
Could Satyam, its investors and its employees recover? Reading the accounts and cases piled up against them since December, it could be highly unlikely. Could India’s credibility take the damage? Turn defeat into a victory?
There are lessons to be learned here. One quickly comes to mind, The Bigger they are– the harder they sure fall.
Outsourcing Solutions, Inc. – your outsourcing partner!
Reference:
Kripalani, Manjeet. “India’s Madoff? Satyam Scandal Rocks Outsourcing Industry.” 7 January 2009. Business Week. Accessed 7 January 2009. Link here
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