Doubts are emerging over the feasibility of the proposed sale of disgraced Indian technology giant Satyam Computer Services after it invited bids from companies interested in taking a majority stake.
Speculation has suggested that IBM is an early front runner to acquire the company, but local experts with close ties to the Indian outsourcing industry said a break-up of Satyam was the only sensible option.
The director of independent consultancy Mindfields, Mohit Sharma, claimed the acquisition process had been set up to fail, as bidders would only have access to Satyam's re-stated accounts for the last three years once they had been shortlisted as potential buyers. A lack of clarity around the enormous liabilities tied to the company as a result of US class action suits and problems in assessing the true worth of the Satyam made a sale highly unlikely, he said.
A local spokesman for IBM refused to comment on the speculation, but Indian software services provider Tech Mahindra has said it is evaluating Satyam and Indian engineering firm Larsen & Toubro and the Hinduja Group have been touted as potential buyers as well.
"The IBM takeover rumour has been there for the last three years, even before this scandal happened, but an acquisition would not add anything to its current portfolio of service offerings," Mr Sharma said.
"Indian companies like TCS [Tata Consultancy Services], Wipro and Infosys would not be interested in buying the whole of Satyam either as it would dilute their margins, and Satyam's customers are already approaching them anyway."
He said second-tier Indian players like Tech Mahindra would not have the ability to provide the scale of services needed following a complete acquisition, but that it would be more likely to succeed in buying portions of the business.
Satyam's Australian business would be a very appealing target for both Tech Mahindra and TCS as an avenue into doing business with Telstra, one of Satyam's biggest clients.
Mr Sharma said about 35 per cent of Australian revenue for Indian firms like Satyam, Wipro, Infosys, HCL and Tech Mahindra came from Telstra, and that TCS was the only Indian IT company which did not have any Telstra business.
Mr Sharma said he believed Indian government officials wanted any secrets within Satyam's books to remain hidden until after national Indian elections next month. Allegations abound in Satyam's home state of Andhra Pradesh that the company's founder, Ramalinga Raju, financed the business of the chief minister's son.
The founder of Swamy & Associates, Sri Annaswamy, said he was surprised that Satyam's board continued to reject the idea of splitting the company up for sale. It was pointless for politicians to delay the sale to avoid the issue, he said.
"There will be an enormous electoral backlash if Satyam remains unsold and fails. If 50,000 people are suddenly out of work, it will be a huge problem," said Mr Annaswamy, whose Sydney-based company gives advice on offshore outsourcing.
