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Satyam and the ‘Shadow Board'

Zafar Anjum | March 14, 2011
Beleaguered Indian IT Services giant Satyam recently announced it is making a comeback towards greater stability and success, but acknowledges that its leaders and employees have their work cut out.

SINGAPORE, 16 FEBRUARY 2011 – Reputation once lost is hard to regain, goes the adage.

Indian IT services company Satyam learnt this lesson the hard way when the news of financial misadventures by its chairman Ramalinga Raju hit the company in January 2009. The company plunged into a financial crisis. The swindle soured the company’s business prospects.

But all was not lost in the turmoil. Another Indian outsourcer, Tech Mahindra, acquired a dominant 43 per cent stake in Satyam, recognizing the group’s potential for revival.

To mollify scandalized clients and investors, Tech Mahindra rebranded Satyam as Mahindra Satyam. Then it announced plans to merge Satyam with its own brand. That merger was to develop, after Satyam had crossed certain milestones.

The company reported in November last year that it had returned to profit in the quarters ended June 30 and Sept. 30. This pathway to recovery, however, has certainly not been a cakewalk for Satyam’s new leadership.

How did they navigate the rubble of disrepute amid the loss of market confidence?

The road to recovery

“The first few months featured massive crisis management,” says Rohit Gandhi (picture), Mahindra Satyam’s senior vice president. “There were issues of customer and employee retention, then there were legal cases to deal with, there was corporate governance to be brought back. We formed an Asia Pac leadership council and brought everyone together. It could not have been done by one or two people. We met every week and came out with a proper to-do list.”

This to-do list had 30 points. Initially, 24 points were about turning-around the embattled tech company and six points were about growth.

“As part of the crisis, we lost a number of key people,” says Gandhi. “We started massive hiring. Initially, I thought that that would be my biggest challenge. Why would somebody want to join Satyam? Surprisingly, there were so many people in the market—good people from very good organizations—who said we want to come here just for the fun of it. They wanted to be a part of this company that was to see a turn around.

“We promoted a number of people internally to leadership positions. The rest we hired from top IT companies.

“Employee attrition has come down dramatically. It was very high, alarmingly high. But, it has now come down to almost industry level. We definitely need to work more on this.”

Return to profitability

“We started pulling a number of levers to improve profitability, whether it was onsite- offshore ratios, or utilization, or benchmarks or whatever, there was a task force working on this,” says Gandhi. “We asked ourselves: how do we get the best out of business? How do we come back to industry norms? It is not over yet but there are encouraging signs. We are almost 60 per cent towards where we want to go. Now we are working on the balance.

 

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