epilogue

On January 7, 2009, B Ramalinga Raju admitted to orchestrating a 1.47 billion fraud on the balance sheets of Satyam Computer Services, the largest ever in Indian history. Satyam also happens to be 4th largest Information Technology company in India and employs over 53,000 professionals. Resignations from the Satyam’s board of directors trickled through for almost a week before Mr Ramalinga Raju confessed of the fraud and resigned.

Even the markets haven’t been kind. Satyam stocks have fallen from an Rs 180.00 level to a mere Rs 6.30 on the National Stock Exchange after the fraud came to light; the scrip might soon be delisted.

As the lives of the 53,000 employees hangs precariously, the impossible task of rescuing Satyam falls on Mr Ram Mynampati the COO, who is now, also the company’s interim CEO. Though Mr Mynampati has given verbal assurances on the future of the employees, the exact cash position of the company is not known. What, however, is known that the IT sector in India is considering downsizing. New hiring and raises have already stopped, because of the economic slowdown.

IT budgets and spending are slated to reduce by 7%-9% in 2009. It is likely that many of Satyam’s customers will chose not to do business with them. Nobody wants projects with players whose future is uncertain; add to that the loss of image and trust. The World Bank had already blacklisted Satyam a few days before the fraud became public knowledge. An Indian competitor buying Satyam for its clients or their order book is out of the question.

Given the slowdown and IT spending cuts, an acquisition for the execution capabilities (employees and infrastructure) doesn’t make sense. Infosys, India’s number two IT company is already refraining hiring from Satyam. The Government of India has categorically denied making any kind of rescue and banks are tightening credit lines. The company has nowhere to go but down.

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