Satyam Scam: Is the Indian IT Dream over?

Adding insult to injury, Satyam founder and chairman B Ramalinga Raju has admitted that the company had been misappropriating its accounts for several years, opening up a Pandora's box of loopholes and miscalculations in corporate governance in Indian IT.


Although this paints a gloomy picture, captains of the IT industry seek to allay fears of a confidence betrayal in the minds of the countless investors, stockbrokers, businessmen and countless households, who have pinned their entire future onto these corporates.

NASSCOM may consider banning Satyam Computer Services from its membership. "The entire incident came us a shock to us. This kind of a fiasco is an unprecedented one in the history of Nasscom. Considering the magnitude and implications of the incident, we can even look at banning the company from Nasscom," says Ganesh Natarajan, Chairman, Nasscom. In fact, Ramalinga Raju had served as the chairman of Nasscom in 2006-07.

"It is a bad day for corporate India and IT industry. Investors will be very worried and this is critical time for the company and thus management has to be changed for company to protect careers of their employees," says Mohandas Pai, Head, HR Administration, Infosys Technologies. He feels that the auditing process should get more rigorous and that all companies should make sure that bank balance confirmation goes directly to auditors. Pai thinks that the outsourcing clients will take a more cautious approach now and people having large exposure to outsourcing will consolidate and work to minimise the risk.

Suresh Senapathy, CFO, Wipro, assures that Satyam's case is isolated and not associated with any industry. He said Satyam would face both civil and criminal prosecution in the U.S. He feels that as shareholders are more vulnerable, clients will assess risks now.

CP Gurnani, President, International Operations, Tech Mahindra feels that the Indian IT industry should call it a crisis situation. However, there need to be some more announcements for employees and shareholders of Satyam. He added that if anybody acquires this company, he will only be acquiring lawsuits now.

"There is definitely a need for deeper and harder look at what we have been calling corporate governance over the last few years. We have to also take a deep look into what allowed this ill-governance to continue for so long," says Rajeev Chandrashekar, President, Federation of Indian Chambers of Commerce and Industry FICCI.

"It is a complex issue. We have to also see what has been the role of board of directors, auditors and company secretary. So, accordingly once the things are clear then the proper action would be taken," said, PC Gupta, Minister of Corporate Affairs in a statement.

"The fact that the board of directors got conned is itself not a very good thing. I think independent directors should have the capacity to understand the business," Gupta added.

Obviously we hope it does not affect the IT sector in general.