Feature

Interview: Satyam CEO speaks to Computer Weekly

AS Murty took over as CEO at troubled Indian IT supplier Satyam. Despite a 15-year career at the company, nothing could have prepared him for his new role.

Satyam has been at the centre of a $1bn accounting fraud scandal after its former chairman B Ramalinga Raju admitted that he had fiddled the company's books for several years. The revelation came in a letter to the company last week, in which Raju offered his resignation and confessed to inflating the company's financial figures.

The company was left short of cash, which put its survival in question. Having secured funding the company must now restore confidence if it is to regain its position as a leading Indian outsourcing service provider.

In an interview with Computer Weekly, Murty tells how he is humbled by the reaction to the scandal of employees, what his immediate priorities are and the challenges the company faces.

Questions:

  1. How important are your staff in helping the company recover?
  2. What is your first priority?
  3. What areas will you focus on in your long-term plan?
  4. Which people and organisations are contributing to this long-term plan?
  5. How long do you think it will take to get the company back to where it was before the fraud?
  6. What are the chances of the company being sold as a whole?
  7. What are the chances of the company being broken up?
  8. How many Satyam employees are expected to be made redundant?
  9. How many Satyam employees have left the company?

1. How important are your staff in helping the company recover?

Our recovery begins and ends with our superior associates. I am extremely proud, humbled even, by our associates' performance during this crisis. Despite real uncertainty, they have performed remarkably. In every case, they have remained committed to providing customer value and to one another. They have been inspired by each other's heroic efforts, and they are determined to see the company through this crisis. As such, the brand and business, while damaged, will recover quickly.

Despite our internal administrative challenges, Satyam associates still feature deep business, industry, process and technology competencies. Our people are among the most professional and dedicated in industry and our board and advisors represent the best management talent available. I am confident that our customers and other buyers of professional services realise that Satyam associates, the real power behind the organisation, are extraordinary.

We are also making every effort to ensure that our associates are comfortable. That includes clear, frequent and consistent communication. Associates receive regular updates via e-mail, webinars, and town hall-style meetings. They even a daily newsletter that provides information and clarifies or refutes incorrect or misleading media reports, which abound, unfortunately. And these are working.

Our recovery depends almost entirely on our associates. As such, I am working to ensure that they continue to trust their leaders and are confident Satyam will regain its market leadership position.

2. What is your first priority?

As CEO, the immediate priorities are to initiate and execute activities that will instil confidence in all of our stakeholders-customers, associates, alliance partners, vendors, etc - and to ensure business continuity. The newly constituted board has done an extraordinary job with these efforts in the past month and they continue to be a critical focus for Satyam.

Other priorities are to:

  • Determine the company's financial position, restate third quarter results and manage overall financial matters
  • Evaluate cost-rationalisation alternatives

Apart from these, we will continue to focus on:

  • Evaluating long-term strategic options
  • Assessing and managing legal liabilities
  • Resuming investments in identified areas

Additionally, it is worth noting that we are making every effort to ensure that our associates are comfortable. They are the lifeblood of the organisation, and have performed remarkably despite continued uncertainty. I will work to ensure that they continue to trust their leaders and are confident Satyam will regain its market leadership position.

3. What areas will you focus on in your long-term plan?

We are in the process of creating detailed plans for the next 30, 60 and 90 days. Having secured funding, our immediate focus remains assuring associates and customers, determining Satyam's strategic options, and providing stability and leadership. When these are achieved, we will turn our attention to medium- and long-term programs.

Additionally, all options we consider will address the interests of all stakeholders.

Currently, business continuity is a priority. In fact, for the past month, we have met or exceeded all service level agreements, and as we move ahead, we are increasing our performance. We are proactively addressing numerous customer concerns, meeting with associates and clients, and ensuring that the stability the organisation has achieved recently remains.

4. Which people and organisations are contributing to this long-term plan?

For the foreseeable future, the board and I will rely on the expertise and capabilities of several special advisors and organisations.

These include:

  • Partho S Datta and Homi Khorukhan, the former finance director of the Murugappa Group and the former managing director of Tata Chemicals, respectively. Datta will help with complex financial restatement projects, including announcement of third quarter results, and ensure prudent financial operations. Khosrukhan will lend his expertise to the board, the priorities of which I have stated earlier.
  • From a legal perspective, Wachtell, Lipton, Rosen & Katz will defend Satyam against class action suits in the US. Additionally, Latham & Watkins, a firm that has worked with Satyam for more than eight years, will continue its dialogue with the US Securities and Exchange Commission on the organisation's behalf.
  • Goldman Sachs and Avendus will help the board explore several strategic options, including identification of strategic investors obtaining expressions of interest and ensuring a fair and transparent approach to the process.
  • Boston Consulting Group (BCG) will work closely with our board and leadership team to spearhead the organisation's revival.
  • Deloitte and KPMG will help restate the company's financial reports.

5. How long do you think it will take to get the company back to where it was before the fraud?

While much has been done to stabilise the company in the past month, we will not be able to accurately determine our status until we have been able to restate our financial position. Until then, it would be imprudent to guess.

However, from the outset of the crisis, Satyam's board and senior management have been in constant contact with customers to assure them of business continuity. The response of those customers has been extremely encouraging.

To this point, our efforts to provide clear, consistent and forthright communications are working. More than 90% of our clients have indicated their support for Satyam, and are staying with us. In addition, several have noted their amazement with our associates, who, despite uncertainty within their organisation, never allowed their customer or delivery focus to falter.

With some clients, the crisis has actually strengthened our relationship they have indicated that they truly admire our teams' continuing commitment to service level agreements in the face of a crisis. As such, we are certainly on our way to restoring the organisation to its market leadership position.

6. What are the chances of the company being sold as a whole?

Our board and executive team have a fiduciary responsibility to consider all serious offers. As such, we will consider selling the company if, and only if, that is the best option to pursue. Because the market recognises its exceptional capabilities and world-class associates, Satyam has been approached by representatives from numerous entities regarding acquisition, and will listen to all of them. However, the organisation's primary focus, for the immediate future, are those I stated earlier.

Satyam has a very promising future, whether or not it remains an independent entity. The company has a world-class roster of clients it enjoys remarkably strong relationships with its customers and suppliers it has deep business, industry, process and technology competencies its staff are among the most professional and dedicated in industry and its board represents the best management talent available.

7. What are the chances of the company being broken up?

The Indian government, which has provided remarkable support for Satyam throughout the crisis, will not allow the company to be sold off piecemeal. It may be purchased one day, if the board, advisors and I find that to be the most attractive option for stakeholders. But if it is, it will be sold in its entirety.

8. How many Satyam employees are expected to be made redundant?

Obviously, Satyam will work hard to rationalise expenses. However, there are numerous ways to increase operational excellence short of reducing staff. Furthermore, as long as customer retention remains strong, there will be no call for layoffs.

9. How many Satyam employees have left the company?

Actual headcount figures will become clearer when the accounting firms reviewing our books finish their projects. When they do, Satyam will share the numbers with appropriate audiences, including the media.

While it is difficult to say how many people have left the organisation, we are proud to say that attrition remains in line with historical levels it remains negligible. We consider this a testament to the commitment our associates have for their clients, and for one another.


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This was first published in February 2009

 

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