Satyam staff could de-rail a deal

The opinions of the customer-facing IT staff at Satyam will have a defining effect on which company acquires the troubled Indian IT supplier. Interested...

The opinions of the customer-facing IT staff at Satyam will have a defining effect on which company acquires the troubled Indian IT supplier.

Any acquirer can prove it has the resources and management skills to run Satyam effectively and even grow the business, but without the senior staff at the coal face it would struggle to sustain its service.

Satyam CEO AS Murty, who took over the role at Satyam last month, told Computer Weekly the company's staff are the real power behind the organisation. If an acquirer is to make a success of the Satyam legacy it will need to win them over.

Mark Lewis, partner and head of outsourcing at law firm Berwin Leighton Paisner, says the reaction of staff to bidders is an unknown quantity, but one that will have a massive effect on who buys the company.

He says the IT delivery staff, in certain service lines and verticals, will be a critical part for any acquisition. "One of the imponderables is whether Satyam is going to retain its top delivery people. If the buyer that emerges is not to their liking, they may disappear in their droves."

Interested parties

Four companies have so far have announced their interest in buying Satyam. One of these, US IT firm iGate, has withdrawn from the race following further analysis.

The other three are Indian engineering firm Larsen & Toubro (L&T), IT services firm Tech Mahindra, and the Spice group, a diversified conglomorate.

Winning staff approval

Robert Morgan, director at Hamilton Bailey, which advises IT outsourcing suppliers, says winning over the key IT delivery staff is the top priority for the company that buys Satyam.

But he says that staff will give the new buyer a chance before they leave. "I believe the acquirer will have three months to prove itself to the staff. Many staff who know they could get another job are waiting to see who acquires Satyam and what the buyer's plans are."

Skilled staff a valuable asset

Kris Lakshmikanth, managing director of Indian recruitment company Headhunters, says the staff at Satyam would be unlikely to want to work for the Spice group. "They will not want to work there because it has no track record [in IT services]."

Phil Morris, European managing director at sourcing consultant Equaterra, says of the three firms that are interested, Satyam staff would probably welcome L&T the most because it has the clearest strategy.

He says all the companies that have so far confirmed their interest in acquiring Satyam will be heavily reliant on the skills and experience of the staff because none of them have the same experience as Satyam.

Whether the buyer of Satyam can return the company to its pre-fraud status will depend on the reaction to the acquirer, from analysts, customers and, possibly most importantly, its workers. The new owner will have to share its plans with staff if it is to retain their commitment after a few months.

Former Satyam chairman B. Ramalinga Raju admitted he had falsely reported Satyam's results to the tune of $1bn. The company has since been managed by a board appointed by the government to help it recover from a major crisis which saw it short of cash and its customers low on confidence.


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