10% of Satyam staff redundant: Karnik

18 Apr 2009, ET Bureau

NEW DELHI: Up to 10% of Satyam Computer Services’ workforce could be redundant as its founder may have hired excess staff to hide the financial fraud at the firm, the chairman of the company’s government-appointed board, Kiran Karnik, told ET on Friday.

Mr Karnik said about 3,000-5,000 staff were in excess, over and above the normal bench maintained at IT firms. Satyam has about 48,000 employees on its rolls. “It is for the board to decide and the board will be Tech Mahindra. I am very clear that we (the government-appointed board) are in a transition mode and we should be out soon,” Mr Karnik said, ruling out any government intervention to protect employees.

There were three ways to deal with excess staff, downsizing being one of them. The company could also get more business to correct the mismatch or cut salaries, he added.

“These are all very obvious measures. The Mahindras is very respected group like the Tatas, and I have full confidence they will take the right steps,” Mr Karnik said. A TechM official said in response to an e-mail from ET: “We would like to state that the Satyam management will do everything in its power to grow the business”.

Satyam’s disgraced promoter, Ramalinga Raju, had admitted that employees were hired in excess of what was required to support the falsified inflated revenue and profit figures. Tech Mahindra will have to protect the employment of 100 key Satyam staff under the terms of the acquisition. These employees have already been identified. Tech Mahindra, which will very soon be the new owner of Satyam, is at liberty to terminate the employment of other staff.

Mr Karnik said the government-appointed board has had no discussions with Tech Mahindra on this issue. “Tech Mahindra still has to complete a few more steps before it becomes the owner. It is yet to deposit money into the account,” he said.

Tech Mahindra has to deposit Rs 1,756 crore for acquisition of a 31% equity stake in Satyam in an escrow account by April 21. Thereafter, Tech Mahindra’s board appointees will work with the government-appointed board to work out the transition.

Tech Mahindra, which has about half the number of Satyam employees, emerged as the highest bidder for the tainted IT services firm on Monday. The Mahindra & Mahindra group firm has also received approval from the Company Law Board for the takeover.