Tech Mahindra deposits funds for Satyam stake buy

20 Apr 2009, REUTERS

HYDERABAD|MUMBAI: Tech Mahindra, the new owner of Satyam Computer Services, has decided to continue with the current management of the scam-hit firm for the transition period. Its priority is to focus on making Satyam’s business viable by halting customer attrition, boosting employee morale and leveraging the best practices of Satyam. “The plan is to work with the current management. The focus is more on governance and restoring customer confidence,” said a source close to Tech Mahindra. However, it will also soon name a chief financial officer, who may not be an insider. The CFO’s post had been vacant after S Vadlamani, the earlier CFO, quit.

Tech Mahindra will have its first official interaction with the Satyam board on Monday. All Satyam directors, senior Tech Mahindra officials and Anand Mahindra, chief of the Mahindra group, will take part in the Satyam board meeting in Hyderabad. Mahindra may also address all the vertical and process heads of Satyam and get an idea of the operations and business from the officials on the field.

The company was widely expected to announce its own man as CEO of Satyam, and the quiet and reserved Ulhas N Yargop, who heads the IT initiatives of the Mahindra group, was tipped to be the candidate. But, persons with knowledge of the situation told ET that the current Satyam management is set to continue during the transition phase.

According to highly-placed sources privy to the information, some of the key business leaders of Satyam who will be retained are TR Anand, who heads Satyam’s telecom business unit, Manish Mehta who spearheads the SAP practice, Keshab Panda who heads the Europe operations and the manufacturing and automotive industry practices, Virendra Aggarwal who steers Satyam’s operations for the rest of the world and Arvind Malhotra, who handles Satyam’s GE account.

AS Murty is understood to have kept himself out of this list. Under the sale agreement, it is binding on Tech Mahindra to retain 100 key employees of Satyam for a year, to ensure business continuity. The list of these 100 employees was furnished to the Pune-based IT firm in the information pack on Satyam, ahead of the due diligence.

“The list includes all the heads of vertical business units and horizontal competency units,” a source said. Top executives have been in Hyderabad for the past two days interacting with the Satyam management. “Other than the very senior people, Tech Mahindra doesn’t have any existing management they can loan to Satyam. It is a much smaller company and is confined to telecom. The telecom business is also very small for Satyam,” said the head of research of a broking firm.

As reported earlier by ET, Ram Mynampati, the interim chief executive officer of Satyam before the current CEO AS Murty took over, does not feature in the list of 100 key leaders. Mr Mynampati spearheads Satyam’s operations in the US and is also in-charge of the firm’s commercial and health business.

Tech Mahindra’s biggest challenge will be to trim Satyam’s employee strength and bring it on par with its business. Satyam has 48,000 employees, 80% of them working offshore and the remaining onsite. The offshore bench staff would be around 5,000, most of them with minimum experience. The company may save only around $4 million dollars if these jobs are axed. Around 5% of the onsite work force are unbillable.