Satyam has 10,000 surplus staff: Tech Mahindra

23 May 2009, ET Bureau

NEW DELHI: About 10,000 employees, a quarter of Satyam Computer Services’ total headcount, are surplus, and the company was looking for “the least painful way” to deal with the situation, the CEO of its new owner, Tech Mahindra, said on Friday.

Among the options the new Satyam management is toying with include across-the-board salary cuts, virtual benching of employees, and sending some of them on a sabbatical or to work with NGOs, as it looks to cut costs and regain its reputation in the global markets.

“We are trying to find the easiest and least painful way,” Tech Mahindra MD and CEO Vineet Nayyar said after a company board meeting.

Satyam, one of the pioneers of technology outsourcing, shocked corporate India in January when its founder B Ramalinga Raju confessed that he had been tampering with the company’s accounts for years. The government then ordered a high-level probe, sacked the company board, and appointed a crack team of independent directors.

Tech Mahindra, the IT arm of the $6.7-billion Mahindra Group, bought Satyam at an open auction by agreeing to pay Rs 2,889 crore for a 51% stake. The acquisition has been approved by India’s Company Law Board and Germany’s anti-trust body. On the issue of the $1-billion fraud and forgery lawsuit filed against Satyam by the UK-based Upaid, Mr Nayyar said the firm would prefer an out-of-court settlement as opposed to a long-term litigation.

“It is in their (Upaid’s) interest and our interest, but there has to be a meeting of minds,” he added.

The Satyam board meeting, which Mr Nayyar attended as a special invitee, was held here to review the firm’s progress and to get an update on the restatement of accounts by its new auditors KPMG and Deloitte.

The two auditing firms are restating Satyam’s accounts for the past six years. “They (the auditors) will have to go back as far as possible as there are issues relating to earlier times. We hope that in the next 2-3 quarters, we will get something done,” said Kiran Karnik, chairman of the Satyam board.

Satyam is expected to see a dip in its revenues as the work being done for clients, which have cancelled their contracts, is phased out, he said.

Mr Nayyar added that Satyam, which had lost a few clients in the wake of Mr Raju’s admission, has not lost any client in the past one month.

Tech Mahindra representatives, including CEO Mr Nayyar, global operations head CP Gurnani, strategic initiatives president Sanjay Kalra and M&M’s IT sector president Ulhas N Yargop, will join the Satyam board from June 1.