Tech Mahindra enlists BT to revive Satyam

Tech Mahindra, the new owner of India’s fraud-hit outsourcing group Satyam Computer Services, is enlisting the help of long-term partner BT as it seeks to rehabilitate the company.

The UK telecoms group holds a 31 per cent stake in Tech Mahindra, which took over Satyam in April. It is assisting with issues such as corporate governance and client relations, according to C.P. Gurnani, chief executive of what is now called Mahindra Satyam.

“Since we have BT Group as investors in Tech Mahindra and we have Mahindra & Mahindra to reinforce our commitment to governance, we have requested them that they can appoint a joint inspection team and do an inspection on a periodic basis,” Mr Gurnani told the Financial Times.

Satyam was one of India’s top five information technology companies until January this year, when its chairman B. Ramalinga Raju confessed to fixing the accounts to invent a $1bn cash pile. It was the country’s biggest corporate fraud to date.

Government-appointed directors took control of Satyam until they were able to sell it off in a deal valued at $1.1bn to Tech Mahindra, part of the Mahindra & Mahindra industrial group.

With Mr Raju in jail pending a trial, Mr Gurnani, the former head of international operations at Tech Mahindra, said the new management’s focus was on reorganising Satyam while reassuring customers.

“This is a company that was started by a promoter [an individual controlling shareholder] and whether we like it or not the whole thing was more hierarchical,” he said.

BT was playing multiple roles in supporting Tech Mahindra’s investment, he said. It has offered to meet prospective and existing clients to promote growth and ensure retention.

It was also sharing best practices to help Mahindra Satyam reorganise, given that both companies are focused on enterprise services, or IT systems for businesses.

This included increasing Mahindra Satyam’s co-operation with “alliance partners”, the multinational software groups providing enterprise services applications.

“Whether it is a SAP or an Oracle or a Microsoft, there are areas of collaboration, areas of synergy, and BT is helping us drive those benefits of synergy,” Mr Gurnani said.

As a result, the exodus of clients that had afflicted the group in the months after
Mr Raju’s announcement had ceased.

Mr Gurnani declined to discuss the company’s financial performance, saying that a forensic investigation into the accounts was still under way and the company’s books would not be restated until December.

Although he said he was “cautiously optimistic”, Satyam has placed 8,000 employees on home leave on sharply reduced pay to alleviate payroll pressure.

Mr Gurnani said 10 per cent of these employees had been called back to work but the future of the remainder was uncertain.

“Instead of layoffs, what we have done is really help the employee either [prepare to] find a job internally with us again as we grow again or help the person actively make himself better for the rest of the market,” he said.