Mahindra Satyam still in the dumps – Raju’s ghost lives on!

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It’s almost been more than a year since the confession of Ramalinga Raju, the now disgraced founder of Satyam Computer Services of his involvement in the biggest ever fraud to hit corporate India. A lot has changed since then. Tech Mahindra acquired Satyam and did manage to save it from completely falling off the radar though after a lot of problems. But then some things remain the same. Mr Raju is chilling and enjoying himself roaming in and out of the Chanchalguda Jail when he wants to… with the best of facilities on offer. Resort anyone?

Mahindra Satyam

But the saddest thing of all is that Mahindra Satyam as its now called is still facing an uphill battle of sorts. The revenues have stabilised but a number of problems still remain. High salary and attrition costs which plague the entire IT sector are proving to be a big obstacle in Mahindra’s path. Higher salaries being demanded offshore and on shore as well as lower utilisation have hurt the bottom line badly. It has also struggled with supply and logistical problems.

The best news for Mahindra is the fact that its litigation, forensic investigation costs have decreased a lot compared to the time last year when Raju was playing his game of hide and seek. Even the restructuring has seen some good progress though tons of work still needs to be done.

While analysing Mahindra Satyam, I still feel that the biggest problem other than all the technology and other issues is the fact that Raju has destroyed the whole organization. It seemed as though he destroyed the entire organization he built brick by brick by his antics. While Satyam was at its peak, it was regarded as among the top grossers in the league of Indian IT companies. But then Raju’s antics have made clients and the normal lose faith in the system of corporate governance in the country.

Other than destroying the entire business structure of the organization, this scam spoilt the image of this organization in front of the future clients. A client say ‘A’ who would have been interested earlier to do business with Satyam must have backed off hearing about the entire fraud story.

And last but not the least, the highest attrition rate of 25% which though may be due to many causes is also an indicator of the employees’ lack of trust with the organization. This could be in terms of payments, policies or generally the facilities and benefits provided.

The future looks optimistic with more deals with existing clients and also an increase in the number of clients. Enterprise business solutions, outsourcing the business processes as well as increased requirement for different kinds of services are seen as the engines of growth as we move forward.

But then a lot of question marks still linger on the merger which could take a long time to be completed.

The points discussed here may have been going down the beaten path again. But then if we analyse Mahindra Satyam’s position today, these 3 points have combined in one way or another to make Satyam struggle even today.

On the other hand, even on the stock front, Satyam is not doing well at all – Yesterday, the stock came down as much as 11 percent thanks to lower than expected result announcement.

One thing’s for sure. What bad had to happen has probably happened and only way now is up. But as they say there are miles and miles to go before Mahindra Satyam can take a breath!

How soon you think will it take for Mahindra Satyam to rest its ghosts?

  1. BeFact says

    Always positive things should be presented first and then negative !

    1. Aseem Rastogi says

      If the situation is negative you can’t help it right..It will look as if I am trying to purposely make it sound positive :(

    1. Aseem Rastogi says

      As I have pointed out in the article, even though things have stabilized and become a lot more better, there is still a long long way to go to reach the earlier levels of normalcy.

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