Raju's fraud admission sends shockwaves through India Inc.

Satyam is not just listed on Indian stock markets, but was also the first Indian technology firm to list on the hi-tech US Nasdaq market and the fraud disclosure, Natarajan said, has sullied the image and reputation of India's IT industry and it will take some time to recover.

"This kind of an incident could also send wrong signals to investors and clients abroad. However, we believe the entire IT sector will not be impacted much as we consider this as a specific case of a particular firm," Natarajan said.

"The entire incident came us a shock to us. Also, this kind of a fiasco is an unprecedented one in the history of NASSCOM. We are looking into the matter on what steps can be taken. Considering the magnitude and implications of the incident, we can even look at banning the company from NASSCOM," he added.

However, Som Mittal, president, NASSCOM, said the body is not looking to ban Satyam immediately.

Incidentally, Raju was once the chairman of the apex body of the IT-BPO industry in India.

"Satyam was always seen as one of the top Indian IT companies and often represented as shining example of Indian liberalization and entrepreneurship. This fraud on the investors and employees of the company shows a systemic breakdown in audit and board oversight of the company," said Rajeev Chandrashekar, president of Federation of Indian Chambers of Commerce and Industry (FICCI).