Shaky future: Satyam employees frustrated, seeking options

Prior to the disclosure of accounting fraud, Satyam's employees, numbering 52,865 (as on September 30, 2008) had rallied behind their employer, vowing to take Satyam to new levels of growth track.

Even when investors clearly indicated that they had lost their faith in the company's board after a botched attempt by Satyam to buy two firms - Maytas Infra and Maytas Properties - in which Satyam's promoters held stakes, for $1.6 billion, became public, the company's employees said despite the poor decision made by Raju and others, the promoters had given their all to make Satyam one of the top four IT outsourcing companies in India.

According to the employees, the promoters should be given "benefit of doubt" and "because of one mistake we cannot just let them go."

Some even claimed that they were "the right people to steer Satyam out of the crisis."

However, the employees had to eat their own words when B. Ramalinga Raju, Satyam's founder-chairman, made a shocking disclosure that the profits from the core business of the company have been inflated "over a period of last several years," and of the reported cash and bank balances of Rs.5361 crore reported for the quarter ended September 30, 2008, Rs.5040 crore was non-existent.

Raju said the company's revenue was Rs.2112 crore, 22 percent less than the inflated figure of Rs.2700 crore that had been reported while the operating margin at Satyam in the September quarter was 3 percent of revenue, instead of the reported 24 percent.

Raju also said the company had Rs.1230 crore worth of understated liability.

The sensational admission, which dragged Satyam's stock to record lows, meant Satyam was a dud company that has probably zero assets, zero cash flows, zero income and zero prospects and when rumors began spreading in the market that Satyam was paying its employees by raising funds and taking loans, the employees realized that their future prospects in the company were bleak.

The future of 53,000-odd employees of beleaguered technology outsourcer Satyam Computer Services or Satyamites as they are popularly known is at stake following the sensational disclosure by the company's founder-chairman last week that he had fudged the company's accounts for several years to inflate profits to the tune of Rs.5040 crore.

Prior to the disclosure of accounting fraud, Satyam's employees, numbering 52,865 (as on September 30, 2008) had rallied behind their employer, vowing to take Satyam to new levels of growth track.

Even when investors clearly indicated that they had lost their faith in the company's board after a botched attempt by Satyam to buy two firms - Maytas Infra and Maytas Properties - in which Satyam's promoters held stakes, for $1.6 billion, became public, the company's employees said despite the poor decision made by Raju and others, the promoters had given their all to make Satyam one of the top four IT outsourcing companies in India.

According to the employees, the promoters should be given "benefit of doubt" and "because of one mistake we cannot just let them go."

Some even claimed that they were "the right people to steer Satyam out of the crisis."

However, the employees had to eat their own words when B. Ramalinga Raju, Satyam's founder-chairman, made a shocking disclosure that the profits from the core business of the company have been inflated "over a period of last several years," and of the reported cash and bank balances of Rs.5361 crore reported for the quarter ended September 30, 2008, Rs.5040 crore was non-existent.

Raju said the company's revenue was Rs.2112 crore, 22 percent less than the inflated figure of Rs.2700 crore that had been reported while the operating margin at Satyam in the September quarter was 3 percent of revenue, instead of the reported 24 percent.

Raju also said the company had Rs.1230 crore worth of understated liability.

The sensational admission, which dragged Satyam's stock to record lows, meant Satyam was a dud company that has probably zero assets, zero cash flows, zero income and zero prospects and when rumors began spreading in the market that Satyam was paying its employees by raising funds and taking loans, the employees realized that their future prospects in the company were bleak.

News soon began making rounds that at least 120 employees from Satyam's lower and middle run management have turned in their resignation papers while around 20,000 employees, including those from the senior level management, were posting their resumes on job sites in their efforts to tap the market for other options.

Some job consulting firms and head hunters are also claiming that they are receiving at least 200-300 new calls everyday from Satyam employees inquiring about jobs.

"We have got a number of calls in the past few days from people in the vice president, senior vice president level and above, looking for other options," said Kris Lakshmikanth, CEO of Bangalore-based Head Hunters India.

"The numbers of calls are growing everyday," a senior executive of another job consultancy firm based in Chennai said, on conditions of anonymity.

"(Satyam's) Employees have become clearly disillusioned by the developments that have taken place in Satyam in the past 2-3 weeks. Their faith in Raju and in the management has been shattered. Now they are not willing to take more risks and want out," the executive said.

The executive said that getting a new job might be difficult for most of the Satyamites as the employment market is looking down. However, "those who are talented and have performed well in Satyam should not have any difficulty in finding new jobs," he added.

When the accounting fraud in Satyam became public, Sudin Apte, country head of market research firm Forrester, said "several of Satyam's employees across the organization" had shown "utter frustration" and warned "both clients and employees will desert Satyam as a result of competitive wooing."

According to media reports, while some employees said they were worried about the possibilities of a merger or takeover as it could mean retrenchment, others expressed worries about their financial commitments like repayment of loans and credit cards.

Meanwhile, many of the Satyamites are saying that they will stay put with the company as one should distinguish the company from its promoters. "The company has good prospects. It has a bunch of talented people and a good list of clients. If the new management body (which is being reconstituted by the government) can manage to reassure the investors and clients that Satyam is here to stay, then in 4-6 months the company will be back on its feet," said a product development engineer who has been with Satyam for 5 years, on conditions of anonymity.

The engineer said "a few bad apples" do not make the company bad and added that there were still many people at the top who are dedicated and would do everything to help bring Satyam out of the present crisis.

The engineer's remarks come close on the heels of the Indian government dissolving the existing Satyam board and appointing eminent people such as Deepak Parekh, chairman of India's top mortgage lender Housing Development Finance Corporation (HDFC); Kiran Karnik, former president of the National Association of Software and Service Companies (NASSCOM), the consortium that serves as the apex body of the Indian IT and BPO industry; and C. Achutan, a former official of India's capital market regulator Securities and Exchange Board of India (SEBI) on the Satyam board to chart out a roadmap for restoring confidence among investors, clients and employees.

Incidentally, Satyam was ranked the second best employer in 2007 by Hewitt Associates in a study partnered by Wall Street Journal Asia.