From the "no ****" files. And now: Indian tech Outsourcing!Follow

Just for the record, this ****** is pretty much singlehandedly responsable for every pointless hour long tech support phone call with some completely clueless person with a heavy accent you have ever endured.


Indian Software Giant Admits Financial Wrongdoing

By Rama Lakshmi
Washington Post Foreign Service
Wednesday, January 7, 2009; 9:11 AM

NEW DELHI, Jan. 7 -- One of India's largest technology outsourcing companies, Satyam Computers, on Wednesday admitted cooking its books and committing other grave financial wrongdoing to inflate profits over several years. The revelation shook India's stock market and sent shock waves across the country's booming software industry, while television commentators quickly dubbed Satyam "India's Enron."

The $2 billion software giant is India's fourth-largest information technology firm, with over 53,000 employees. It services many Fortune 500 companies, and is also registered on the New York stock exchange.

Chairman and founder B. Ramalinga Raju took responsibility for the fraud and resigned in a letter he submitted to Satyam's board. The letter said that the company lied about profit and revenue for several years, inflating revenue by 33 percent and profits more than tenfold between July and September of last year.

Raju apologized to the company's stakeholders and said that none of the other board members had any knowledge of the financial fraud.


The beleaguered Raju, who had been in the news recently for a controversial acquisition fiasco, said that every attempt to eliminate gaps in the balance sheet and fill the "fictitious assets with real ones" and "non-existent cash" failed.

"It was like riding a tiger, not knowing how to get off without being eaten," he wrote in the letter. " . . . I am now prepared to subject myself to the laws of the land and face consequences thereof."

Financial observers expressed fears that there may be skeletons hiding in the books of other Indian technology companies, casting doubt about the celebrated Indian outsourcing industry and oversight of its companies. Observers worried that the scandal could erode the confidence of overseas clients.

The National Association of Software and Service Companies in New Delhi issued a statement calling Satyam "a stand-alone case of failure of corporate governance" that is not a "reflection on the industry or corporate India".

Ironically, Raju had received the "entrepreneur of the year" award in 2007 from the consulting firm, Ernst & Young. The Council of the Institute of Directors said it will be withdrawing the Golden Peacock Global award for best corporate governance that it gave Satyam in 2008.

The company headquarters in the southern city of Hyderabad was immediately cordoned off by the police, and its shares nosedived by almost 80 percent on Indian stock exchange. The Bombay Stock Exchange plunged 7 percent and the Indian rupee fell as the news of the scandal became public.

India's market regulator, the Securities and Exchange Board of India (SEBI) immediately announced an investigation.

"His confession is an event of horrifying magnitude. We have to go beyond this letter and find out what actually has happened," C.B. Bhave, the chairman of SEBI, told reporters in Mumbai. "This is an issue which has very serious implications. It also raises the issue of authenticity of accounts that have been audited and certified by the auditors."

The minister of company affairs in the Indian government, Prem Chand Gupta, said that this was a "serious fraud" and "there will be no leniency in dealing with this case".

Raju said that the gap in the company's book rose because of inflated profits recorded over several years.

"What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years," he wrote. "It has attained unmanageable proportions as the size of the company operations grew significantly."

However, Raju said, he or the company's managing director did not take "even one rupee/dollar from the company and have not benefited in financial terms on account of the inflated results." The interim chief executive officer, Ram Mynampati, wrote an open letter to his colleagues on Wednesday: "What we are confronted with is the challenge of continuing our business operations, seamlessly. Rumors will abound and it would be fair to assume that competition will try and leverage it to their advantage."

Mynampati said a fully empowered cross functional team was formed to weather the crisis and address issues like maintaining delivery systems, customer retention, pipeline management, cost controls and collections.

The company I worked for before my current one used Anthem Technologies at first, but they were fired due to incompetence and Satyam was hired. They were still sourcing work to them when I left, despite my objections based on prior experiences.

You get what you pay for.

It's not the heavy accent.

It's not paying money overseas to workers who are cheaper because they're not protected in the event of ill health or bad luck with a public welfare safety net, instead of keeping the money within your own economy.

It's making customers talk to people who don't know what the problem is, and don't have the resources or the authority to fix the problem if they do. Making us talk to to people who, if they can't fix it themselves, can't walk down the hall or up one floor, and get you the person who can. Or at least know the extension number of the person who can.

Edited, Jan 8th 2009 7:45am by Aripyanfar