The Satyam Scramble

Companies should outsource to local IT services. This should serve as a big lesson. Or they will eventually close down themselves.

Ah! the virtues of outsourcing....outsource, layoff employees, kill morale...to find out that the company you outsourced to has vanished... mind you i am not saying jobs will not or should not go to lower cost places, only commenting on giving control to a 3rd party....

Why risk it with another offshore vendor?

You will find more value in the USA. We may not be the cheapest developers, but we are the best.

This is absolutely rubbish. USA did not suffer on account of financial misdeeds, misappropriation and frauds of Enron, Fannie Mae, Merrill Lynch and endless list, which we haven t seen the last of.

Agreed that Ramalinga Raju was on the wrong side, but it is hypocrisy to hear other business leaders and politicians slam Raju. Without justifying Raju's deeds, The 7000 Cr scandal seems like small change when compared to the Rs 90000 Cr telecom scam involving Raja and Karunanidhi, ably supported and sponsored by Manmohan Singh. I also wonder why the same speed was not shown in even without giving any consideration to the Rs 90000 cr telecom scam, it has died down without a whimper.

It also pales into insignificance comapred to Manmohan Singh's sell out of India to the US on the nuclear deal [misdeed].

Also, others businessmen like Narayana Murthy are no angels. They have indulged in wide spread land grabbing from the poor using the politicians as a tool and using the land under the guise of development. Its a classic case of pot calling kettle black.

Nothing is free (or cheap) in life. Wonder how much this is going to cost the companies that outsourced. You got what you paid for...

Once Satyam clients move to another Indian companies, then another breaking news, another Indian outsourcing company also cook their book as they cook their employee resume

Do not treat Mr.Raju as a criminal, what he did was for the benefit of the company.Do not talk of ethics in India, every politician is accountable , see the oil staff and transporters strike which has costed the nation more than the satyam 7000 crore scam in 2 days, they ripped the common man of basic necessities, denying them the common basic necessity of reaching corporate India in time,no petrol,no diesel,no rickshaws,no taxis,nothing for common man transport.Is this justice.Arrest the ministers who ignored the striking oil officers demand, make him accountable for the innumerable suffering he caused to the general public instead of just harping on Mr.Raju.Please remember Mr.Raju gave away employment to scores of Indians in India and overseas, provided the much needed sponsorship for rural,semi urban Andhra Pradesh which all governments ignored.He is a hero and I salute him for giving as many as 53000 Indians and their families a square meal a day in this otherwise starving nation where GDP,GNP does not work.Ask the finance ministry to refund the extra taxes collected by way of income tax and corporate taxes collected in such a inflated balance sheet. The answer will be, WE WILL DECIDE , their decisions will take years till all Indian nationals will die of Hunger.I have to say that Mr. Raju made Satyam and he will be the Raju of Satyam, no one will take away his place.Be honest and ask you conscious. Be Indian and be honest to a man who has provided food and shelter to thousands of satyamites and their families and to many of the various villagers who benefitted from his drinking water and other services of his foundation.

Enron+adelphia+maddoff+cw+indymac not equals America

Satyam not equals India.

Offshore outsourcing will die only if there is no more business value in it. Companies that offshored to Satyam are not going to readjust their cost model and turn back to US shores.

With Western business comes Western "culture" and Western "lifesytle". The companies who laid off qualified employees just so their VPs can pocket hefty bonuses...serves you right!

"Do not treat Mr.Raju as a criminal, what he did was for the benefit of the company."

Seriously? He just defrauded investors of billions. Don't think of him as a criminal? He is a common thief and he should be treated like any other prisoner.

If India doesn't send him to prison, the US should also prosecute him. His company was publicly listed on the NASDAQ and he also defrauded Americans. I dare him to step foot on American soil.

All i would like to say is this:

1) We keep offshoring to cut costs but are back at the psame point every five years....we have to cut costs again...

The answer is that offshoring does not really save overall costs...the reason why a lot of functions are offshored is because usually someone is on the take...I personally heard this from a Satyam VP...with Indian managers at larger multinationals they used to buy houses/apartments in their wives names when business was outsources...especially at companies like CISCO. With American managers, trips to europe, big screen tvs were bought as gifts.

I have seen this happening with first line managers at american companies as well they want a cut of the action. We have faced this as part of our small consulting company business in the US.

This problem will keep happening unless we create an audit process at large companies. We as shareholders are equally responsible....a lot of acquisitions that companies like CISCO, AMAZON and others do are bogus, they do not make any money for the company...they are called off balance sheet transaction.

But while the going is good, nobody cares. Like ENRON screwing california, the rest of country sat there and ate up Cheyney's BS. California produced and still produces 40% more power than it consumes, but we bought into the power plant shortage BS.

These things happen, greed is part of human phsyche live with it.

Now I can say, that no one recognize anything Good that Raju has done for the country and the 53000 emp. but one bad thing the whole world knows...and no one likes himm...screw the media...the real scammers are Indian Politicians they should be arrested and tried for their wrong doings..."oo wait that cant be done its WRONG, iTS against the RULE BOOK"

American should be grateful what Indians have contributed to American scientific and technological supremacy. As the biggest democracy, India is the American’s nature ally. In addition, Millions of Indian engineers, scientists and doctors play vital roles in American economy. Some examples are:
36% of NASA scientists Indians,
48% PHD are Indians,
38% of Microsoft engineers are Indians
33% Silicon Valley hi-tech companies are started by Indians
Computer Pentium CPU is invented by Indian
Microsoft Window is written by Indians
Oracle is written by Indians
Indians are by far the richest and most highly educated ethnic group
Without Indian contribution, American is no longer a science/technology superpower.

You get what you pay for when you look at reducing costs. The outsourcing issue is not going away, but I do not think companies do enough due diligence around risk and exposure around outsourcing certain functions.

There is another deeper issue here and that is how did this company passed the audit and who else was involved with the scheme. I believe the indian government needs to enforce better corporate governance along with imposing public accounting standards board to review audits and public practice accountants.

There can be endless Gibberish hear Don't outsource, Raju is a Monster Evil Blah blah hey No Room here for personal opinions here. Outsourcing is a concept and there are insights and reasons for doing it. Yup I know whats coming No it's just greed greedy CEO. Well Capitalism is no Charity either. Companies and capitalism is for profit and bottom line like Bernie pointed it will die only when it's value cease to exits. And those of u who have lost u r job and think can change the world by just Barking out loud Outsourcing is bad Bulls*. Mr Raju and Madoff's are classic examples of loop holes of the system called Capitalism which is still evolving. Recession such as the one we are right now is good for the society in general in the long run. It's called Cleansing. Had the economy been running fine Mr Raju could have went on showing the $1billion on the balance sheet and somehow adjust it to cheat every one else. So Please don't Cry like a baby my Job is gone, Pick up u r huge Ass do some hard work and u will find u r way. And one more advice Don't over spend. Be normal spend 80 if u r making 100. Pay Credit card bills all of it not the minimum and u will understand why the world is the way it should be (everything happens for a reason)

This is isolated incident of incorrect accounting, has been seen in America before and nothing specific to the practice of outsourcing. A business can not avoid exposure such risks completely as various businesses are links in a value chain.
Anybody using this incident to justify why outsourcing just reflects his/her ignorance and is not addressing the issue.

Its not surprising that this one happened - there is no accountability in India. Its like the whole poison in the milk issue in China.

To those who outsource to India or buy cheap from China, well... you get what you pay for.

Not sure if this will hamper global outsourcing though, There are better outsourcers out there: Philippines, Vietnam, Brazil to name a few.

If we are wise, we should outsource to Mexico - give it cheap jobs - so that they wont have to illegally come to us.

Agreed this was ghastly.

But one offshorer doesnt represent the industry and some bad managers dont represent 50000 people

All US citizens who seem to be throwing in some long standing frustration at the outsourcing industry, get this: Next time you are in a meeting room, just look around to see how many Indians are in there. I'd bet 50% atleast. And not all of them are from an outsourcing perspective, they are regular consultants, some permanent residents, some citizens and some from outsourcing firms. Fact is, the world today cannot debuckle software and India.
If you want the situation to change, go to the board of directors in your company and argue your case. They will bombard you with so many facts associated with revenue and cost savings, that you'll shut every outlet in your body and walk back to your seat. Compared with what your director may have lost with Madoff, his investment in engaging Sathyam can be easily resurrected.

Well said Bernie! I totally agree with you. Outsourcing sustains as long as it has benefits those out weight the dis-advantages. As far as Satyam is concerned its a going to be a lesson to Indian government like Enron was to USA. I am sure with the developments in next few weeks, most of the affected customers will move forward with minimal or no damage to their business.

I agree with R. Lawson's comment about available pool of skilled workers in US. With so many companies cutting and the unemployment being worst in decades, companies need not outsource at this time. What I know of outsource companies everywhere is that they want to push their workers back to onsite work in US so that they can bill much more than initial billing. That said, it is not easy for companies to suddenly stop their out sourced activities.

Good comments above about the available pool of skilled workers in USA. With so many companies cutting here and the unemployment being the worst in decades, companies need not outsource at this time. Many excellent skilled workers are available now able and willing to work. That said, it is not easy for companies to suddenly stop their out sourced activities. What I know with experience dealing with many outsource companies in that region is that, companies bid low to do the work in the ODCs outside USA, but they want to push their workers back to onsite work in USA to get premium billing.

In my opinion, it is a myth that the off-shore centers are very cheap. Since, the salaries are rising; many companies in India are re-outsourcing projects to other countries to increase their bottom lines. Sometimes, the headaches a company has to go through before getting a quality work with the outsourced company is not worth the small savings in the overall cost.

i fully agree the views os p s krishnan and rehan.why the govt has not even questioned the information minister raja about thr reported spectrum allocation scandel said to be more than TEN TIMES that of raju.s self confessed amount of 7000 crores ,why with the same speed the medias have not covered the spectrum scandal.while raju self confessed raja did not care come what this india.

i think everything is done by god....we are jus the toys which are dancing to his tones....raju has made it dont worry ...jus think tat he has only made it and now fade it....no worries just live life and be honest u all people with no job will definately get...jus b happy...
BCOZ Not the Strongest,tallest Succeed BUt those succeed THOSE who believe they can....!!!!