Mahindra Satyam Boss Talks Up Prospects

On a swing through London to woo British clients, the new CEO of scandal-scarred Indian IT outsourcing giant Mahindra Satyam was candid but upbeat

By Nick Heath

For a man at the helm of a business that has been through so much in the course of this year, Mahindra Satyam's new CEO C.P. Gurnani looks remarkably relaxed.

With his smile and immaculate suit, Gurnani has been away from home for 12 weeks on a mission to reboot Indian outsourcer Satyam in its new incarnation as Mahindra Satyam (MAHMq.F).

Once India's fourth largest software and services outsourcing company, Satyam was thrown into turmoil in January this year when the company's founder and former chairman B Ramlinga Raju admitted he had inflated Satyam's profits by £640m over the previous seven years.

Subsequently, Indian telecoms integrator Tech Mahindra paid $351m for a 31 per cent majority stake in the company and Mahindra Satyam was born.

Newly-appointed CEO Gurnani is in London as part of a charm offensive that has seen him travelling the world trying to reassure existing customers and win back those who abandoned Satyam.

However Gurnani faces an uphill battle – customer confidence took a heavy knock in the wake of the revelations and he said the company is now only "marginally cash flow positive". At end of March this year Satyam had a bank balance of $74.6m and it will be another six months before it will be able to restate the true figures for Satyam's accounts over the past three years.

There is a lot of damage for Gurnani to repair, with Raju's revelation appearing to have cost Satyam a significant number of its customers. Just before the scandal broke the company claimed to have more than 600 customers whereas today Gurnani says that figure has dropped to "400 plus".

"We lost a fair amount of business and it had to go to someone – in certain cases it went to Wipro (WIT) or IBM (IBM) or TCS or HP (HPQ), you name it," said Gurnani, who took over as CEO six weeks ago after moving from his post as president of international operations at Tech Mahindra.

In its Satyam incarnation, the company provided services to 185 Fortune 500 companies, including helping to provide a common technology platform to food giant Nestle and striking a deal with football's international governing body Fifa, to be the IT services provider for the 2010 and 2014 Fifa World Cup and two Confederation Cup events.

While the deals with Nestle (NESN.F) and Fifa continue today, there were high profile names among this year's losses, including heavy equipment manufacturer Caterpillar (CAT), which dropped almost all of its outsourcing deals with Satyam.

Gurnani said that those companies who decided to drop Satyam were not dissatisfied with the quality of the service being: "The reality is there was an uncertain customer base and uncertain environment and some people were not willing to wait and they had to make their decisions, it's a natural thing."

"In UK and Europe we did not have even one loss whereas in the US particularly the financial services clients were much more aggressive in making the decision of moving on, particularly during the times of uncertainty."

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