Satyam Regaining Customers, New CEO Gurnani Says (Update2)
By Mark Barton, Harichandan Arakali and Ambika Behal
July 3 (Bloomberg) -- Satyam Computer Services Ltd., the company at the center of India’s biggest corporate fraud probe, is regaining customers after its takeover by Tech Mahindra Ltd., Chief Executive Officer Chander Prakash Gurnani said.
“The company is now focused on growth,” Gurnani said in a Bloomberg Television interview today. “Overall, the feedback from the customers is excellent.” The former head of international operations at Tech Mahindra was appointed at Satyam by the Pune-based software-services provider last week.
Gurnani, 50, has vowed to improve corporate governance and ties with customers as Satyam tries to win back business lost to rivals including Infosys Technologies Ltd. after a $1 billion fraud. Satyam shares have rallied 64 percent since Tech Mahindra won control at an auction in April.
“The most important thing is to reassure clients that the continuity of business will not be lost,” Rajesh Balasubramanian, analyst at Chennai-based Spark Capital Advisors Pvt., said by phone. “He needs to convince them that he has the balance sheet capacity for Satyam to pay the salaries.”
The Hyderabad-based company, once India’s fourth-largest software exporter, rose 0.6 percent to close at 77.4 rupees in Mumbai trading. The Sensitive Index added 1.7 percent.
Retaining Customers
Gurnani, a former chief operating officer and founder of the Indian unit of Perot Systems Inc., has to reassure customers Satyam is a supplier they can rely on, especially given the current global recession, Balasubramanian said.
“This challenge has been partly addressed by the takeover but we still keep hearing stories about Satyam losing clients,” he said. “If the world were a very hunky-dory place they might be able to pull it off, but with everybody cutting budgets, Satyam may be at the losing end.”
Satyam lost contracts from about 46 customers to rivals such as International Business Machines Corp. and Tata Consultancy Services Ltd., the Economic Times reported in March. Applied Materials Inc., Nissan Motor Co., Sony Corp. and Telstra Corp. are among companies that have moved or are in the process of seeking other vendors, the newspaper said at the time.
Gurnani has also streamlined operations as he tries to woo back former clients such as State Farm Automobile Insurance Co., which canceled its contract in January after Satyam’s former chairman, Ramalinga Raju, said he overstated assets.
Satyam will focus on fewer business areas for growth, Gurnani said. “We have also made the organization more customer-centric” by delegating to operational heads, he said. The company maintains computer systems and provides back-office support for Cisco Systems Inc., Nestle SA and other clients.
Share Employees
Satyam will share surplus employees with Tech Mahindra to manage “financial challenges,” Gurnani said today. The company has 8,500 employees idling in a so-called virtual pool because of a lack of orders, he said on June. 23.
The software provider may fire as many as 8,500 employees in six months unless business picks up, newly appointed Executive Vice Chairman Vineet Nayyar said on June 24.
There is a possibility the employees who have been furloughed on reduced pay will be fired, Nayyar said at the time. The cuts would represent 18 percent of the workforce, based on the 48,000 employees that Satyam in April said it had.
“The virtual pool program is a fine balance between our anticipated demand and also keeping those employees on our payroll on reduced salaries,” Gurnani said. “Instead of wage cuts or going through bonus freezes, we decided that is a much better way and a more elegant way of keeping people happy.”
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