The Satyam affair is perhaps not so much surprising with regards to scale as with regards to where it has occurred. The IT industry was so far held as the brightest symbol of a new India, an India that had given up on wheeling and dealing and on corrupt business practices, an India which was prepared to match the world when it came to the best practices in managing companies and delivering value to one's stakeholders. Names like Infosys, TCS and Wipro would always seem to be synonymous with integrity, honesty, and success achieved by sheer talent. In many parts of India, a bridegroom with a job in the IT industry would be valued (cheap process, but fact of life) almost as much as a regnant king.
But now, the mirror is showing cracks. Even before, Indian IT companies like Pentafour and DSQ revealed that all was not all that shiny in the new industry and that behind the glamour of the biggies, small timers were indulging in the same notorious practices that give businessmen a bad name everywhere. But it was always imagined that the big giants like Satyam were impervious to such allures. After all, after having achieved so much in such little time, surely they did not need to stoop to such depths for mere profits. Perhaps it was wishful thinking, perhaps we were trying to deify a specific breed of people, despite being fully aware that they were, in the end, humans and prone to human errors.
Satyam's treachery with its stakeholders, be they its shareholders or its employees or its clients, will undoubtedly raise questions about how changed is Indian industry from the days of the license raj. Our regulatory authorities will be challenged to meet this fiasco head-on and learn valuable lessons, and not just learn but also ensure that such learning is applied to make sure that such incidents do not recur. Most of all, Indian companies across the length and breadth of the country will be hard-pressed to demonstrate to a greater extent their commitment to ethical corporate governance. The fourth estate can be trusted to be vigilant about any impropriety being committed by companies on a similar scale and of a similar nature.
However what about the present? The fate of Satyam's employees and its shareholders needs to be top priority now. As it were, class actions by ADR shareholders in the US seem to imperil the already tottering edifice even further. Legal liabilities, both domestic and international are expected to be huge. The sacking of the board and the Union Government's resolve to appoint a new board would mean some uncertainty about who's in charge for some time. Mergers and acquisitions are a risky business anyways, and with such baggage in stow, Satyam will find suitors hard to find. There is need for some quick action; only the coming days will tell what it portends for India's image in the world.
But now, the mirror is showing cracks. Even before, Indian IT companies like Pentafour and DSQ revealed that all was not all that shiny in the new industry and that behind the glamour of the biggies, small timers were indulging in the same notorious practices that give businessmen a bad name everywhere. But it was always imagined that the big giants like Satyam were impervious to such allures. After all, after having achieved so much in such little time, surely they did not need to stoop to such depths for mere profits. Perhaps it was wishful thinking, perhaps we were trying to deify a specific breed of people, despite being fully aware that they were, in the end, humans and prone to human errors.
Satyam's treachery with its stakeholders, be they its shareholders or its employees or its clients, will undoubtedly raise questions about how changed is Indian industry from the days of the license raj. Our regulatory authorities will be challenged to meet this fiasco head-on and learn valuable lessons, and not just learn but also ensure that such learning is applied to make sure that such incidents do not recur. Most of all, Indian companies across the length and breadth of the country will be hard-pressed to demonstrate to a greater extent their commitment to ethical corporate governance. The fourth estate can be trusted to be vigilant about any impropriety being committed by companies on a similar scale and of a similar nature.
However what about the present? The fate of Satyam's employees and its shareholders needs to be top priority now. As it were, class actions by ADR shareholders in the US seem to imperil the already tottering edifice even further. Legal liabilities, both domestic and international are expected to be huge. The sacking of the board and the Union Government's resolve to appoint a new board would mean some uncertainty about who's in charge for some time. Mergers and acquisitions are a risky business anyways, and with such baggage in stow, Satyam will find suitors hard to find. There is need for some quick action; only the coming days will tell what it portends for India's image in the world.
1 comment:
The media has again gone over the top and left no stone unturned in its "coverage" (said) of the incident. Seems yet another case of the media handing down verdicts from the idiot box. Narayana Murthy has rightly told the media to stop being intrusive on Satyam (http://specials.rediff.com/money/2009/jan/15slide8-hello-sir-got-a-job.htm).
While an impartial and swift inquiry should and will be carried out, steps should be taken to see that the employees' morale should be lifted. They should once again be made to feel they are capable of earning profits for the Company and delighting their customers.
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