Monday, June 8, 2009

Satyam Ramalinga Raju Scandal: Some Reflections

Ramalinga Raju was considered to be one of the success stories of modern India in the field of outsourcing. He came from south India and he studied there and then he went to USA to get hired studies and even attended a course in Harvard University. Then he came back to India and tried to build his career. He was one of the few persons in India who realized the potential of outsourcing and that is why, he started Satyam in 1987. He started with only just twenty workers and he worked very hard indeed to get projects from American companies.

In the last two decades, Satyam Computer Services Ltd. Acted tremendous growth and success and it has currently more than 50,000 workers. So, it really looks like an Indian success story in the field of outsourcing. Everything looked rosy until a few months ago. Then, things fell apart all of a sudden for the Company. Ramalinga Raju but is no longer the pioneer and hero of a outsourcing sector of India but he is now considered to be one of the worst villains that Indian business sector can think of.

To give you the story in brief, I am quoting from Wikipedia:

In January 2009 Raju indicated that Satyam’s accounts had been rigged over a couple of years.[5] The botched acquisition attempt involving the company Maytas in December 2008 led to a plunge in the share price of Satyam and started unraveling the fraud.[5] It eventually ended in Raju admitting to the accounting fraud to the tune of 7000 crore Rupees or 950 million pounds, and resigning from the Satyam board on January 7, 2009.[6][7] The Indian subsidiary of PricewaterhouseCoopers was the auditor of Satyam.

I am surprised to see one thing is that Satyam Computer was listed in even New York Stock Exchange. How could Ramalinga Raju carry out such large scale accounting fraud single-handedly? What did the other detectors do? Why they could not understand the problem of the company? I guess that many people like me are contemplating on the questions at the moment and we will have to wait for some weeks or even some months to get a clear picture.

It seems that Indian government officials have the same questions in their mind and that is why they have decided to slap notices on Satyam directors. I am a very Interested to see what Indian government do in the next few days. Satyam Ramalinga Raju Saga but has certainly brought a lot of negative publicity for the Indian business sector. I remember that two years ago, Channel 4 of UK but broadcast a documentary on Data Theft Scandal. This brought a lot of negative publicity for Indian outsourcing industry in the UK but you can easily understand that at the time, it was possible for Indian companies to say that it was just a propaganda and in accurate depiction of Indian outsourcing industry. Now, the tragedy is that but a lot of bad publicity has been generated within India itself about Satyam scandal.

The scandal is India’s biggest corporate scandal. And I’m certain that this will not be the last one and it is still a good time that Indian government takes a closer look on the corporate culture in the country. After all, it is a $1 billion scam that has literally given a bad name to the way business is carried out in India.

The people who got affected endorsed a manner are the investors or shareholders of Satyam. It was considered to be a lucrative company and many people did not mind buying the shares are several times more than their actual price. Now, they can find that the shares they own but have any value in the market. Naturally, they are very angry with this matter and they’re demanding exemplary punishment to Ramalinga Raju. They’re also very worried about their future and some family is will perhaps get totally broken financially because of this scandal. It is perhaps a shocking to see that some people are actually supporting Ramalinga Raju if and during his worst time. If you are from Europe or America it may look shocking to you but it is not talking to me because it often happens in South Asia. Ramalinga Raju but was a generous man to his villagers and some other poor people and they got a lot of facility from him. Naturally, to them, he is like a demigod and savior, who has saved their life and their families.

I really wish that Indian government deals for them matter but in a very transparent manner and give full access to media all the documents. Indian government should also allow Ramalinga Raju to talk to the journalist freely and tell his side of the story. Transparency is needed at this moment because the reputation of Indian outsourcing sector is at stake with this scandal. Indian government should also try to figure out how to minimize this kind of scandals in future because it may seriously affect Indian service industry.

It is the time of economic recession and many people in America have lost their jobs. So, those people who were against outsourcing will be trying to take this opportunity and say that outsourcing should stop. Indian government has to take this matter very seriously and assure that American companies that Satyam Ramalinga Raju Scandal is just an exception and is not a part of a future trend.

What do you think about the Satyam Ramalinga Raju Scandal? Let me know your ideas in the comments section.

(This entry was first published in January 11, 2009. Because of a technical problem, the entry had to be deleted and I am reposting again now.)

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