So now that the dust has settled, I ponder what the ultimate impact will be given the events that occurred at Satyam last week.  Given that Satyam founder Ramalinga Raju admitted to falsifying the books of his firm for several years, these actions will surely cause  many CIOs question their relationship with Satyam or other Indian outsourcing firms and reevaluate their outsourcing strategy all together.   There were several news accounts of US firms abruptly ending their contracts with Satyam and sending Satyam’s consultants home.  I work with Indian colleagues who have acquaintances that were impacted by these actions.

Even though Ramalinga’s actions are reprehensible, I think everyone needs to take a deep breath.  It is reported that Satyam employs some 50,000 workers in India and around the world.  If one peruses the trade magazines or reads IT Service Management blogs on the Internet, you do not hear anything negative about the work that these individuals are doing.  In fact, the workers are turning out great work, with great quality.  The failure in this case was with the leadership of Satyam, not the people delivering great results for clients around the world everyday.

The actions of Satyam will undoubtedly cause repercussions for the other firms in India who are engaged in outsourcing, but I hope that there firms are better managed and have better internal controls to prevent this sort of issue from occurring.  I suspect that there will be greater scrutiny with these firms as US firms begin to renew or renegotiate their outsourcing contracts with their outsourcing partners.

Perhaps India needs to think about better regulations and government oversight of these large firms that are delivering services to customers all around the world.   Don’t get me wrong, we have lots of regulation and government oversight here in the United States and somehow we figure out a way to circumvent a lot of that based on the economic fallout that the US has gone through over the last year and a half.  But there needs to be some sort of controls put in place to at least mitigate the risk of this happening again.  It will be interesting to see how Indian officials will deal with this over the coming months and how Satyam will rebuild the trust of their clients.