As part of my job, I happen to meet many customers and corporate governance is the new buzz among the customers. This is particularly relevant among new customers, who want to outsource its operations to an Indian Service Provider. Some of the sample questions from analysts are as follows :
1) Who are your auditors ? If you say PWC, then expect to hear a smirk and muted sarcasm
2) Is your cash real ?
3) Do you have truly “independent directors” ?
The questions from the customers and analyst community are particulary valid and I can emphatize with their concerns. The competition particularly global players like IBM, HP, Accenture who have been brought on the backfoot by the increasing aggressive onslaught of the India based outsourcing companies have reasons to celebrate. They now possess a viral weapon which can be effectively used to create FUD in the customer decision making process. The issue of corporate governance within Satyam is being projected as a failure of the Indian outsourcing industry, which I believe is a sweeping statement bereft of any logic.
The Indian IT industry is a 40bn dollar industry, has been created because of a lack of transparency and flexibility shown by existing incumbent players. The Indian players moved in to fill the void and addressed the latent demands of customers via flexibility & cost rationalization. The Indian IT Industry has survived for more than two decades and an isolated incident like Satyam cannot stop its march towards dominance. We can draw parallels for the IT Industry with the existing automobile industry, which is a straight fight between American and Japanese companies with added exhibits of Europe based automobile companies.
If the Indian IT Industry wants to stop this FUD, it has to quickly bring the guilty within Satyam to books. That will set a strong precedent and serious message to the world community. Secondly, Satyam should not be allowed to collapse. It must be revived and made stronger by merging it with a serious player in the IT Industry. Lastly Indian companies need to advocate 360 degree of transparency in its operations. Transparency should become the DNA of an organization and should encompass the entire gamut of stakeholders, investor relations, analysts, customers and employees. That should be the silver lining.
If the Indian IT companies can practice the above approach, the isolated incident of Satyam will be soon be history and lead to increased confidence and improve sentiments in the marketplace.