Satyam discusses rebranding option; salary cuts, sabbaticals or even 'virtual bench' to tackle the 'definitely large excess staff'.
Hyderabad-based Satyam Computer Services today got a breather from the Texas Court in the form of a 90-day continuance in the Upaid case, where the UK-based online and mobile payments service company is seeking around $1 billion by way of damages for an alleged fraud case in Texas. The case will come up for hearing in September-October 2009.
Meanwhile, the Satyam board, at its meeting in New Delhi today, is understood to have discussed possible scenarios of rebranding for the IT services firm and ways of reducing cost. It was attended by members from Tech Mahindra and Satyam’s two auditors – KPMG and Deloitte.
The company also announced that four nominee directors of Venturbay Consultants (a subsidiary of Tech Mahindra – which is in the process of becoming the new owner of Satyam) – Vineet Nayyar, vice-chairman, managing director and chief executive officer of Tech Mahindra, CP Gurnani, head (global operations, sale and marketing functions), Sanjay Kalra, president (strategic initiatives) of Tech Mahindra, and Ulhas N Yargop, president (IT sector) – will join the board from June 1. This will increase the strength of Satyam’s board to 10.
Excess staff of 10K
“Clearly, getting business is difficult, and this is not only for Satyam but for the entire IT industry. The bottom line of the company is also under pressure. There is definitely large excess staff. While lay-offs are not a measure, the board members and Tech Mahindra are looking at all the possible means,” said Kiran Karnik, chairman of the board.
Satyam reportedly has an excess staff of 10,000 on an employee base of around 40,000. The company, however, did not confirm these numbers.
Karnik also said that Satyam’s revenue would pick up but that would take some time. In terms of excess employees, while the board ruled out lay-offs, several other measures are being worked out. Some of these include salary cuts, reducing the bench through sabbaticals or creating a virtual bench.
All of these “have been used by the industry”, noted Karnik. He also said the company has rented properties which are huge expenses.
“In many of the cases, these properties are laying vacant,” he said.
Vineet Nayyar, CEO of Tech Mahindra, also agreed that there are areas that need cost control. When asked if the management is looking for re-branding Satyam, Nayyar said: “We will look at options.”
Meanwhile, the Tech Mahindra senior management team, including Nayyar, CP Gurnani, Sanjay Kalra and Mahindra & Mahindra’s Vice Chairman and Managing Director Anand Mahindra, have already started meeting key clients.
“The overall feedback has been positive. All the clients are impressed by the way the company has continued to deliver despite all the problems,” said Nayyar. When asked if there were cancellations, Karnik too asserted that there were “no new cancellations”, except those that happened in the January-February period.
Meanwhile, the Central Bureau of Investigation today said it has enough evidence to prove that former Price Waterhouse partners S Gopalakrishnan and T Srinivas are guilty in the multi-crore rupee Satyam scam case.
