Satyam reassures SA customers

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 09 Jan 2009

Troubled Indian-based IT outsourcing business Satyam, whose local arm has signed several key IT contracts in SA, has spent the last few days reassuring local customers that all is business as usual.

The assurance comes after the company's founder and chairman, Ramalinga Raju, resigned, revealing that Satyam's profits had been falsely inflated for years. In what the Indian press are calling India's biggest corporate disgrace in memory, Raju revealed in his resignation letter that the figures had been inflated by as much as $1 billion (50 billion rupees).

The company's SA country manager, Chittaranjan Jena, says: “It is a challenging time for all of us. However, we want people to know things are business as usual, and we are committed to all the clients we have partnered with here in SA.”

The announcement has shocked the Indian IT market and the company's shares plunged nearly 80% before the New York Stock Exchange halted trade on Satyam's portfolio yesterday. India has expressed concern that the controversy may threaten the country's once-booming IT outsourcing sector.

2010 worries

While the company internationally scrambles to find its feet and hopes the dust will settle, the local arm seems confident the trouble will be resolved. According to Jena, the international business has already elected an acting CEO, Ram Mynampati, pending his full acceptance by the board.

The local Satyam business has been working hard in SA over the two years that it has had an African presence. The company employs over 120 staff in SA and will add another 20 to its stable over the next few weeks.

Satyam was the first of Fifa's major sponsors appointed for the 2010 Soccer World Cup and was also chosen as one of the organisation's IT service providers. The company is expected to provide support services during this year's Confederations Cup and the main event next year.

This deal with Fifa also covers the 2014 World Cup. While the deal has not been given a value, it is speculated to be worth billions.

Other business

The company also signed an exclusive telecommunications partnership deal with Faritec near the end of 2007. The deal is expected to give Faritec a piece of the 2010 pie and give Satyam access to SA's top-four telecoms companies.

Satyam also has contact centres around the country servicing several high-profile IT business including a part for the Bophela Consortium, which last year won the State IT Agency R1 billion, 10-year contract to provide the national Department of Health with an electronic health record system.

Another concern for SA is that Satyam has been extensively involved in skills development. It runs something of an exchange programme and around 45 South African students are studying abroad.

Satyam has offices in Cape Town and Johannesburg, Abuja (Nigeria), Accra (Ghana), Cairo (Egypt), Gaborone (Botswana), Nairobi (Kenya), Port Louis (Mauritius), and Tunis (Tunisia).

These offices service over 50 major customers in aviation, government, banking and financial services, oil and gas, as well as mining.

“We will come out of this stronger,” adds Jena. He says the South African business has been doing well, and that the company will still service all its clients.