A class-action lawsuit has already been filed against Satyam Computer Services, the software company whose CEO admitted to fraudulently claiming profits for the company of over $1 billion. The law firm of Izard Nobel filed the lawsuit in United States District Court on behalf of those who purchased shares of Satyam between January 6, 2004 and January 6, 2009.
Before Satyam's CEO admitted Wednesday to cooking the books, he also created trouble in December 2008 that had Forrester's analysts on edge. He tried to get the Satyam board to agree to buy his sons' construction businesses, valued at a couple hundred million dollars, for over a billion dollars.
Forrester's analysts saw a red flag in that and other actions of the company and were reportedly advising customers of Satyam at year's end "to monitor the company's strategic mindset over the next 18 months to ensure its commitment to IT services is not undermined with other ill-fated investment decisions." The analysts added, "Satyam clients should review the exit clauses in their current contracts and assess their portfolio. In the worst-case scenario, clients will have to shift work to alternatives if the contentious issues are not resolved in the next six-nine months." By putting such a huge amount of money toward a totally different industry, Forrester's analysts concluded, Satyam was "consciously" walking away from IT.
And then Wednesday, the other shoe fell. Satyam's CEO admitted to cooking the books over a period of several years, lying that the company had achieved over $1 billion in profits when in fact that number was fiction.
What will the implications be for Satyam's many partners and collaborators? Satyam has partnered since 2000 with Microsoft in various endeavors, and the company received Microsoft's Microsoft Partner of the Year Award "for Citizenship" in 2007. But Microsoft was not the only well known company to collaborate with Satyam, as this company timeline from Moneycontrol.com shows.
And what about Satyam's customers? Already the Australian airline Qantas Airways has been quoted as saying the business risk from its IT contract with Satyam is “manageable.” But no company wants to be in the news because the company it chose to outsource its IT services to is in the news because of corruption and lies.
IT pros who have watched their jobs disappear over the years to such outsourcing companies as Satyam might be excused for wishing the company ill. But they might also feel compassion for the tens of thousands of IT pros who work for Satyam. What should they do now? Stay or go?