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Software Info-Tech - Interview Industry & Economy - Industry Associations
Our biggest challenge now is to ensure service and employee continuity in the company.
Dr Ganesh Natarajan, Nasscom Chairman Moumita Bakshi Chatterjee New Delhi, Jan. 8 The IT industry is still coming to terms with the shocking confession by the Satyam promoter, Mr B. Ramalinga Raju, on falsification of company accounts and its assets. As the Government, regulators, and clients swing into action to deal with the scandal - the sheer magnitude of which has rocked India Inc – the Natioanl Association of Software and Services Companies is hoping that the fiasco would be seen as an ‘isolated’ case, and not a reflection of the Indian IT industry. Business Line spoke to the Nasscom Chairman, Dr Ganesh Natarajan, on repercussion of the financial fraud on the industry and the measures that the apex association is mulling to prevent a repeat of Satyam debacle. Satyam is the fourth largest IT exporter in Nasscom’s rankings for FY08. What fallout do you foresee for the company and the industry in the coming days? The impact of Satyam undoubtedly looks terrible. The company will find it difficult to get a buyer because due diligence will take 3-4 weeks. The incident will also take a toll on the employee confidence and confidence of customers, many of whom could consider a legal termination process. But where the nature of engagement is mission- critical, clients may take longer in shifting processes. At this juncture what message would Nasscom want to convey to overseas IT clients, who see India as the nerve-centre for any offshoring decision? Clearly, the issue of corporate governance is company-specific. But if the customers suffer and there is stoppage of service, it will prove to be disastrous. Our biggest challenge now is to ensure service and employee continuity in the company. However, in the mid to long-term, we do not see an adverse impact on offshoring. What are the options before clients who have an engagement with Satyam and want to move operations now? Very broadly, I believe this option will be covered under Force Majeure clause… I am sure a lot of law firms are working with customers to help them look at various options. However, certain operations such as application development and implementation is relatively easy to transition, while mission critical work, say, infrastructure management, database administration and BPO, are more complicated when it comes to migration. Given that the role of auditors itself has come under the scanner now, do you expect tougher audits with longer timelines for companies? Yes. If you look at the aftermath of Enron-Andersen case, the audit processes in the US had gone up. I think here too people should be prepared for tough questions, and naturally the time and costs will go up. From a customer perspective, there will be greater due diligence and new customers will look beyond balance-sheets…there will be additional overheads. This incident will cost the industry… As an association, what steps or measures are you assessing to prevent a repeat of Satyam? It is a complicated process. As an industry, you can take collective steps on security or measures to prevent cyber crime; but how do you protect the industry from people within the industry. The Ministry of Corporate Affairs and the Securities and Exchange Board of India can come out with more stringent standards. May be, we’ll at some point, depending on how things unfold, help in transition. It is rather premature; but for those employees who want to look at options, we could put up a public database of people to help them get the right opportunities. Nasscom had also decided to announce the revised FY09 targets for the industry? Is that process now going to be delayed on account of the Satyam incident? Well, we were going to give a growth range, so I do not expect it to be impacted too much by the incident. We almost announced the revised numbers on Wednesday, but I think it will now be pushed back by a few days, as we will have to see whether it needs any modification. ‘Stand-alone’ case of failure: Nasscom Rs 7,000-crore fraud When a management is intent on committing fraud… Simple manipulation of revenues & earnings Lack of relevant info made me quit: Dham More Stories on : Software | Interview | Industry Associations | Satyam Computer Services Ltd
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