The second coming

It has been five years since the most unexpected corporate story unfolded in India — Ramalinga Raju’s confession that the accounts of Satyam Computers were fudged. The news sent shockwaves across the country in 2009. The most affected were the over 52,000 employees of the IT giant. BLink talks to Hari Thalapalli, who was the chief people officer at Satyam then, and has since moved on to marketing and business consulting functions at the company, now renamed Tech Mahindra. He relives the days of the scandal and the eventual takeover by Tech Mahindra. Five years on, the Satyam brand has been obliterated entirely.

Breaking bad

The unfolding of the scam was a two-stage process. The first moment of revelation was on December 16, 2008, at 5:45pm when I was called in by (Ramalinga) Raju to say that Satyam was going to acquire Maytas (group of companies also founded by Raju). He told me that he had already taken the decision. I was incredulous. Why would an IT company buy an infrastructure company? Especially at a time when markets were sinking? I took strong exception. It was a letdown for the leadership council (at Satyam). We were being informed after a decision was taken. There was disbelief and anger. The only point Raju made in his defence was that acquisition decisions have to be kept secret. I was not convinced.

The stock markets were informed the same day. The reaction to the decision was so violent. Satyam’s ADRs (American Depository Receipts) began to sink. That night, six or seven of us (members of the leadership council) deliberated till 2:30 in the morning. There was so much angst… by 3 am, we decided to reverse the decision. The reaction of the markets and the anxiety of investors prompted Raju to agree to this. But people began quitting; within days, four directors had left Satyam.

My second brush with reality was on January 7, 2009. A meeting was called at 10:30am. I was driving to work at 9:45am when a colleague called to say: “Hari, have you seen the latest communication from Raju? Just stop the car and read it.” I parked on one side of the road and checked my BlackBerry. Raju had written that we were not making profits, our revenue numbers were inflated… that whole riding a tiger story.

I was numb. Three emotions ran through me at that point of time — shock, disbelief and a sense of betrayal. Some of us had been involved in every decision that the company had taken in the last 10 years... This was just unbelievable. I gathered myself eventually and drove to office.

Zero Hour

When the news of the scam broke, people were wailing and crying, even 40- and 50-year-olds. Some were breathless and others were hysterical. It was a dramatic moment, something I had never witnessed in my life.

One of the first things to do was to arrange for a doctor on the fifth floor (of the then Satyam headquarters at Hyderabad). Each senior official had to be checked every two hours. The doctor told some of us our pulse was erratic and the machine was at fault. He didn’t want to reveal how bad it was.

A feeling we didn’t acknowledge openly was shame — oh god, we were part of this. For the outside world, we were a party to everything that had happened!

Around noon, after the initial noise and disbelief had settled, we assembled again to take a call if the number he was quoting was right.

We started calling some of the key account managers and doing back-of-the-envelope calculations to see if we were really making those revenues. By 4pm we realised what Raju was saying was true. The money in the bank was very low. A crisis was looming. Overall, there was a sense of shame, anger and betrayal.

At that point of time, two issues were important: what does this mean for the IT industry in India and for the company. You could not ring-fence it down to a company. It meant that the IT industry in India itself would potentially be under threat because if we went down, then a number of mission critical projects we were involved in could cause a serious setback to the industry.

I called Som Mittal as soon as I got to know about the scam; he was the Nasscom president then. He asked me to mail Raju’s letter.

At that stage, the decision was to somehow keep the company running and not allow it to implode. Thankfully, the intervention of Nasscom, the Indian government, and the unprecedented speed with which they put together a new board gave some hope. Kiran Karnik and Deepak Parekh were much-respected.

What kept us going was constant communication with the customers, associates and the media. My challenge was multi-fold — one was that the press was going berserk reporting the story. Even when a customer was potentially reviewing an arrangement, the news would be that the customer was gone.

We had to squash rumours — we picked up each article coming out on Satyam every day and put the real version next to it on our website. It was largely for employees but later, we created access for end-customers too. And then we progressed to FAQTS — a daily Q&A on key questions like ‘Did we lose a customer?’.

We started another initiative and created News Today, which runs even today. It is a daily gist info about what is going on — did we get a bank loan, has a leader quit, what a customer’s exit means. We also set up ‘Planet Satyam’, through which we could webcast updates. An Australian newsreader would read news and leaders would be interviewed by him. This helped reduce the fear of the people. ‘Surf the Board’ was a 2-3 minutes snippet by each director as a message to associates. If Kiran Karnik or Deepak Parekh were to say something to associates, it would provide a sense of relief.

Those were the first 100 days.

Brick by brick

When the problem started, the headcount was 52,000 and it came down to 23,000 in April 2010. We dropped dramatically on headcount — like losing 50 per cent weight in a year. When this happens, your systems go wrong, knowledge gets dismantled, people walk away with knowledge.

The Mahindra name brought in tremendous credibility and we did not lose customers after May 2009. After customers got to know that there is a new owner and an infusion of $600 million, there was relief.

Those days, we’d do floor-walks. We’d go to a floor and get the whole group to assemble. From January to August 2009, I must have done hundreds of them. The message till April 2009 used to be that we’ll find a potential buyer; when the potential buyer comes in money will come in; and when money comes in, we’ll rebuild.

From May to August, the message was about losing weight. We had to take the difficult decision of addressing excess people as the previous management had added about 10,000 people more than needed. Revenue was 2.4 billion dollars and average revenue per head had to be justified. We had to walk around telling people that we will lose some weight as an organisation and we will be very transparent on the principles that we will use.

We rearranged the organisation structure completely in June. We created a two-in-a-box model, saying delivery and sales will be equal. Earlier it was one-in-a-box — sales were in front and the delivery was subservient.

We also created a group of 150 game changers. These were the people thinking out-of-the-box and showing determination to change the company. Some of us, CP Gurnani (MD and CEO of Tech Mahindra), Vineet Nayyar (executive vice chairman) and I would spend time with the families of game changers and tell them how we believed things would change.

Simultaneously, some of us were out in the field. Gurnani must have travelled about 25 days in a month. He was in front of customers all the time. Customers saw decisiveness, they saw connect and credibility.

By December, we had actually gone back and reversed all the customer contracts to the original form, which meant the customers had seen the comfort and things were stable.

Most of us had taken a 30 per cent salary cut between February and October 2009. We reinstated salaries in October.

My favourite example during floor-walks used to be from Vertical Limit, an amazing movie, where a father, son and daughter go mountain climbing and through a series of accidents, end up hanging from the same rope. Since it can’t take the weight of three people the father cuts himself off to let the other two escape. I used to say — all of us are hanging, some of us will have to cut the rope. Our people cost those days was 97 per cent of the revenues. We had to take some tough decisions — we put some people on virtual pool with less pay for six months and brought back 3,000 of those people as opportunities came. We requested competition to interview and take some others. We helped some with higher education, arranged financial and psychological counselling to make a soft landing in a difficult situation.

Year one was all about survival, the second year was of investment and the third was the year of growth. People were passionate about rebuilding the company. So it became easier. This experience is probably the biggest proof that you shouldn’t give up. To me, this has been life-changing. My need for material things has changed dramatically ever since.

Even during the worst of times, January-February of 2009, on Fridays, we would go to my farmhouse or gather at somebody’s house, pick up biryani packets and beer as that was all we could afford those days, and sit down and laugh away the pain. I also realised the possibility of building good governance. We created a whistle-blower programme. We built an organisation committed to ethical practices. We have a corporate ombudsman.

And while my role has changed from HR to business consulting, you can’t take the people aspect out of me. That is my first strength. I am not missing HR, I am happy.

As told to Rashmi Pratap

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