Its been a not so great start to 2009 for India world over. The economic crisis just keeps getting worse.
I had last written about a how the slowdown could be the right time for cherrypicking. But the Satyam story has made me wonder if the same really applies to competitive industries in the service sector also.
Take the Satyam example: There are way too many options available to Satyam clients. They would get similar (if not better) standards of deliverables at better costs probably (given the slowdown and IT industry’s need to get more paying clients)
– Most big IT clients already have multiple vendors. So they would not have to start afresh but look at re-distributing business amongst the others
– Most clients will not be rewarded (enough) back home for the risk involved in continuing with Satyam- given that it has already earned the title of India’s Enron. So even with the new board and GoI pitching in, my sense is that most of them would want to make a quiet and slow exit.
– Satyam was not into cutting edge IPR generating work- which means that they are replacable with the highly documented processes etc.
– Service sectors like IT do not have much “assets” beyond people IPRs. With the scale of fraud being discovered at Satyam, this asset(people) will be highly undervalued by any suitor. Even if one ignores the Sr Mgmt and looks at the Project Mgr level- the indian job market is full of qualified and experienced techies looking for better avenues.
So why would any one want to pick up Satyam – a Co. without much assests, with huge and increasing liabilities? I tend to agree with Phaneesh’s point of view that window of opportunity to invest in Satyam is now gone- with each passing day it would be tougher to revive an organisation which is losing more than its gaining (since the scam discovery).