Satyam gives CEO job to internal executive

Stan Beer
Monday, 09 February 2009 06:58

IT Industry - Market

Fresh from the worst corporate scandal to hit post tech miracle India, IT outsourcer Satyam Computer Services has appointed the company's HR boss Mr A.S. Murty as Satyam’s Chief Executive Officer. The appointment follows the dismissal and subsequent arrest of Satyam CEO and co-founder Ramalinga Raju and his brother B. Rama Raju on charges of corporate fraud.

Since the arrest in early January of the Raju brothers for allegedly inflating the balance sheet of Satyam by US$1 billion, analysts have expressed doubts over whether the Indian IT services provider can survive. The Indian Government, mindful of the potential adverse affect the Satyam scandal could have on the wider Indian IT industry, seems determined to remake and sanitise the company while keeping it intact for the time being.

According to a Times of India report, Mr Murthy, a 15 year staffer at Satyam, was appointed to the top job because the company could not find anyone qualified for the position outside the company who was willing to take the job. The report questioned how Satyam would be able to explain the appointment of an internal executive to clients who were previously told that there would be an external appointee to the role.

 “Mr. Murty (‘ASM’) is a Satyam veteran of 15 years, who has been in its forefront since Jan 1994. He brings to play a deep understanding of the organization, proven expertise in leading a Business Unit, overseeing Global Delivery, nurturing Customer relationships and spearheading the entire gamut of the Human Resources function.  He is well respected for his ability to effectively integrate the team and enable a collective decision making - which will be critical as Satyam moves into its revival phase.” said Satyam board member Mr. Deepak Parekh.

“In our interactions over the past few weeks, we are convinced that Satyam needs an internal leader to steer it at this critical juncture and ASM has the required bandwidth and support.”  added Mr. Parekh.

The Board also announced the appointment of Mr. Homi Khusrokhan and Mr. Partho Datta as Special Advisors to the Board, to assist in Management and Finance areas, respectively. The Special Advisors, along with Boston Consulting Group will work pro bono.

The appointements are aimed at quickly stabilizing Satyam, according to a company statement.

“This is a unique opportunity to provide direction and guidance and I accept it with all humility. I have no misgivings about the enormity of the task in front of us, but together with my colleagues, I am confident we can accomplish the impossible. I look forward to working very closely with the Board, our Advisors and all Satyamites – to restore Satyam to its well-deserved glory. We will chart a precise and practical 30 – 60 – 90 day plan that will encompass and address the interests of all stakeholders.” Mr. Murty said.

The board also confirmed receiving bank sanctions of US$130 million as a planned fund infusion towards working capital requirements. The funding is expected to help the company tide over its financial challenges.  Satyam also reaffirmed that January 09 salaries (globally) and the fortnightly salary in Feb 09 (for its US based associates) have been met from its internal accruals.  (US payroll is run fortnightly for US based associates and has been so since company’s inception).

“Completing the complex financial restatement exercise including announcement of Q3 results and ensuring prudent financial operations will be the primary focus in the next few weeks,” said Mr Datta, who will be overseeing the financial operations of the company.