Effect of Satyam Fraud on Indian Outsourcing Market

                                                                                         

January 7, 2009 will be marked as a Black Day in the corporate diary of India. India, with its unlimited talent and IT resources, was hailed as the outsourcing hub in the world. After the Satyam incident, it has been suddenly reduced to a heap of forged documents, botched accounts and disloyal partners. In this scenario, what is the future of outsourcing companies in India? Is Satyam saga the end of offshore software development in India?

Well, if we analyze the entire scenario in a global perspective, we will see that Indian outsourcing industry will not be hit by a single episode like this. The evidence: many overseas clients, including that of the tainted Satyam, have offered support to their offshore business partners in India. They have shown confidence in their service and acknowledged the dedication shown by the employees. Does it mean that the foreign companies are free from the bias in offshoring their services to India? No, not exactly. Many concerns may be raised in the future, as regards to the role of partners, investors, auditors and even the top management of many companies. Foreign investors also are likely to scrutinize Indian companies carefully before they take a decision.

However, the most important concern for any overseas client about outsourcing to India is the quality of service. And, the good news is that India is still capable of offering that same quality. Even at Satyam, we may see that the quality of the work was not affected after Ramalinga Raju and his associates had ‘overstated’ the accounts. At Satyam, the clients were real, and the work delivered to them was real, though the number of employees was fictitious. Just because a few people manipulated things in a company, the quality of the work delivered by thousands of others cannot be underestimated.

The final question is whether Indian outsourcing businesses will overcome this crisis or not. Yes, they will. The credibility that the Indian software industry had earned through many years of hard work cannot be undermined by an isolated episode like this. There may be many Satyams playing the game around us - not only in India, but also around the globe. Corporate history has also marked the names of Enron, Madoff and Parmalat, among others. Each of these incidents points towards the lack of moral responsibility from the part of a few towards their people. However, each episode gives a lesson to the industry and the government. These incidents make the existing businesses contemplate whether to follow their path or not.

A final word to companies looking to outsource their businesses in India: do not underestimate the entire industry on the basis of a single incident. Business deals should happen based on reason, not on bias.

About the author:
The author is associated as manager - Internet Marketing with IDS Logic Pvt. Ltd. IDS Logic is an offshore outsourcing India and SEO Services India company providing integrated web solutions and Internet marketing services to global clients.

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