Team-BHP - Satyam Chairman and MD Resigns

Satyam's star performers - Dream ends abruptly for Satyam couple

"We were both star performers at Satyam, expected promotions this year and had made the down-payment for a three-bedroom apartment. Our life together had just begun and we were looking forward to a strong, secure future. Now we’re looking for jobs,"

"For the past one month, my schedule has been to come in at 10.30, check my email, then have long chat sessions with my boss about what the future holds until it’s time to go home,"

"Back in June last year, our appraisals got delayed and there was no explanation from the management. Lots of people moved on to competition but we stuck around, thinking the company was cash-rich and would definitely take care of those it called ‘star’ performers. We were plain stupid."

Assuming that the current claim by Mr. Raju that the real margins of Satyam are just 3%, now, how are others managing higher margins?
That is possible only if the following were true
1. Satyam's cost of sales (Read employee cost in case of IT companies) is higher than others. This is not possible in the market conditions of the last three years. If Satyam paid more salaries than others, others would have lost their best employees to Satyam. This industry is most notorious for attrition.
2. Satyam is quoting lower prices for its sales. This cant be true either because in that scenario other companies would have lost all business to Satyam. If you worked with an American customer you would know how badly they bargain and shop around for better prices. Other Indian companies cant be rated much higher than Satyam in brand valuation for an American customer.

Now how are others getting away with 25 to 40% margins?

Contrary to this if Satyam's real margin is not 3% and is much higher, then all what happened to all that profit?

Quote:

Originally Posted by sridhga (Post 1123279)

That is possible only if the following were true
1. Satyam's cost of sales (Read employee cost in case of IT companies) is higher than others. This is not possible in the market conditions of the last three years. If Satyam paid more salaries than others, others would have lost their best employees to Satyam. This industry is most notorious for attrition.

Or if all the non billable resources on Support like Admin, HR blah blah (like sales) we exhorbitantly paid on par with the billable ones...

But a seat cost would normally have all the cost (Admin, HR, Sales, blah, blah) built in...

In effect makes less sense to claim 3% margin. Its suicide....

You have the clients and the people to deliver the goods. Surely a few amongst the 53000 can line up some VC's and start a company. It wasn't just Raju getting in all the business and ensuring the results are delivered. There have to be scores of senior staff who understand the full logistics of harnessing business and delivering the goods. The programmers are just one element.

Many guys today in the IT sector who have done well once were employees at Patni

With a couple of major lawsuits looming this may be the only way ahead for Satyam. I doubt the company can survive the hammering it will get legally and from the regulatory authorities. Infact the lawsuits make it highly undesirable for acquisition despite its sizeable client base and talent pool

Amongst all the rubble strewn around Satyam employees got something to cheer today. They bagged a new contract from Malaysian Airlines. And Malaysian Airlines has insisted that the whole team needs to be onboard by Jan 12.

Quote:

Originally Posted by sgiitk (Post 1123315)

A third possibility is that the operating costs are overstated. This will naturally reduce the actual margins.

This question about 3 per cent margin was raised by a broker on CNBC on Wednesday. I think Shankar Sharma of First Global.
It's a very naive question to ask for a man with his kind of experience. Obviously everything about Raju's statements are false and misleading. What sgiitk says is absolutely the only reason for the apparently low "real" margins.
There is no reason to believe everything that Raju has written in the letter. I am sure there are a host of other lies or carefully covered up unpleasant truths in that letter.

We need Phaneesh Murthy at Satyam to pull the company out of the current morass(with no direct reporting female staff :D).

Jokes apart, what the company needs is a dedicated team to assuage the fears of the foreign clients, who would be close watching the situation.It's gonna be very tough , but then it's do or die for the firm.The firm would find it diffucult to attract decent suitors if all it had to offer were a big albeit mostly telented workforce.

I just cannot get over the fact that PWC has screwed up big time.Don't they physically check Bank Balances, Cash in Hand, vendor payables etc, basic elements in an Audit :Frustrati

Quote:

Originally Posted by getsurya (Post 1123415)

To say the least, it talks about the quality of services our folks at Satyam deliver to their clients.

Exactly, there is huge value creation in that company to justify where it is. With Raju out and hopefully the others who goofed getting booted out soon Satyam can be steered on provided someone takes over. But the catch is who would want to gamble with the lawsuits they will inherit? Its only the employees who can break away and start afresh without the baggage of the outgoing management's horrid legacy.

Someone should engineer breaking the company up so the bulk of employees with the bulk of the business gets shifted out so the rest of the remaining mess can be nailed and buried for eternity on account of lawsuits and regulatory action

I don't know how this can be done legally. Perhaps naively but I'd think an enmasse shift of employees out with clients is the only solution. The lawsuits can focus on attaching the assets of the promoters in settlement.

Quote:

Originally Posted by Zappo (Post 1123382)

Deb, fantastic news! Satyamites say cheese:)

Infact I was just thinking that the best way ahead is to shift the entire liability of the lawsuits to the promoters and clean up Satyam so it can be acquired afresh by anyone. That would be a positive way to resolve the current mess

I guess one has to split the assets and liabilities to the promoters and the manpower with the client base goes to a new owner.

Quote:

Originally Posted by DKG (Post 1123484)

That is easier said than done. Law suits cannot be seperated from the sources of revenue. That is you cannot take away the cream (business) and make law suits on people without business. The very purpose of the law suit is gone in that case. I am not sure bankruptcy judges would allow that.