RP to benefit from Satyam scandal, lawmaker crows

Instead of urging local BPO players to check their books to avoid a repeat of Satyam fraud scandal here, a lawmaker chose to point out that the Philippines may stand to benefit from the debacle that hit one of India’s outsourcing giants.


Catanduanes Rep. Joseph Santiago, the chairman of the House information and communications technology committee, said in a press statement that Saytam’s freefall may drive outsourcing traffic to the country.

"The Philippines is in a superb position to capture whatever outsourcing business that India stands to lose on account of Satyam’s troubles," Santiago stated.

The Indian firm’s woes started on January 7, 2009 when chairman and co-founder B. Ramalinga Raju admitted massive irregularities in the company’s accounts, listing assets that were actually non-existent.

Satyam’s entire board has since been fired, while key executives, including Raju and his brother, were arrested and charged with various criminal offenses under Indian laws.

Santiago said the Philippines is fortunate not to have experienced a scandal of similar magnitude.

"This could be due to higher corporate governance standards and more rigorous controls here," he said.

But, while initial reactions point to the Philippines as a potential beneficiary of Satyam’s misfortune, it could also be that the local BPO market may be adversely affected since Western companies may hold back or avoid outsourcing altogether because of the exposed irregularities.

Financial Insight, an advisory firm owned by IDC, said there’s a slim chance that Satyam may survive even with the dire prognosis.

"Essentially, in the short term, it should be business as usual. IDC believes that it would in the best interest, both financially and as a business continuity measure, for organizations to continue their existing relationship with Satyam," it said.

The analyst firm said that if a couple of the big organizations panic and decide to discontinue with Satyam, it would not only delay, halt, or hamper their existing projects and result in massive unplanned cost, it would also subject them to the torment of finding another equally large services partner, qualify them, negotiate with them, and thereafter go through the arduous training process with the new team.

In IDC’s opinion, Satyam may eventually be put up for sale and is likely to be acquired in its current state by the highest bidder.

As for India’s vaunted outsourcing industry, IDC said the future still looks good. "There is no doubt that further questions will be asked of the India-based players, as well as the long-term viability of the offshore model, but IDC believes that Outsourcing India will emerge from this scandal with its reputation tested, but better for it." By MELVIN G. CALIMAG - Manila Bulletin