Satyam Computer Services Ltd., the software company at the center of India’s biggest corporate fraud probe, may cut as many as 8,000 jobs because of a lack of available work, two company officials said.
The company will make an announcement after informing all the employees involved, one of the officials said on condition of anonymity. The cuts represent 17 percent of the workforce, based on the number of employees Hyderabad-based Satyam said it had two months ago.
The fraud has compounded Satyam’s woes as it fights to retain clients and sustain sales as the global recession prompts companies to cut technology spending. Tech Mahindra Ltd., a software exporter with more than 25,000 employees, agreed to buy a controlling stake in Satyam in April after founder Ramalinga Raju said he overstated the company’s assets by $1 billion.
“If the company’s margins have to be brought back to respectable levels, then obviously” it will have to reduce headcount, Apurva Shah, Mumbai-based head of research at brokerage Prabhudas Lilladher Pvt., said by telephone.
Satyam fell 6.6 percent to 66.85 rupees in Mumbai trading, its biggest decline since March 30. The shares have lost 63 percent of their value since Raju’s disclosure on Jan. 7. Tech Mahindra dropped 4.6 percent to 637.4 rupees. The stock has almost doubled in value since the company won the bid to acquire Satyam April 13.
Rajesh Chandiramani, a Mumbai-based spokesman at Tech Mahindra, declined to comment. Sridhar Maturi, a spokesman at Hyderabad, India-based Satyam, also declined to comment.
Client Defections
Tech Mahindra Chairman Anand Mahindra, who outbid billionaire Wilbur Ross and Larsen & Toubro Ltd. with a $579 million offer, has said he is taking a “calculated risk” in buying Satyam before the company restates accounts and without clarity on liabilities from lawsuits in the U.S. The 53-year-old Harvard graduate is also trying to keep Satyam’s clients from joining State Farm Automobile Insurance Co. in canceling orders.
Satyam has lost contracts from about 46 customers to rivals such as International Business Machines Corp. and Tata Consultancy Services Ltd., the Economic Times reported in March, citing an unidentified person familiar with the developments. Applied Materials Inc., Nissan Motor Co., Sony Corp. and Telstra Corp. are among companies that have moved or are in the process of seeking out other vendors, the newspaper said at the time.
Excess Employees
Satyam had more than 10,000 excess employees, Vineet Nayyar, chief executive officer of Tech Mahindra, told Reuters on May 22.
Set up as a venture between BT Group Plc and India’s largest utility-vehicle maker, Mahindra & Mahindra Ltd., in 1986, Tech Mahindra counts the British telecommunications company as its largest client and mainly serves phone companies in Europe. The software exporter had 25,429 employees at the end of December, about half of Satyam’s workforce of 48,000.
The company will make an announcement after informing all the employees involved, one of the officials said on condition of anonymity. The cuts represent 17 percent of the workforce, based on the number of employees Hyderabad-based Satyam said it had two months ago.
The fraud has compounded Satyam’s woes as it fights to retain clients and sustain sales as the global recession prompts companies to cut technology spending. Tech Mahindra Ltd., a software exporter with more than 25,000 employees, agreed to buy a controlling stake in Satyam in April after founder Ramalinga Raju said he overstated the company’s assets by $1 billion.
“If the company’s margins have to be brought back to respectable levels, then obviously” it will have to reduce headcount, Apurva Shah, Mumbai-based head of research at brokerage Prabhudas Lilladher Pvt., said by telephone.
Satyam fell 6.6 percent to 66.85 rupees in Mumbai trading, its biggest decline since March 30. The shares have lost 63 percent of their value since Raju’s disclosure on Jan. 7. Tech Mahindra dropped 4.6 percent to 637.4 rupees. The stock has almost doubled in value since the company won the bid to acquire Satyam April 13.
Rajesh Chandiramani, a Mumbai-based spokesman at Tech Mahindra, declined to comment. Sridhar Maturi, a spokesman at Hyderabad, India-based Satyam, also declined to comment.
Client Defections
Tech Mahindra Chairman Anand Mahindra, who outbid billionaire Wilbur Ross and Larsen & Toubro Ltd. with a $579 million offer, has said he is taking a “calculated risk” in buying Satyam before the company restates accounts and without clarity on liabilities from lawsuits in the U.S. The 53-year-old Harvard graduate is also trying to keep Satyam’s clients from joining State Farm Automobile Insurance Co. in canceling orders.
Satyam has lost contracts from about 46 customers to rivals such as International Business Machines Corp. and Tata Consultancy Services Ltd., the Economic Times reported in March, citing an unidentified person familiar with the developments. Applied Materials Inc., Nissan Motor Co., Sony Corp. and Telstra Corp. are among companies that have moved or are in the process of seeking out other vendors, the newspaper said at the time.
Excess Employees
Satyam had more than 10,000 excess employees, Vineet Nayyar, chief executive officer of Tech Mahindra, told Reuters on May 22.
Set up as a venture between BT Group Plc and India’s largest utility-vehicle maker, Mahindra & Mahindra Ltd., in 1986, Tech Mahindra counts the British telecommunications company as its largest client and mainly serves phone companies in Europe. The software exporter had 25,429 employees at the end of December, about half of Satyam’s workforce of 48,000.
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