Outsourcing risks: Satyam

Leading Indian IT outsource provider Satyam Computer Services has become involved in an accounting fraud scandal allegedly involving more than US$1billion that could affect its services to Australian customers. Business Week.

Satyam has more than 50,000 employees.

The issue for customers is one of trust, especially if the service they outsource is a material business activity.

According toThe Times of India " The initial investigations by the Registrar of Companies (RoC) into the Satyam scam has revealed large-scale selling of the company's  shares by institutional investors just days ahead of Ramalinga Raju's startling confession of sexed-up company accounts. 

The Serious Fraud Investigation Office (SFIO)... would probe all aspects of the scam, especially since the RoC's initial report has suggested that the company's books of accounts and its corporate filings with the exchanges seem to be unreliable.

The SFIO probe, expected to be completed in three months with the Government's intention to fast-track the process, is likely to be an all-encompassing affair and would also cover the auditors and independent directors and their role.

Gupta said the priority for the Government was to protect the interest of the over 3 lakh shareholders, employees and Satyam's clients, both domestic and overseas. Asked to comment on the fallout of the episode for the credibility of India Inc, the minister insisted that Satyam was an "aberration". "