by Michael Friedenberg

Satyam’s Meltdown

Feb 23, 20093 mins
IT Leadership

Satyam's meltdown raises questions about ethical behavior.

Pretty alarming news not long ago about the meltdown at Satyam. In case you missed it, Satyam has become the Enron of India. Former Chairman B. Ramalinga Raju had been reporting for years more than $1B in phony revenue, and when that caught up to him, it caught up fast. When this news broke on Jan. 7, Satyam’s market value dropped 80 percent.

Industry pundits say many of Satyam’s prospects are looking elsewhere. Are you surprised? I’ll bet not. As Gartner put it, “IT services are unlike hardware or software in that they focus on a relationship with a ‘trusted partner,’ rather than on a product. We believe Satyam’s difficulties have considerably diminished its ability to retain and inspire this trust.” Ya think?

So now there’s one less potential suitor to consider as an outsourcing partner. But what if you are already a customer of Satyam?

My parents told me long ago that the people we associate with speak volumes about us. If so, then how can you continue to be a customer of Satyam’s? I almost fell off my chair when Computerworld reported an unidentified analyst saying, “Customers are not concerned about the investigations into the financial scandal at Satyam. Rather, CIOs…want a clear picture about Satyam’s liquidity position, having a new management in place and ensuring the continuation of the company as an operating entity.”

Are you kidding me? How could CIOs not be concerned about the financial investigation? If this is the case, we need to really question how we make business decisions in today’s economic climate. Not taking into account the current investigation is just unfathomable to me. It makes me wonder if we have reached a point in business where as long as I get the benefit that was promised to me, then nothing else matters.

I was gratified to see that State Farm understands this core ethical issue: The company issued a statement saying it was dropping Satyam. Yet, as of this writing, GE has stated it will continue to work with Satyam for now.

To me, there can no longer be any gray area when it comes to ethical behavior in business. The lines have been stretched too far, and it’s time to say that enough is enough. To partner with a company that may have served you well but was committing fraud should pose no questions about what to do next. There are plenty of honest, qualified partners out there. If you are still a Satyam customer, what are you waiting for?