10,000 excess staff in Satyam, says new owner

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10,000 excess staff in Satyam, says new owner

This article was posted on May 24, 2009 and is filed under Press Releases

Satyam Computer Services’ has more than 10,000 excess staff, new owner Tech Mahindra said on Friday, and the fraud-hit outsourcer’s chairman said revenues remained on a downward slope.

Vineet Nayyar, the chief executive of Tech Mahindra which last month won an auction for a controlling stake in Satyam, said there was a need to lower headcount.

“It is more than 10,000 people are excess,” Nayyar said. “Ultimately if the company fails, you have 40,000 people out of the job. Nobody wants that.” “I think the future is great but there will have to be a few sacrifices in terms of compensation, in terms of a large number of things… Some form of least painful way of reduction in staff is an option which will have to be looked at,” he said.

However, Kiran Karnik, chairman of the board appointed by the government to salvage the company, said Satyam was looking at cost-control steps including wage cuts but not layoffs.

Satyam’s founder and former chairman shocked investors in January by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India’s fourth-largest software services exporter.

The government quickly stepped in and sacked the board to limit damage to India’s once-shining IT sector. Satyam lost some customers, and Karnik said the company was yet to stem the losses.

“Without a doubt, revenue is on a downward slope just now. We are hoping to pick up, but the pick-up won’t happen immediately,” Karnik told reporters.

“There is stress on the company’s bottom line and very clearly some definite and fairly strong actions will have to be taken,” he said.

Karnik said Satyam had high operating costs which it was looking to rein in, adding Tech Mahindra would take the final decision on how they would be lowered.

“It’s been like a patient is being rushed back to health, but it’s not yet cured. There are yet things that need to be taken… some bitter medicine.”

source: Onlineequitycalls

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