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Satyam scandal: Has it affected your IT outsourcing and offshoring?

For those keeping an eye on IT outsourcing and offshoring, there were a couple of noteworthy pieces of news this week regarding the artist previously known as Satyam Computer Services Ltd.

First, Tech Mahindra Ltd., which purchased the troubled IT outsourcing company two months ago, following the Satyam scandal, has officially rebranded it as Mahindra Satyam.

Secondly – and, I think, more importantly – Satyam is looking to cut jobs if orders coming into the company continue to languish. According to this article, 8,500 employees placed in a so-called “virtual pool” might see their positions eliminated in six months if the company fails to find them work.

Satyam’s staffing troubles aren’t surprising — it must be difficult to woo new Satyam customers or retain those with expiring contracts, given the past transgressions of company leaders. Considering all that, I’m a little surprised that the new owners are leaving Satyam in the company’s name at all. As a point of comparison, after ValuJet Airlines experienced a series of safety problems and the fatal crash of ValuJet Flight 592 into the Florida Everglades, it changed its name and is now operating as AirTran Airways.

Since the Satyam scandal broke early this year, IT outsourcing and offshoring clients have struggled to parse through fact and fiction, protect existing contracts and wise up when pursuing new IT outsourcing deals. As the recession deepened, we began to hear that companies were seeking cheaper rates, sometimes in exchange for more flexibility on the part of the outsourcer in how work is completed. More recently, it seems that insourcing – bringing previously outsourced IT work back in-house – is on the rise.

So what role has the Satyam scandal played in these trends? I recently asked Ben Trowbridge, CEO of Alsbridge Inc., a U.S.-based IT outsourcing and business process optimization consulting firm, whether the scandal was sticking in his clients’ minds.

“Yes – but it’s amazing how short a memory clients have for bad news,” Trowbridge replied. “Within a month of that being brought to a head, it was like everybody had forgotten about it.”

This wasn’t the answer I was expecting. Google’s AdWords tool tells me that the term Satyam is still being searched quite a bit. So I’m putting the question out to enterprise CIOs: Has the Satyam scandal had any effect upon your company’s IT outsourcing and offshoring activities in the past six months? I’d love to hear your stories.

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