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Action steps for non-Satyam customers

The Satyam scandal will have ramifications across the industry if Satyam customers flee and take their business to other IT outsourcers. Learn how to protect your own interests.

The Satyam scandal will have ramifications across the industry if Satyam customers flee the vendor and take their business to other IT outsourcers. To protect your own interests, consider the following moves suggested by David Rutchik, a partner at outsourcing advisory firm Pace Harmon:

If your IT outsourcing vendor hits the skids

Review your contract for damage clauses and exit strategies.

Inventory what data the provider has, and where it is.

Review who works on your account.

Consider traveling to meet with the team to reassure them of your engagement and creating incentives for them to stay.

Figure out if it makes sense to consider switching vendors, and how to do it.

Shop around to see where else you could take your business.

  • Consult with your outsourcing provider and get its assurance that it will continue to provide you the same level of service, even if it takes on new clients.
  • Talk to your provider about its financial situation, so you can rest easy that it won't be in the same situation as Satyam anytime soon.
  • "We think this is likely an isolated incident … but these concerns need to be addressed, and offshore providers in particular need to provide comfort to customers," Rutchik said.
  • Ask your IT outsourcing partner to provide audits, even if it doesn't have to under any service agreement.
  • "CIOs should be demanding this, to give them comfort, because they have to explain to the CEO that [the outsourcing partner] is OK," Rutchik said.

  • If it's time to reassess or renegotiate your contract, consider pushing for lower rates. "With [many thousand] resumes flooding the market, there's a lot of talent out there, which could be driving down local salaries," Rutchik said. "These are pricing elasticities [that CIOs] should be aware of."

As far as the Satyam scandal's impact on the industry, "We certainly think it's going to give CIOs some pause," Rutchik said. "It's taken some folks awhile to get comfortable with offshoring, and then with offshoring their more mission-critical areas. Fairly or not, you can't avoid some concerns and second guessing and questions."

Let us know what you think about the story; email: Rachel Lebeaux, Associate Editor

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