The rise of the phoenix

Early this year when the Satyam scandal broke out and created a sensation in the corporate world, the future seemed bleak for the software company.

While the company's clients were not sure if they would continue to buy its services, Satyam's employees were certainly without any hope.

"They believed, and for very good reasons, that Satyam as a company would cease to exist," said Vineet Nayyar, executive vice chairman of Mahindra Satyam and Tech Mahindra (Tech M). But "they showed incredible resilience during a period when everything was so uncertain," he said, addressing a group of journalists in Singapore last Friday (3 July).

"They (Satyam's employees) were still at sea and the boat had sunk," Nayyar said. "Suddenly they saw a lifeline which came and which ensured that the company they knew, the company they were proud of, would continue to exist and possibly flourish."

That lifeline was Tech Mahindra that took the ownership of the scandal-hit company.

Lifeline for Satyam

To recap, Satyam was plunged into a crisis in January after its founder B. Ramalinga Raju revealed that the company's revenue and profits had been over-stated for several years. The new government-appointed board decided to sell a majority stake in the company to a strategic investor, and Tech Mahindra was selected in a bid in April this year.

Tech Mahindra, with current revenues of about US$1 billion, is a leading technology provider in the telecom sector. It is a joint venture between British Telecom and the Mahindra Group, the latter a major Indian conglomerate with interests in automobiles, technology, real estate, and finance.

Under the new dispensation, the company has been rebranded as Mahindra Satyam. A new management team has been announced, that includes C. P. Gurnani as the chief executive officer (CEO) of Mahindra Satyam.

"We have a fair amount of business and growth in the telecom sector," said Nayyar, providing the rationale behind Tech Mahindra's takeover of Satyam. "We were unexposed to other sectors. What the marriage between Satyam and Tech M does is that it brings Tech M's deep knowledge in telecoms and aligns it with the verticals in Satyam, such as banking, retail, supply chain management, etc. They (Satyam) have a fair amount of enterprise competency. Essentially, this merger brings various competencies together and you become clearly one of the major technology players out of India."

Changes after the takeover

One of the major aspects of the company's reorganisation is that the company has been divided into 11 business groups, said Nayyar. "Each group is comprehensive, with its own business and delivery arm. And both of them are aligned towards exactly the same goals. It will be good for customers and from the overall accountability perspective."

Even though Mahindra Satyam and Tech Mahindra will work closely, they will not merge as yet.

"We are keeping these two companies separate for the time being," he said. "They will have their own management. They will have their own employees. Each company will work independently till it merges... It (the merger) will happen one or two years down the road."