Optimation stands by embattled partner Satyam

Services firm Optimation says its long-standing partnership with India’s fourth largest outsourcer Satyam Computer Services will be unaffected despite the fraud scandal which hit the Indian giant this week.

Satyam chairman B. Ramalinga Raju resigned after admitting he had inflated the company’s profits for many years.

Satyam also recently backtracked on plans to buy construction businesses with family interests, a move which the former chairman reportedly said would replace fictitious assets with real ones.

Optimation CEO Rhoda Holmes says it has been in daily contact with Satyam and received a letter from interim Satyam CEO Ram Mynampati “giving us assurances for how they’re getting it back on track.”

“Satyam have been really quick to put in place some interim management and make sure all their partners and customers are reassured it’s business as usual.

“The facts as we have them are that it’s the actions of an individual – the chairman who has resigned. From the facts we’ve been given it doesn’t reflect a systematic issue.”

Satyam has been subcontracting to Optimation for about the last year on a software services project for the Department of Corrections. Optimation has other projects “in the pipeline” which would involve Satyam, Holmes says. However, she says the situation presents no contractual risk to customers and contracts are always honoured.

In the last full financial year, Optimation’s work with Satyam accounted for three per cent of the Kiwi firm’s revenue. Holmes says the partnership is a small but growing part of its business, adding that the partnership’s peak was about 10 or 11 percent of Optimation’s revenue.

Analysts have speculated Satyam may be acquired by a competitor, however Holmes says it is too early to comment on any predictions by commentators.

Optimation would always want an offshore outsourcing partner offshore as part of its services mix, she says.