Satyam's turnaround-from a scandal-hit company with an uncertain future to a company that recently reported a 10 times increase in its year-on-year profits-has taken many watchers by surprise. One Indian commentator wondered if Mahindra Satyam is the next dark horse of the Indian IT industry. With a hefty dose of good luck, he wrote, this company could become the next Cognizant--the US-based company that beat Wipro earlier this year to become the third biggest IT services company.
High praise indeed for a global IT services provider like Satyam which, only about three years ago, was hit by a tsunami of bad press in early 2009 when its founder and chairman Ramalinga Raju had acknowledged cooking the books of the company in a letter to the Indian government. While Raju landed up in jail, Anand Mahindra of Tech Mahindra came to the rescue of the company and rechristened it Mahindra Satyam. Despite the takeover, not many felt enthusiastic about Satyam's future. There were doubts galore about the company's viability.
Within two years, however, Mr. Mahindra's team has turned the company around-the company is not only growing, it is also making handsome profits. In November, Mahindra Satyam reported growth for the fifth consecutive quarter despite an uncertain macro-economic environment. Consolidated revenue for the quarter was US$330 million, up 3.2 percent quarter on quarter. The company now has over 32,000 employees, still a lot less than the 53,000 headcount that Satyam had at its peak. The attrition rate is now down to 15.6 percent from 17 percent in the earlier quarter.
How did Satyam achieve this near magical turnaround? To understand this, I met Hari Thalapalli, the Chief Marketing Officer (CMO) and Chief People Officer (CPO) of Mahindra Satyam, in July in Singapore. Thalapalli has over two decades of experience in the IT industry. He has been with Mahindra Satyam for the past 11 years, playing vital roles in the organisation's growth and during its turbulent phase in the recent past. He was in town to collect an award for Satyam's people practices.
When I met him, my first question was how does he balance the two roles of CMO and CPO for a company with such a huge staff scattered around the world? "Frankly, the genesis of the fact that I ended up doing both these roles is something that was brought about by the circumstances," he said. "I was traditionally a HR guy and I had moved out of HR into marketing back in 2007, happy doing marketing. Then this whole stuff (the Satyam crisis) happened. When that happened, people were quite demanding. They had to deal with corporate layoff. We had to deal with issues of morale, which was severely dented at that time. So there was a request that I came to step into the HR side. That's how I walked in to deal with HR in 2009 and continued to do marketing." He has been holding that job since then.
Two and half years after the crisis (we met in July), Thalapalli and his colleagues at Satyam have put the crisis behind them, so much so that they don't even talk about it anymore. Meanwhile, in his role as CMO, Thalapalli's understanding of consumer behaviour has helped drive service innovation and brand enhancement programmes for the organisation.
How does he do it? "So if you look at it," he said, "today we are talking about growth and what it takes to grow to the next level. So we created a two-in-a-box in marketing. Probably you know that we have a two-in-a-box even in business, we have sales and delivery joined in the head. In marketing, the two-in-a-box is brand enablement and business enablement joined at the head. We have two key leaders to do this: one who is focused on brand building and public relations. The other is focused on analyst creation, customer intimacy, and so on. Then those two together play the jugalbandi, the harmonious dance, for the marketing role."
As the CPO of Mahindra Satyam, Thalapalli frequently raised the performance bar to help the organisation scale new heights while leveraging human capital. Mahindra Satyam has been repeatedly acknowledged for its innovative and path-breaking HR practices in many national and international forums (Hewitt and Mercer's "Best Employer" recognitions and ASTD and Training & Development's Global Ranking among them).
"The HR role is traditional," he said of his role as CPO of Mahindra Satyam. "The good news is that we have had some exceptionally robust people practices for many years in the past. So what it actually meant was that you didn't actually have to allow any erosion to happen during the challenging times. What we are now doing is moving from maintenance to growth. We measure it in simple terms: how is your attrition behaving; and if you are looking at hiring, how many you are hiring and how many you are hiring through internal referral programme. We have moved our referral numbers from 18 per cent about five months ago to something like 32 percent now. Out of 900 people that I recruit every month, 32 per cent comes from internal referral. That shows the increasing trend of comfort that people have ...that too in an environment where all sorts of IT companies are hiring today."
The three-year plan
After Satyam's takeover by Mahindra Satyam, the major challenge before the company's leadership was to stabilise the company and then put it on the path of growth. How did the plan work? "This can be divided into two parts at the very high end," said Thalapalli about the efforts to revive the company and enhance the Satyam brand during and post the crisis. "We told ourselves it is a three-year plan. We divided three years into three specific directions: first year around stabilisation, second year around investments, third year was around growth. And from that corporate messaging if you may, we derived the messages that we would need to communicate and the actions that we will need to do.
"So when we talked about stabilisation, we talked about the need to be capable of sustaining the company. We talked about actions that may be painful, so as to allow the organisation to take the next leap. In the second year, all our messaging would have been around how we were forming the competency, how we were encouraging new innovation. We talked about the innovation clubs and allowing people to come up with new ideas. We talked about enabling Mahindra Satyam to be on the leading edge of being a mobile workforce-enabling everything on handhelds compared to other companies. So we moved a lot of our messaging and programmes to the customers, to the associates around the fact that we were now bending at the knees so that we could jump."
"In year three now, if you look at it, from last quarter, the messaging has been around how we have been able to grow. I see the traction not scaling down. What are we trying to say is that the messaging has been derived from the larger objective. The good news is people are seeing the traction in growth."
Managing the employees
After the crisis, managing the employees was one of the greatest challenges for Thalapalli. How did he manage to increase the performance bar of the employees during the time of the crisis? "One was to be able to move the sense of uncertainty and fear -neutralising that was as important as bringing forth transparency at where we are going," he said.
"First year was being as transparent as you could, so that there was a connect (with the associates). Our chief executive officer CP Gurnani used to write a blog every 15 days. So all the messages that we wanted to share would go from the CEO's table and we had people responding to those and we would be responding to those responses. What we did was to flatten the organisation in terms of the communication and connect. You had 22,000 employees in the company at that time, feeling comfortable to connect with the CEO. That helped a lot because people knew what was coming."
"When we did take some difficult decisions, in July 2009, the uncertainty and the fear was enhanced for about almost 3-4 months. For 3-4 months, we said in every forum that this was a one-time activity and ...so, once the fear part of it was gone, and people could see what we would do three months down the line, then things started to change..."
As new business came in, that became the biggest motivator for the employees. "For us, in that turnaround phase, even a $700,000 win was a big win," he said. "We would actually send a mail out and nobody cared about the revenue size. What everybody cared about was the fact that we could actually turn the tide, even if it was a small one. And with every win, there were mails exploding around in the office; people were feeling very bullish about it, and every week you had something to cheer about."
"With senior management, we were connecting every two three days; now, we connect every two three months," he said. The company's leadership council is around 100 people. Mahindra Satyam's APAC leadership council had 18 members. "Even two and half years later, 16 of them are still working," he said.
As a turnaround strategy, a Shadow Board was constituted, drawing in younger employees. "The thought behind the Shadow Board was to bring in unconventional solutions to unconventional problems," Thalapalli said. A move like this empowered the grassroots level worker.
Other measures included making the staff mobile-enabled-time-sheets, leave application, NFC-enabled recognition system, the whole nine-yards.
According to Thalapalli, social media is being used extensively within the organisation. Twitter is allowed in the office. There are Internet kiosks on every floor for employees to access Facebook.
Now that the company is back on its growth path, Thalapalli is looking forward to the Mahindra Satyam and Tech Mahindra merger, which is on the cards for next year. "The combined Tech Mahindra and Mahindra Satyam will have the most mobile workforce in the world," he says.