Official – Tech Mahindra wins bid for BPO Pioneer Satyam

It was announced mid-day Monday in Mumbai – Tech Mahindra has officially won the bid for the Indian IT giant Satyam.  Satyam founder Ramalinga Raju remains in jail with a number of other company financial officers and accountants. The trial is set to begin later this year. Raju’s public confession of misstating accounts to the tune of over $1 Billion USD, serially, for years has reduced the company dramatically in global stature, so this event is seen as the first step in closing the last chapter and starting a new one for Satyam. It is a huge move for Tech Mahindra.

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Prospective Satyam Bidders May Include IBM – L&T, Tech Mahindra Confirmed

So many analysts, reporters, and bloggers are trying to link IBM to the bidding for Indian IT giant Satyam, whose disgraced CEO Ramalinga Raju (currently in jail) admitted to cooking the books and defrauding the company of over $1 Billion USD. This last week, Reuters released an article quoting the Economic Times in India, stating that IBM was in the bidding for the company and conducting due diligence in the second round of the sale process being overseen by a former Chief Justice of the Indian Supreme Court. Within 24 hours, Reuters released a second article denying IBM was in the bidding for Satyam, while the ET has stood by their story and repeated it in other articles. Some reports have stated that a law firm is representing IBM in the deal, a degree of separation that may lead to the attribution calls in both reports.

Yet, some are saying IBM doesn’t need Satyam with its 50,000 employees and IT staff that form the outsourcing backbone of the majority of the world’s Fortune 500 companies. IBM already has around the same number of employees in India currently, making it with Infosys, Wipro, TCS, Cognizant, and Satyam one of the top IT outsourcing service providers in the country. Analysts say Satyam’s potential liabilities, from a class action shareholder suit against Raju for destroying stock value and a lawsuit by Upaid for fraud / copyright issues could be problematic, to the tune of over $100 Million in liabilities. Bidders for the company have been unable to review the full accounts of Satyam, as the investigation into the accounting fraud is still ongoing. Clients have canceled accounts with Satyam, and the company has taken a bridge loan to cover operational costs until a new buyer is found. What advantage to IBM, then, in purchasing the company with so many problems?

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