The Satyam Scandal & The Indian BPO Sector

in Small-business

Have you ever heard of the Satyam effect? For starters, Satyam was the 4th largest BPO in India and 183rd company in the list of fortune 500 companies. Collapse of Satyam’s reputation was faster than melting of an ice cube. The corruption report of Satyam was aired on the media within minutes of the managing directors of Satyam being arrested by the local authorities.

The "Satyam Effect", more specifically how the collapse of Satyam affected global and Indian specific outsourcing, was a matter of debate for several years after the incident took place. The collapse of Satyam group affected other companies in the industry in both positive and negative ways. Satyam had almost 600 clients. These were not small customers like small HVAC companies or Physicians offices like smaller answering services would manage. These were giants like the IBM's and the Dell's of the world.  Since the survival of the company was a big question mark, many of its clients withdrew the business and approached other BPO providers for services. This was an opportunity for the other companies to boost their business and gain a foothold as an outsourcing player. Changing services seems like an easy task, and it may be for a "basic" client but not for a large customer. Call center outsourcing requires training, knowledge of the brand, training on any specific CRM, and through knowledge of escalation procedures. Companies that were purely depending on Satyam for customer service and technical support were in a big trouble as transitioning was not an overnight option. They had to immediately sign up deals with various other companies, train new employees and reinvest for setting up new infrastructures.

India had a tough time after the Satyam disaster. Satyam's corruption reports pulled down the growth of BPO sector in India. Overseas clients were hesitating to sign up deals with Indian companies after hearing the Satyam news. It took years for the Indian government to restore the trust of foreign companies and bring back the business. Several clients that Satyam had in its account signed up contracts with BPOs in other countries. Indian IT companies had to struggle to stay away from the black shade of Satyam, in order to go on with their business.  

The reputation of other Big IT brands like Infosys, Wipro, TCS etc., was a boon for India in such a disastrous situation. These reputable companies were the available other options for the big clients of Satyam to rely on. Since, the organizational structure of these companies were on par with Satyam, clients did not have to think twice using them as an alternative. IBM and Accenture were the other two companies to take a piece of Satyam's losses. Government of India and Managing directors of IT companies worked together to wash off the black mark that Satyam left on the BPO and IT sector of the country.

Even though a new management team was formed to lead the Satyam Group, it's reputation is still heard throughout the Indian BPO sector. Reconstructing the goodwill of Satyam has become next to impossible. Employment issues became a big concern in India when Satyam broke down. The highly paid IT professionals and call center executives working for Satyam were out of jobs and it took time for them to suit themselves in different companies.

After many years, the effect of Satyam disaster is largely managed. Indian vendors are now more focused in developing a reputation in the market to attract more business through transparency and great customer service. The BPO business in India is enjoying a stable growth again.

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For more information about other call center industry hot topics, please visit the Live Call Center Blog which discusses topics like the Satyam disaster and open source PBX software.

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The Satyam Scandal & The Indian BPO Sector

This article was published on 2012/03/25