LayoffBlog.com

January 7, 2009

European investors unfazed by “India’s Enron” in IT

According to Reuters: “European investors remain upbeat about India despite an accounting scandal at IT company Satyam Computer Services (SATY.BO) that sent Indian markets tumbling on Wednesday.

Shares in the IT group fell almost 80 percent after founder and chairman Ramalinga Raju admitted inflating the company’s reported cash and bank balances by over 50 billion rupees ($1 billion).

While shaken by what has been dubbed “India’s Enron”, some investors say they will wait for signs of widespread malfeasance among Indian companies before deciding whether to change their investment policy on India.”

  • Satyam is the fourth largest of the Indian IT outsourcing firms
  • Satyam serves more than a third of the Fortune 500 companies
  • Satyam’s clients include multinationals such as NestlĂ©, General Motors (GM), and General Electric (GE)
  • Satyam’s auditor is PricewaterhouseCoopers, who endorsed the company’s accounts

Update: Ramalingam Raju, the chairman of troubled Indian IT outsourcing company Satyam Computer Services, resigned on Jan. 7, 2009, admitting the firm had falsified accounts and assets and inflated its profits over several years.

2 Comments »

  1. IT giants (like Cisco, Oracle, Motorola, etc) are using offshore labor very heavily. The side effect of offshore cheap software development labor strikes back very badly. Stay tuned.

    Comment by DF — January 7, 2009 @ 2:06 pm | Reply

  2. This is just another example of the Auditor not doing their job. Satyam employed WESTERN auditors, and used WESTERN methods. In this case $1Billion is a lot to ‘miss’. PWc need the money, and cannot dissapoint their clients, do you think that the banking system in the UK and US is any different? Its not!. Until Auditors are NOT tied to their clients cheque books this will continue.

    This incident however marks the end of the road for PwC. Another Arthur Anderson (Accenture).

    Man the escape pods :)

    Comment by The Great Architect — January 11, 2009 @ 2:34 pm | Reply


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