Tuesday, May 26, 2009

Of Satyam and Asatyam

Patibandla Srikant
Research Scholar
Institute for Social and Economic Change
Nagarbhavi, Bangalore – 560072.
Email: psrikant@isec.ac.in

As the New Year celebrations were continuing, B. Ramalinga Raju, founder and chairman of Satyam shocked everyone by announcing that, ‘profits were inflated’ to a tune of Rs. 7,100 crore. The immediate reaction was very sharp from various sections of the society. Scathing remarks were made saying that this is ‘shameful’, ‘cheating’, ‘instance of human greed’, ‘horrifying event’, ‘India’s Enron’ and many other such statements were made. While such scams have been common in India, uncommon was the severe reactions that evoked in the aftermath of Raju’s resignation. Even when the Global Trust Bank (GTB) also inflated the profits in the past, the reaction and resultant criticism were not as sharp as in the case of Satyam.

There were similar scams in the industrial sector in the past and there will be so in the future too. What makes the Satyam scam so significant is that – first of its kind by an IT company. However, one is not aware whether this money has been swindled or it has been really faked. Either way the news came as a severe shock to many in the industry and also the general public. The scam has hit the belief of the investors and shareholders alike in times of recession. Further the morale of the IT workforce, clients and IT industry as a whole received a severe set back.

Ramalinga Raju founded Satyam in 1987 and ever since there was no looking back for Satyam under the leadership of Raju. He received many awards with regard to business and leadership skills. Similarly Satyam too received many awards as a role model company. Currently, Satyam is the biggest IT firm in India with more than 50,000 employees and worldwide presence. Satyam has a certain image among the IT workforce, investors and shareholders that Satyam stands for transparency, accountability and efficiency. Such was the trust on Satyam that even when the World Bank banned Satyam of any future transactions with the bank, shareholders still stuck to Satyam.

Now there is a general mood that people have been cheated. Hence, the New Year scam has evoked sharp reactions from various sections of the society. Why did the general public felt that they were cheated, particularly ignoring other similar scams? This sense of betrayal has its roots in the manner in which the media, industry and policy makers generally projected the IT industry. Ever since the growth of information technology the IT industry was projected as an example of corporate governance – transparency, accountability, efficiency and non-corrupt. This had a spillover effect on governments with many arguing that the same should be adopted in governing people. The czars of the IT industry – B. Ramalinga Raju, N. R. Narayan Murthy, Azim Premzi – were projected as the trinity of the industry and the new poster boys of the middle class dreams.

IT was also projected as the one time solution to many problems that country is facing. As a result working in companies like Infosys, Satyam, Wipro was regarded as a status symbol, where a job in one such industries was perceived to be more prestigious than a gazetted officer in the government. Thus a certain kind of aura was spin-doctored around the IT industry and its top leadership.

The Rs. 7,100 crore scam only shattered those myths. As a result, a heavy dose of criticism is being aired out against B. Ramalinga Raju, not because of the scam but for bursting the myth surrounding the IT industry. Meanwhile, the IT industry would recoup the economic loss as and when the recession ends, but what is at stake is the non-corrupt, transparent, accountable and efficient image of the IT industry.

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