Satyam customers told: Batten down the hatches

Analysts are warning Satyam's customers to prepare themselves against the risk of disruption of services from the troubled outsourcer.

It follows last week's admission by Satyam's founder and former chairman B Ramalinga Raju that its books had been inflated by nearly $1bn.

Analyst group Gartner warned that the ensuing investigation will hamper Satyam's ability to invest in client engagement, staff development and R&D and risks driving staff out of the company, limiting its attractiveness as a IT services vendor.

Gartner recommends that companies closely monitor their contracts with Satyam for disruption, prepare contingency measures and offer "retention bonuses" to keep key Satyam staff on critical projects.

The note said: "In the current economic environment, enterprises consider financial indiscretions by any business intolerable; we believe this will severely handicap Satyam when prospective customers are evaluating potential partners."

Satyam's clients include household names such as BBC Worldwide, Birds Eye Iglo Group, Fifa, General Electric and Nestlé.

A spokesman for Nestlé said it had assurances from Satyam over the continuation of its service but added it is examining its options: "Nestlé's own internal resources are in a position to provide the company with the necessary IT support.

"Alternative solutions are being considered and no disruption of Nestlé's IT operations is expected."

A spokesman for BBC Worldwide, which worked with Satyam on its BBC Blast VJ Masher video portal for young people and has an ongoing services contract with the outsourcer, said: "There is only a very small amount of work being carried out at this present time, which is reaching a natural conclusion, unconnected with recent events.

"If we were to enter into any future contract of work with Satyam we would obviously apply the appropriate due diligence and contractual terms to protect BBC Worldwide."

Fifa said it is "monitoring the situation relating to Satyam", which is the IT services provider for the 2010 and 2014 Fifa World Cups and two Confederation Cups.

Article continues on page 2...