IT Customers Closely Monitor Satyam Scandal

Many companies rely on the outsourcer based in India for vital technology operations like supply chain management and business intelligence.
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A larger question is what Satyam's downfall means for the Indian outsourcing industry and even outsourcers in general. On one hand, after years of boom, Satyam's fraud raises larger questions about institutional governance and business practices in India. "I really believe that this event is a blow to Indian outsourcers," the financial services executive said. "This could be the bellwether of something much worse."

Please join us for InformationWeek's Editorial Webcast: "Offshore In India: What's Next?" on Thursday, January 22, 2009 at 11 a.m. EST. Editor-In-Chief Rob Preston and a panel of top executives from the Indian IT industry will discuss Satyam and other issues. Register with this link. Customers and investors will dig deeper into the financial health of all their Indian service providers, questioning whether this industry is as strong as it has seemed. On the other hand, Indian firms likely see this as somewhat of an opportunity -- TCS is aggressively pursuing Satyam's business at the financial firm.

According to attorney Mehra, it's possible that the Securities and Exchange Commission could even get involved by revising some compliance regulations. For example, under the current regime, an outsourcer or software-as-a-service company can receive what's known as SAS 70 compliance (basically, a document certifying compliance with Sarbanes-Oxley regulations) after an auditor performs a test of compliance controls.

That may change going forward, he said, especially since PricewaterhouseCoopers, Satyam's own auditor, wasn't able to uncover what was happening there.

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