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Satyam Clients Aren't The Only Ones Losing Sleep Over Scandal

Satyam customers aren't the only ones worried about the company's mess. Non-Satyam clients who outsource pieces of their IT to other services providers should be looking over their shoulders, too.
Satyam customers aren't the only ones worried about the company's mess. Non-Satyam clients who outsource pieces of their IT to other services providers should be looking over their shoulders, too.As Satyam's competitors race to cash in on an exodus of Satyam customers, everyone should be keeping an eye on their own IT outsourcing continuity, says David Rutchik, partner with outsourcing consultancy Pace Harmon, in an interview with InformationWeek.

For one, Satyam competitors wanting to attract nervous Satyam customers also could be shuffling resources -- i.e., talent -- that's needed to accommodate the new business. That means some of the most reliable and knowledgeable people you've got working on your outsourced app dev team now, for instance, could end up being reallocated to new Satyam accounts, he says.

Also, in the near term, as Satyam tries to keep its own employees from leaving -- and Satyam competitors try to lure some of this talent to accommodate new accounts, rates could swing upward, he says. That means the cost of outsourcing could rise.

In general, Rutchik doesn't think Satyam's mess will discourage organizations from outsourcing pieces of their IT, but it might bring a mini-boom to U.S. IT services providers who promise work done domestically, as opposed to offshore.

Satyam's problems "won't have any meaningful impact in outsourcing in general, but will create obstacles in the minds of CFOs and CIOs" when it comes to decisions about offshoring, he says.

"Accenture, IBM, HP/EDS will benefit," at least for a while, he predicts. "There is cultural bias," he says.

Yet as shocking as the Satyam fraud fiasco is, a major data security breach by an Indian IT services provider would have been a far worse blow to confidence in Indian IT outsourcing, he says.

How's that for the cup being half full?

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Sara Peters, Editor-in-Chief, InformationWeek / Network Computing
John Edwards, Technology Journalist & Author
John Edwards, Technology Journalist & Author
James M. Connolly, Contributing Editor and Writer