Satyam may sack 8,500 staffers after all
24 Jun 2009
Satyam Computer Services Ltd's 8,500 employees benched on a so-called ''virtual pool'' may have their positions eliminated in six months if the company fails to find them work, executive vice chairman Vineet Nayyar told Bloomberg in a telephone interview on Wednesday.
''We are hoping that this doesn't happen, that things will pick up, but yes, there is a possibility,'' Nayyar, former chief executive officer of Satyam's new owner Tech Mahindra Ltd, is reported to have said.
Earlier, there were reports that Tech Mahindra trying to avoid job cuts at Satyam and had even put some 400 virtual pool employees back to work. Nayyar's latest comments seems a reversal of this position. (See: Satyam puts 400 benched staff back to work)
Satyam will release a reorganisation plan on Thursday to cut costs and help retain customers after a stock collapse prompted by founder Ramalinga Raju's admission in January that he overstated assets by Rs100 crore.
On Tuesday, Nayyar said at a news conference that Tech Mahindra plans to absorb its newly created unit Mahindra Satyam. "It is logical and there are a lot of synergies. I am afraid I can't give a time right now. It will be in the foreseeable future," he said.
Depending on the market conditions, the company will decide on the timing of the issue, Nayyar said. The funds will be used to retire the debt Tech Mahindra has taken to finance the Satyam acquisition.
Both firms are likely to have a common governance board to start with and Nayyar will oversee the governance and integrated functioning of the two firms. The succession issue at Tech Mahindra after Nayyar retires is also resolved with two of its senior-most leaders now being elevated to chief executive levels.
"Right now we have to roll up our sleeves and get the car back on track," said Anand Mahindra, vice-chairman of the group, which also runs India's top utility vehicle maker Mahindra & Mahindra.
C P Gurnani was named as the new chief executive of the rebranded Mahindra Satyam, and he said a reorganisation of the unit's structure would be announced in the next two days.
Gurnani said there had been "practically no customer attrition" at Satyam since Tech Mahindra, which is 31 per cent owned by Britain's BT Group, won control in April.
Earlier, Tech Mahindra said it planned to sell 13.6 million shares to institutional investors. The firm said it would use the funds to repay some of the debt taken for the Satyam deal, which is valued at more than $550 million.
''Mahindra Satyam has a huge advantage that the Mahindra group has lent their 65-year-old brand to the company,'' said Gurnani.
