Satyam Fraud – The Perils of Outsourcing

The massive accounting fraud at Indian IT services provider Satyam Computer demonstrates the perils to U.S. and European companies of outsourcing.

Over the last two decades, American and European firms like GE, Goldman Sachs, Siemens, Morgan Stanley and countless others have rushed heedlessly to outsource their IT work to Indian companies to reduce their costs.

Take Satyam for instance – At the end of its fiscal second quarter of 2009, Satyam derived 83% of its revenues from the U.S. and Europe. Satyam claims that 185 of the Fortune 500 corporations are its clients.

Besides the obvious hardship to thousands of American and European employees, outsourcing on the massive scale to Indian companies also exposes big corporations to several risks – data theft (not uncommon with Indian BPOs), association with unethical companies like Satyam tends to rub their dubious reputation off on the corporations that are outsourcing, setback to IT projects when massive frauds are uncovered as at Satyam, financial loss and possible theft of their valuable intellectual property.

The risks of outsourcing are far too many.

Our advice to U.S. and European corporations, large and small – the next time you are itching to pinch a few dollars by outsourcing to the Indian IT coolies think hard about the ramifications down the road. Think a million times.

Related Stories:
Indian Outsourcing Crook Ramalinga Raju Arrested
Satyam Board Kicked Out, Hooray
Ram Mynampati Vows to Stay at Satyam; Kick Him Out
Trading in Satyam Still Halted on NYSE
We are Big Time Crooks, Confesses Satyam
Satyam Makes Another Big Mistake – Names Insider Ram Mynampati Interim CEO
Crook Raju Wipes Out Rs 10,000 Crore in Market Cap
Are Infosys, Wipro & Mindtree Crooks Too?
53,000 Satyam Coolies Up Shit Creek; Massive Layoffs Likely
End of the Road for Satyam Computer
Satyam Chairman Ramalinga Raju’s Arrest Imminent
Satyam Shares Crash After Massive Fraud Revealed
Satyam Fraud – Is Nasscom Sleeping?
After the Shit Hits the Fan, Satyam Kisses Employees Ass
What the Hell is Really Happening at Satyam?
Investors To Satyam Raju – Drop Dead
Satyam Computer Screwed in Forgery Case

3 Responses to "Satyam Fraud – The Perils of Outsourcing"

  1. SRINIVAS   January 8, 2009 at 1:48 am

    Will Add just one line to your article ….they all have been assisted / audited by American / Western firms …

    Enron was involved in Dabhol Power project … and ofcourse Arthur Anderson …Now its PriceWater House …

    The current phase of recession ….and all those American Banks – like Citi …gave loans to all and sundry …so cannot trust American banks anymore???

    And of course the American Insurance company …AIG

    Its good that govt regulations in India dont allow complete FDI(100%) in Insurance sector ….so you had TATA-AIG ….But for TATA ….Indians would have suffered thanks to AIG ….

    So All American Insurance Companies / Financial Sector cannot be trusted ….

  2. SRINIVAS   January 8, 2009 at 1:51 am

    George Soros was responsible for the Asian Crisis of 1997 — Can the world trust Americans at all??? Responds:

    You write above: George Soros was responsible for the Asian Crisis of 1997

    Again, a very naive statement.

    Read this for a better understanding.

  3. SRINIVAS   January 9, 2009 at 1:19 am

    I have read that before …. Speculation played a major role in the crisis ….inflating everything ….and then it came down with a thud ………..this is where investors are always involved … this case it was George Soros …..

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