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Satyam: an analyst case study

So who was first to react to the Satyam scandal? And who had, and continues to have, the most incisive comment for Satyam’s users and other heavily outsourced operations?

I’ve been catching up on commentary from the analysts, and doing a little research. Considering how important outsourcing is, from global enterprises down, it’s disappointing. There’s really limited coverage. You might find these notes interesting not just for themselves but for what they tell us about the speed with which the analyst community reacts.

Remember the timescale: the Satyam chairman’s resignation took place on 7th January. Who reacted first, and whose insights are the most actionable? I’m not looking at news coverage, but at advice and interpretation offered to enterprise users of insight services. Satyam’s customers include many of the largest global companies. What can this tell us about the insight services you rely on? And importantly, what’s available even if you’re not a client?

So here are the key analyst reactions and the timescales. I used Malcolm Ramsay’s specialist search engine at AllTheAnalysts to see what was out there.

First to react: AMR Research
First coverage: Satyam’s Woes Put India’s Services Industry in the Hot Seat, 7th Jan (client access)
Accessible coverage: First Thing Monday podcast, 9th Jan
Follow-up: Beware of the Satyam Ambulance-Chasers, 15 Jan (client access)
Focus: the future of Satyam. AMR expect Satyam to be acquired within 1-2 months for the sake of their client base.
Client advice (from the podcast): having to switch providers is very expensive for a client. It’s the people that matter; look for continuity. Don’t panic; the people will stay put in the current climate.

Best accessible coverage: Gartner
First coverage: Prepare for Aftereffects of Satyam Accounting Scandal, 2 page document, 8 Jan. Although a client research note, this document is available free through But you need an external search to find it
Accessible coverage: online documents and Gartner Voice podcast 12th Jan. But oddly, no blog coverage visible.
Follow-up: two subsequent short documents (accessible). One longer client-only document dated 9 Jan. Local event in Mumbai upcoming on 10 February
Focus: the broad implications for the global IT services industry. Gartner expect Satyam to cease to exist in its current form by “some time in 2010” for this and other reasons. It will be crippled from development, so that its expertise will decline. It will be starting from scratch to rebuild client trust. But Satyam has Indian Government support offering some confidence for clients.
Client advice: look more deeply than just financial stability when selecting an outsourcing vendor

Disappointing: Forrester Research
First coverage: Satyam’s Fraud Leaves Clients In The Lurch, 8 Jan (client access)
Accessible coverage: none located, no coverage in the Forrester blogs
Follow-up: teleconference, 20 Jan (client access, available from archive)
Client advice: can’t be inferred from what’s visible

Others: Ovum
First coverage: The ‘mithyam’ (deception) behind Satyam, 19 Jan 2009
Accessible coverage: none found
Focus: the reputation of India’s IT industry (based on provider’s abstract)
Client advice: can’t be inferred from what’s visible

Coverage: The Satyam Saga: What Next for the Company, Its Customers, and “Outsourcing India? No specific date (just January); client access, 6 pages
Client advice: can’t be inferred from what’s visible

Celent of India published a report on Indian IT services firms on 29 January which appears to make no mention of Satyam’s troubles. No other services show coverage of the crisis to date.

Client conclusion

Forrester’s web conference, particularly, will be of value to clients and can be replayed; but lack of coverage in the blogs is disappointing. The Sourcing and Vendor Management blog has no entry since October.

AMR Research show up well in this, specialists that they are, and Gartner exhibit their strength in fast considered reaction. There are clear differences in the interpretation and advice they are giving, particularly in the timescale for Satyam to disappear in its current form and in the likelihood of staff attrition. Both offer some clear guidance: AMR is more sanguine of an acceptable short to medium term outcome, at least for Satyam customers.

And the learnings? In a sudden crisis like this one, where your exposure could be significant, find all the advice you can. Find your way to the openly accessible content. Look at the specialist insight services, and always at Gartner, even if you’re not a client. Weigh the opinions: they may vary widely. And in the end, make your own decision – not theirs!

• Prepare for Aftereffects of Satyam Accounting Scandal, Gartner, 8 Jan 2009
• Life after the Satyam scandal, Gartner Voice, 9 Jan 2009
• Satyam’s Woes, AMR Research, via First Thing Monday (click More and locate the title)
• AllTheAnalysts