Wipro claims 'business as usual' after Satyam fraud scandal

India's outsourcing industry faces a shake up in the wake of the £1 billion Satyam fraud scandal, but remains "one of the safest places to outsource" predicts Wipro.

"We have been reassuring and educating our customers on our philosophy which is not to just follow defined standards but to continuously improve, along with putting in sufficient checks and balances."

Pascal Matzke, vice president at analyst house Forrester Research, said Indian offshorers were facing an increasingly difficult battle to retain customers. "The Indian value proposition is being lost," he said. "First they offered the low cost, then the quality - both valid arguments - but now the European and American firms are more level in terms of resource."

The Satyam scandal would have a serious impact on all Indian outsourcers, he said. "Customers want a higher degree of transparency, they are demanding explanations on how their suppliers are making money. Some vendors are even giving customers leaflets explaining their financial position."

In order to show transparency, Indian outsourcers are also "more readily taking on risk in projects, accepting more risk/reward mechanisms," Matzke added.

Yet Wipro remains confident in the robustness of the Indian outsourcing industry, even after large US firms such as IBM and Accenture have been touted as offering a real alternative on cost and capability. "There are 350,000 engineering graduates every year in India, and we're getting the best ones," said Strawser. "In the US, there are 40,000."

But Wipro itself has not avoided controversy. Close on the heels of the Satyam fiasco, it emerged that Wipro had been barred from direct contracts from the World Bank, after family and friends of the bank's CIO and other senior executives purchased Wipro shares under a programme set up by the company.

Wipro has rigorously denied charges levelled by the World Bank that it provided improper benefits to the bank staff. During its earnings report, the company said that the number of shares offered by the company were too few to amount to an inducement, and were "a goodwill gesture". Its business from the World Bank to date is "insignificant". Strawser declined to comment further.

Wipro said it has no plans to take over scandal-hit Satyam Computers, and, unlike some of its rivals, it was "not proactively going after" Satyam clients, Strawser claimed.

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