Two Satyam clients walk: How easy is migration?

Since the Satyam scam came to light, there has been much speculation about Satyam's clients moving their accounts to other IT companies.

 

Kiran Karnik, a government-appointed director on the newly-constituted Satyam board and former Nasscom chairman, admitted to two Satyam clients walking away. "It is true that customers as any sensible person have a Plan B and they are talking of it, what-if kind of plans. But the customers I have spoken to, we have had two of reasonably large customers who have given a notice and are leaving," he said. "But the others are there, and many of them have indicated to me that not only are they there but they would like to renew and in fact expand contracts if they see through this period of the next few weeks, which they recognise is the critical period that the company faces."

 

However, how easy is such a migration? CNBC-TV18's Sunanda Jayaseelan speaks with industry experts to find out.

 

It looks like shifting accounts from Satyam to other IT companies may not be as easy as it sounds. Experts say that of the 630-odd clients that Satyam has, not many may finally make the shift. That's because such a move involves complexities that will be both time-consuming and costly.

 

Says Sudin Apte, Senior Analyst, Forrester Research, "Migration of a larger project is surely difficult. If you look at really Satyam's client portfolio, they have 50-100 clients who have 300-1600 as the size of their offshore development team. Those clients are difficult to migrate. 365 odd clients of Satyam who spend less than USD 1 million will be easy to migrate."

 

According to Forrester, most vendors don't have a well-documented knowledge transfer process. The process of account migration also involves the client putting out a new request for proposals, and evaluating both the proposals it receives as well as the vendor operations, and this cannot be done overnight.

 

Also, a new vendor will need time to ramp up and integrate seamlessly.

 

Wipro, on its part, says it will only look at projects tjat could guarantee revenues of between USD 10-20 million over a two- to three-year timeframe. Wipro also has a stringent list of quality 'must-haves', and will only look at projects which meet these criteria. Also, Wipro says it will decide to accept a project only if it is satisfied with the stability of the previous vendors' processes. These are sentiments other industry leaders agree with.

 

Girish Paranjpe, Joint CEO, Wipro, says, "if they are a fringe client or we are a fringe vendor doesn't make much sense. We choose those projects or accounts where there is mutual dependence and not only a transactional relationship."

 

Raman Roy, CMD, Quatrro, says, "I Don't think customers will take moving very lightly but what is needed is to build back the comfort and the confidence. They talk about salaries yet to be paid. It would worry the life of customers because that means your talent will walk. So there are huge confidence-building measures that have to be taken and should be replicated at the corporate level now."

 

These issues are just a scratch on the surface

 

Most vendors say it will be feasible to take on only the core team - usually between 20-50 people - from existing projects. Typical offshore teams consist of anywhere between 200-500 people. And a decision to shift may literally affect hundreds of employees.