Visas at risk as NAB cuts ties with Satyam

NATIONAL Australia Bank is poised to sever ties with Satyam Computer Services of India. NAB executives have cancelled the second phase of a massive outsourcing project contracted to the troubled IT services provider.

The decision is also likely to result in working visas being revoked for the 100 staff Satyam brought to Australia to support the project.

Satyam and its staff have been under siege since January, when chairman and founder B.Ramalinga Raju admitted to inflating the company's cash reserves by $US1 billion ($1.54 billion).

NAB would be exposed to significant corporate risk if it proceeded with the second wave of the information technology outsourcing initiative, NAB technology services general manager Craig Bright told staff at a briefing yesterday.

However, according to a NAB spokesperson, the second wave had been suspended, not cancelled. No timeline was provided.

"Until the longer term future of Satyam becomes clearer, NAB will suspend all work currently in the early stages of transition to Satyam. This work will continue to be carried out by NAB employees. "As the longer term future of Satyam becomes clearer in coming months, NAB will consider whether to continue to transition this work to Satyam or another offshore supplier," the spokesperson said.

NAB announced the decision in separate briefings to its staff and Satyam employees at Melbourne's Telstra Dome yesterday.

At the meeting the bank did not outline backup proposals following the decision to drop Satyam.

NAB chief information officer Michelle Tredenick has previously told staff there were several contingency plans to deal with situation.

The bank has publicly committed to continuing with the first wave of outsourcing, but it is understood that behind the scenes NAB executives are scrambling to find ways to stop dealing with Satyam altogether.

It would either bring the technology functions back in-house or outsource them to another firm.

The Australian recently reported a number of problems that plagued NAB's outsourcing experience with Satyam.

The bank retrenched about 50 employees last year as part of the early stages of ITO Wave 2, and had previously scheduled another round of redundancies in March.