Tuesday, April 28, 2009

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Tech Mahindra may use benched Satyam staff

Tech Mahindra is hammering out a solution that would offer relief to the bloated workforce of the beleagured Satyam Computer Services. The workforce with a large number of unultilized but technically qualified employees has been one of the biggest concerns since the Satyam sale.

The proposed arrangement, to be modeled along the lines of ‘secondment,’ will enable Tech Mahindra to use Satyam’s workforce for its projects instead of hiring people from outside. Secondment refers to transfer of a person from their organization of work to a temporary assignment elsewhere.

“We will definitely like to optimise some of our costs and strengths but it will be done with prior approval of both the boards because they are separate listed companies,” said Tech Mahindra’s president (international operations), CP Gurnani, in a response to an ET query.

The top management of Tech Mahindra and Satyam are exploring the feasibility of an arrangement akin to ‘secondment,’ said people familiar with the development.

Tech Mahindra may have a project that needs manpower with specific skill-sets. If these skill-sets are available with Satyam, their workforce can be assigned for the project. It can work both ways as the idea is to synergise skills, said a person with knowledge of the matter.

Tech Mahindra is focussed only on providing services to telecom clients but it could leverage the technical skills of Satyam employees for its projects and also expand the range of services it currently offers to telecom clients.

“The secondment is a good move, it will, on one hand improve the resource utilisation at Satyam and on the other hand, address the resource gap at Tech Mahindra. However, more importantly, the broader significance of this move is that the Tech Mahindra’s management team has got cracking post Satyam’s acquisition and we should not be surprised to see more action forthcoming in the near term,” said Alok Shende, principal analyst, Acsendia Consulting.

The nuts and bolts of such an arrangement may have to be worked out carefully, especially since Satyam will function as a standalone entity. The relationship between the two firms would have to be on an arm’s length principle, said an IT analyst who did not wished to named.

Satyam has a work force of around 48,000. Of this, nearly 80% work off-shore and the remaining are on-site workers. The bench strength is estimated at over 12%. But investigating agencies probing the scam at Satyam reckon the bench strength of offshore employees was much higher at 40% in September 2008.

The bench consists of employees who are not working on any billable projects. In effect, the bench adds to the cost but doesn’t contribute to revenues. Managing costs and bringing in new projects are critical to revive Satyam, which had to take a working capital loan to run its operations.


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