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The Satyam scam tarnished the credibility of India’s IT story, requiring others to do a lot of convincing to retain clients. As dramatic it was, the World Bank, within a week of the Satyam scam coming to light, announced it had banned, besides Satyam, Wipro and Megasoft from working for it. To give the government its due credit, it acted swiftly by superseding the Satyam Board, which brought in new auditors to restate accounts and found a new owner in Tech Mahindra.
The year also saw the software exporting community trying hard to retain their margins as clients cut down on IT spends. The huge forex losses due to fluctuation of rupee didn’t help them either. The fallout of this was that top Indian IT companies, which used to hire up to 25,000 people annually, put recruitment on hold and postponed campus recruitments. Indian IT industry is still passing through a difficult phase. Shrinking budgets, pressure on revenues and bottomline, competition from global bigwigs are staring at the home-grown software multinationals who have to adjust to a new scenario.
Globally, the industry saw a few mergers and acquisitions (M&A). In April, US business software company Oracle Corporation announced that it would buy its Silicon Valley rival Sun Microsystems for US$7.4 billion in cash. In September, the world’s second largest PC maker Dell acquired computer services firm Perot Systems for about US$3.9 billion. Copier major Xerox Corporation announced that it will acquire outsourcing entity Affiliated Computer Services (ACS) for about US$6.4 billion in a cash and stock deal.