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Thread: Satyam (India IT outsourcing Co.)chairman admits he cooked the books

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[quote=COOLSPRINGS,359850]01-07) 19:38 PST -- A huge accounting scandal ravaging one of India's top outsourcing companies could have ramifications from Silicon Valley to Bangalore.

Ramalinga Raju, chairman of Satyam Computer Services of Hyderabad, admitted Wednesday that he had cooked the books at the back-office giant, and resigned, citing the "tremendous burden that I am carrying on my conscience."

In a letter to the board, Raju said he inflated the company's balance sheet by $1.04 billion so that 94 percent of assets Satyam claimed were, in fact, fictitious.

Major accounting troubles at a company like Satyam could affect many industries that rely heavily on Indian outsourcing, including Silicon Valley firms and blue-chip stalwarts like General Electric, General Motors and Citigroup, all Satyam clients. In recent years, the vast majority of tech companies have used India for low-cost, highly educated labor. How much the Satyam scandal will affect those relationships remains to be seen.

"It will probably put a cloud over India for a while," said Rob Enderle, a principal at consulting firm the Enderle Group in San Jose. "It will force a lot of their large clients to pull away from them, like having a run on the bank. The fact that they were able to conceal something of this level puts a big question mark over financial controls in India."

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