Jan 7, 2009: Ramalinga Raju resigns, admitting that the company inflated its financial results. He says the company's cash and bank balance sheet has been inflated and fudged to the tune of Rs 5,040 crore. Other Indian outsourcers rush to assure clients and investors of credibility. Indian IT industry body Nasscom (National Association of Software and Service Companies) jumps to defend the reputation of the Indian IT industry as a whole. "This is a stand-alone case of failure of corporate governance and it is critical that it be viewed in this light," Nasscom said.
Jan 8: Satyam attempts to placate customers and investors that it can keep the company afloat, after its former CEO admitted to India's biggest ever financial scandal. But law firms Izard Nobel and Vianale & Vianale file class action suits on behalf of US shareholders, in the first legal actions taken against the management of Satyam in the wake of the fraud.
Jan 11: The Indian government steps into the Satyam outsourcing scandal and installs three people to a new board in a bid to salvage the firm. The board is comprised Deepak S. Parekh, the executive chairman of home loan lender Housing Development Finance Corporation (HDFC), C. Achuthan, director at the country's National Stock Exchange, and former member of the Securities and Exchange Board of India, and Kiran Karnik, former president of Nasscom.
In a separate scandal, India's third-largest outsourcing company Wipro admitted that it had been blacklisted from bidding for contracts by World Bank for "providing improper benefits to bank staff". The four year bar was issued in June 2007 and will run until 2011. The "improper benefits" allegation centres on a scheme to that allowed family and friends of the bank's CIO and other senior executives to purchase Wipro shares under a programme set up by the company.
Jan 12: The new board at Satyam holds a press conference, where it discloses that it is looking at ways to raise funds for the company and keep it afloat during the crisis. One such method to raise cash could be to ask many of its Triple A-rated clients to make advance payments for services.
Parekh claims this case would not undermine confidence in India's entire IT economy. "This one unfortunate, tragic, colossal case doesn't mean the IT industry as a whole is under a cloud. India is known for its strong, good corporate governance and I don't think that's in doubt."