Gartner issues reccomendatios for customers of Indian service providers as well as other service providers world wide after the Satyam Computer Services scandal.
The IT Industry in India has suffered a big shock when Satyam Computer Services chairman Ramalinga Raju resigned from its board and claimed that "for a number of years," Satyam has been systematically and deliberately overstating its revenue and profits. Raju's letter also claimed he was personally responsible for these overstatements.
Gartner has issued a document with reccomendatios for customers of Indian service providers as well as other service providers world wide:
Customers of other Indian service providers:
- Become more familiar with the organizational structure and governance of your providers, but continue your engagements with them, as the factors contributing to Satyam's difficulties are likely to prove unique.
- As a risk mitigation measure, consider asking for a certification of compliance to generally accepted accounting principles (GAAP) or their equivalent, certified by the CFO, CEO and the board of directors, and countersigned by the external auditors.
- If you are also a Satyam customer, as a contingency measure, consider assessing the ability of your other providers to take over projects currently run by Satyam, if necessary.
Offshore service providers worldwide:
- If you are an offshore, "nearshore" or onshore service provider, emphasize transparency as a best practice. Publicly offer details about your governance structure, financial management and internal controls.
- Ensure that your internal controls and enterprise risk management are in order. Consider retaining one of the top third-party auditors in the industry (rather than your regular auditor) to complete a full financial and internal controls audit. Make the audit results available to current customers and prospects.
- Arm your front-end staff (your sales and account management teams) with a strong corporate message to deliver to your customers and prospects. Any confusion or lack of clarity in this first line of contact could potentially raise red flags.