Tech Mahindra has decided to keep the Satyam brand alive as it merges the two companies, renaming the combined entity Mahindra Satyam and leaving some experts to wonder why.
Today, the company also announced that C.P. Gurnani, currently president of Tech Mahindra LTD’s international operations, will become Satyam Computer Services LTD’s CEO.
The changes are part of the effort to move on from the worst business scandal in India in which Satyam chairman and CEO Ramalinga Raju was arrested for overstating profits and revenue and diverting cash.
The move brings back memories of MCI WorldCom, a brand that did not survive its scandalous leadership. However, David Mitchell, senior vice president of IT Research at advisory and consulting firm Ovum, came out today in favor of keeping the Satyam brand alive, saying “remember the context.”
By that he means there is still residual value in the Satyam brand, sufficient for Tech Mahindra and the broader Mahindra Group to retain it in the new concatenated brand.
He described the call for the Satyam brand to be annihilated a “kneejerk reaction to the corporate governance scandal wrought on the company by chairman and founder Ramalinga Raju” that failed to consider the victimhood of the Satyam staff.
“On a day-to-day basis Satyam continues to provide services to a large number of customers, with stability and certainty increasing since the Tech Mahindra acquisition was announced in April. It is those everyday customer interactions that represent the remaining value in the Satyam brand.”
Mitchell said business decisions need to be made on the basis of rational logic not on purely emotional grounds. Those Satyam customers who have been able to do so and evaluate the company by the performance of its consultants and not its criminal executive leadership still see the value in the company.
Mahindra Satyam will not have to do for itself what it has done for others and align their own capabilities that make the most business sense. Mitchell said there are opportunities for practical cooperation and cross-working between the companies, particularly where the infrastructure managed services capabilities in Tech Mahindra and the application services from Mahindra Satyam come into play.
“What we hope to see emerging is a realpolitik where the two firms cooperate on deals where it makes sense for them and where the skills needed are genuinely complementary – this is already happening in places. This is practical integration rather than forcing through a destructive but theoretically sound integration strategy,” Mitchell said. He added that “value can often be destroyed through hasty decision-making, and this would certainly be the case if Mahindra Satyam and Tech Mahindra were rapidly crashed together.”
Mitchell said it will take some time to work through the phases of understanding, stabilization, alignment, integration and growth that their plan will inevitably need to encompass. Mahindra Satyam will have to re-align its costs to reflect revenue reality rather than what Mitchell calls Raju-esque figures.”
