Nissan, Pfizer May Be Latest Outsourcers to Dump SatyamJessica Mehroin Irani
Clients continue to desert the fraud-hit Satyam Computer Services despite the newly-appointed board of the Hyderabad-based company trying to put it back on the rails by bringing in a strategic partner. Japanese auto maker Nissan and US-based pharma giant Pfizer are believed to be the most recent clients considering their exit options.
Seven clients have moved parts or all of their business away from Satyam since the company's disgraced promoter and former chairman Ramalinga Raju admitted committing a Rs 7,000-crore fraud on January 7. The list includes State Farm Insurance, Cigna, Citigroup, Merrill Lynch, Novartis, GlaxoSmithKline and Coca-Cola. Also, another client SanDisk has mentioned in its annual report, which was out on February 25, that it might move away from the Indian firm.
Four people familiar with the development said Nissan and Pfizer have invited bids from other vendors to move the projects away. While TCS, Wipro and Cognizant are believed to be bidding for the $35-million Nissan contract, Cognizant is believed to be leading the race for bagging Pfizer's IT contract. TCS is learnt to be another bidder for the Pfizer contract.
Japanese auto major Nissan wants its new IT vendor to absorb a few Satyam employees who are working on the project. "It (Nissan) wants its business continuity to be uninterrupted and the transition process easier," said one of the persons quoted earlier. The size of the global pharma company's contract with Satyam is not known. The Hyderabad company services Pfizer in non-US geography.
While Satyam, TCS, Wipro and Cognizant refused to comment on the issue, an email sent to Pfizer on Monday remained unanswered.
"Nissan is aware of the situation and is taking appropriate steps to ensure the continuity of Satyam-supported systems and applications. We'll continue to closely monitor the matter," said a Nissan spokesperson.
Pfizer (India) had earlier outsourced its clinical data management to Cognizant. The Nasdaq-listed Indian IT major earns 25% of its revenues from the healthcare and life-sciences practice. Pfizer also outsources work to TCS and Infosys. TCS, too, is strong in the healthcare space with clients like Roche, GSK, AstraZeneca and Novonordisk.
ET had reported in its edition dated February 21 that Cognizant would be the IT vendor for GlaxoSmithKline (GSK) by June 2009. "Cognizant has an almost uncontested leadership position in healthcare spanning the drug development lifecycle from discovery, clinical, manufacturing/production to commercial operations (sales and marketing)," research firm Edelweiss had said in a note.
The world's largest supplier of flash memory cards, SanDisk, has said in its annual report that it is facing problems like project delays and productivity loss, owing to the Satyam crisis.
SanDisk has warned investors that the design and implementation of the new enterprise resource planning (ERP) system at the firm could take longer than anticipated. It also said "if Satyam is to lose key personnel, declare bankruptcy or unable to perform at the expected level, SanDisk would have to engage a new integrator, which would likely result in significant delays in implementation and additional cost."