Yesterday we learned that Satyam, the beleaguered consulting and IT services company, is to be rebranded as Mahindra Satyam in the next stage of its integration into Tech Mahindra. The new branding marks the start of the rebuilding exercise one that will need to be approached with care and patience. Tech Mahindra is starting out with this approach in mind.
Satyam had its woes, but remember the context
There is obviously residual value in the Satyam brand, sufficient for Tech Mahindra and the broader Mahindra Group to retain it in the new concatenated brand. Many had called for the Satyam brand to be annihilated, in a kneejerk reaction to the corporate governance scandal wrought on the company by chairman and founder Ramalinga Raju. This reaction failed to recognise that the majority of Satyam staff, not just customers and shareholders, were also victims of a scandal that they knew nothing about. 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.
In our discussions with Satyam customers, with few exceptions, the reactions to the scandal have fallen into two camps. First, there are those who feel deeply disappointed, some say cheated, disheartened, upset and almost entirely negative towards all things Satyam. Second, there are those customers who remain happy with the Satyam teams who support them on a daily basis and who want the company to continue to provide them with the services that they need. As a general rule, those customers who had personal dealings with Raju fall into the first category, and those who didnt fall into the second. However, business decisions need to be made on the basis of rational logic not on purely emotional grounds.
The start of a new chapter practicalities not polemics
Initial indications are that Mahindra Satyam and Tech Mahindra will run as separate businesses. However, we expect that practical cooperation and cross-working between the companies will emerge. There are complementary capabilities within the companies for example, the combination of the infrastructure managed services capabilities in Tech Mahindra and the application services from Mahindra Satyam. 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.
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