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'Severance' package for 10k at Satyam
May, 29th 2009

A majority of the 10,000 excess staff at Satyam Computer Services are set to be offered 40% of their salary for six months in what can be termed as a severance package being firmed up by the beleaguered IT firm. ( Watch )

The top management of Satyam in consultation with its new owner Tech Mahindra has prepared a list of around 10,000 employees who have not been billed for over six months now. These employees are set to be offered 40% of their existing salary for six months, along with medical insurance and provident fund.

But they may eventually have to leave the firm.
Non-billable employees have been short-listed as they do not bring in any revenues to the IT firm. Satyams revenues have been under pressure as many customers snapped ties with the firm after its defamed founder B Ramalinga Raju admitted to perpetrating a Rs 7,000 crore financial fraud.

Raju had hired more number of employees to inflate revenues and profits of the firm, and the economic downturn has only compounded Satyams woes, forcing Tech Mahindra to look at a separation package for the excess staff in the Hyderabad based outsourcer.

Kiran Karnik, who was chosen by the government to be on the Satyam board and salvage the firm, said unless substantial steps were taken to contain costs, Satyam could go under and risk the jobs of all employees.

The government-appointed board had suggested a number options to the new management including organisation-wide salary cuts, keeping employees on a virtual bench and sending them on a sabbatical. In the last two cases, the company would have to pay only part of the salary to these employees.

Vineet Nayyar, the CEO of Tech Mahindra and now whole time director on Satyam, declared that the company had an excess staff of around 10,000.

The employee strength at Satyam is reckoned to be around 42,000. It is likely to drop to 32,000, if the proposed plan to create a virtual pool is implemented.

Non-billable employees across all levels will be impacted, though entry and middle levels will see more exits.
We recognise that we have to deal with the situation and are exploring the most humane ways to tackle this issue, said Satyam Computer Services marketing global head T Hari.

The company is talking to a dozen outplacement firms to help people who are laid off find new jobs. It is also planning to tie-up with engineering colleges for PG courses and would fund employees who wish to enroll in these programmes.

A few companies have also written to Satyam to take some employees on board. Employees, who have been identified for lay offs will also have access to all the training programs offered by Satyam, said Mr Hari.
The company plans to have financial counsellors to help out those whose exits are imminent.

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