Satyam fraud is a black eye for Indian outsourcing

A massive fraud was revealed at Satyam Computer Services today. Where was the oversight? Where were the controls?

Satyam Computer Services founder and chairman B. Ramalinga Ramu resigned today, admitting a 50.4 billion rupee shortfall (out of a reported total of 53.61 billion rupees) in the company's accounts, attributed to "inflated profits over a period of last several years."

[For more on this story, see Indian outsourcers face scrutiny after Satyam debacle]

I'm speechless. If a company is assessed at CMMI Level 5, given ISO 9001 certification, given awards for Excellence in Corporate Governance, Best IR Website, Best IT Practices, and for an Anti-Money Laundering (AML) solution, and in addition its chairman is given an award for Entrepreneur of the Year, wouldn't you expect it to have enough oversight and accounting controls that fraud like this simply couldn't occur?

What does this say about the other big Indian outsourcing companies? Is this an isolated problem, or a symptom of a general lack of oversight?

Ironically, the word "Satyam" is Sanskrit for "truth" or "reality"; Satyam is what is left when Maya and illusion are stripped away. Have all the Maya and illusion now been stripped away from Satyam Computer Services?

[Updated 1/8/09]

Updated Status: As of 1/8, Satyam is struggling to find the cash to meet its next payroll, and its auditor, PricewaterhouseCoopers, is in deep trouble with regulators and investors.