Salary concerns kick in

Satyam’s interim CEO Ram Myanampati’s confession about “dismal liquidity” on its working capital has made employees wary, who a few hours back were assured by the management that their salaries would be distributed on time. Although everyone received their December salaries, employees are dreading that January payouts, due in three weeks, will be delayed.

A Satyam associate in Hyderabad revealed, “Those who have applied for salary advances, reimbursement of expenses, LTA, etc haven’t got it yet, despite waiting for a reasonable period of time.”

In an internal communication to its employees earlier in the day, the Satyam management revealed that clients such as Oracle, Thomson Reuters, Applied Materials, Telstra, Sun and GE have conveyed their support to the company. In response to employee’s questions about salaries, the management responded, “There will be no impact on salaries of associates. We will be mobilising funds through customer collections to keep the operations going.”

 

In the first half of 2008, Satyam has reported Rs 5,440 crore in revenues, of which almost 60 per cent was paid as salaries.

It was also learnt that employees in the US offices might have to wait for a few days more, before they get their December salaries. Typically, the US workforce is paid by the ninth of every month, through a payment processing agency appointed by Satyam. A US-based Satyam staffer, requesting anonymity, said over phone, “Our salaries are credited on the ninth of every month, but we haven’t even got our pay slips yet (pay slips are usually released few days in advance to help identify discrepancy, if any).” The employees, when questioned the senior management, were told to wait for “a few days as the cash had been transferred to the payroll processing agency.”

An employee from the business development team told Business Standard, “We were told that Oracle Corporation Senior VP has written to Ram Mynampati expressing his support in steering Satyam back on track. This is assuring as this means that company has business and revenues will continue.” The management also assured that by January 12, the US employees would be paid.

Another Satyam worker from its Singapore office communicated, “While salary apprehensions are on our minds, the management hasn’t yet told us about any salary freeze.” He also said that most of the Singapore staff was willing to wait for salaries, as long as their jobs remain intact. “It’s a lesser evil than getting laid off during such times,” he rued.

Another employee wondered, “Even if the January salaries come through, the question that employees are asking is whether payments would be made in February, or are we heading for a mass retrenchment.”

IT outsourcing contracts of over $200 million (around Rs 960 crore) are up for renewal. Some of the major clients who have long-term strategic relationship with Satyam include Unilever, Nestle, DuPont, Cisco Systems, GE, Sony and Applied Materials.

The current move by Satyam is expected to trigger a possible review of their relationships with the company.