Qantas has 'alternatives' in wake of Satyam scandal

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Qantas has 'alternatives' in wake of Satyam scandal

Qantas has described the business risk currently posed by Satyam’s US$1 billion accounting scandal as ‘manageable’ but said it could activate ‘alternative’ arrangements if the outsourcer is unable to service the remaining five years of its contract.

A Qantas spokesperson told iTnews that its IT Services team is ‘monitoring the situation and will continue to do so on a daily basis until the situation is resolved’.

"Qantas has five years remaining on a seven year contract under which Satyam provides IT application maintenance and support,” the spokesperson said.

“At this stage Qantas assesses any risks to business as manageable.

“In the event that Satyam is unable to continue services, Qantas has the ability to activate alternative internal and external arrangement to enable the continuation of seamless services,” the spokesperson said.

Other large Australian customers of the outsourcer, including NAB, have also been contacted for comment.

Jens Butler, Principal Analyst at consulting firm Ovum, said the impact of Satyam’s US$1 billion accounting scandal on Australian customers ‘will take some time to clear up’.

The chairman of Satyam, one of India's largest outsourcing providers, has admitted to inflating profits for seven years, sending its stock price into free fall and enveloping the firm in a global scandal that is being likened to Enron.

“The Board has already set up a taskforce to assess the situation, but any contracts that are up for renewal in the near-term may be at risk of being handed to another provider,” said Butler.

“Expect some instability, mixed messages and lots of governance talk to come out over the next few weeks, but it would be best to just sit tight and hope that key operational staff to not leave/get poached.”
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