Leafing through the transcript of the back and forth between the Satyam management and the investment companies, it was easy to see this sense of chagrin among the fund managers. They were seething with the argument made by the company in its defence for using its cash reserves to make the aborted deal, that growth opportunities in the IT sector were secularly drying up. The India funds had made substantial losses. The value of their combined holdings in Satyam Computers dropped by about Rs 1.8 billion in a single day, as the firm’s shares lost nearly a third of their value. As many as 135 funds had a collective exposure of 26.42 million shares or 3.92 per cent in India’s number four software exporter. For the mutual fund industry the Satyam stocks were among the top fifteen at the end of November as per data from credit rating agencies.

But if this were the only measure, the outlook for the sector would be grave plus or minus Satyam. However, as industry analysts and chiefs of the rival companies say, the picture is different. A week later, another Wednesday, as the ADR prices of Satyam continue to fall by as much as 18 per cent for instance, in reaction to the developments regarding the World Bank news, that of Wipro rose by 3 per cent as it announced its acquisition of Citigroup’s technology unit.

So obviously reputation issues have not got clubbed in a catch-all. The World Bank ban was already industry knowledge for some time, so it did not surprise too many of the decision-makers. There will be questions no doubt. These would mostly centre on whether other IT companies too believe opportunities in the sector are really drying up. In this context decisions like Wipro’s to buy Citigroup’s technology unit restate the continuing strength of the Indian IT story. In the new year, as Barack Obama’s administration takes a look at the outsourcing story and India, it is therefore not Satyam but the passage of the IT (amendment) Bill 2006 that would be more keenly tracked.

... contd.