CORPORATE Australia's push to export IT jobs to India is in disarray following a $1.84 billion fraud involving one of the world's key outsourcing companies.
Telstra, Qantas, Coles, National Australia Bank and Suncorp are among scores of Australian companies affected by the scandal.
The fraud, involving Hyderabad-based Satyam Computer Services, also throws into doubt plans for a $75 million software laboratory at Deakin University's Geelong campus.
The laboratory, a joint venture between Satyam, Deakin and the State Government, was slated to create 2000 jobs and inject an annual $175 million into the Victorian economy within the next decade.
Satyam Australia, which employs about 1700 local staff, has headquarters in Collins St.
Calls to Satyam's Melbourne office yesterday were answered by a recorded message.
Shares in the Mumbai and New York-listed business crashed after company chairman B Ramalinga Raju, the company's chairman, confessed to falsifying the earnings and assets of India's fourth-largest software and outsourcing services provider.
Raju's criminal activities surfaced when shareholders blocked his bid to sell two companies to Satyam in order to plug a 50.4 billion rupee ($A1.84 billion) hole in the company's balance sheet.
Confessing to the crime in a letter to directors, Raju acknowledged that he had inflated company profits over several years.
Satyam shares slumped 78 per cent in Mumbai trading and in New York its American depositary receipts plunged 90 per cent before the NYSE intervened and halted trading.
Apart from its Australian clients Satyam provides outsourcing services for the giant Citigroup and Japan's Nissan Motor Corp among other big corporates.
Worldwide more than 53,000 people are employed by the company, mostly in Bangalore, Chennai and Hyderabad.
Qantas, which signed a $71 million software development and maintenance contract with Satyam two years ago, said yesterday that if necessary it could activate alternative arrangements.
An airline spokeswoman said the situation would be monitored daily until resolved.
She said Qantas could activate alternative internal and external arrangements to ensure a seamless change in contractors.
Telstra employs Satyam as one of its four major IT contractors.
Spokesman Martin Barr said the telco was actively reviewing the arrangement and planned to cut the number of contractors to two.
National Australia Bank has outsourced at least 500 positions to India after engaging Satyam and other providers over the past three years.
NAB spokeswoman Kerrina Lawrence said the bank was monitoring events and was reviewing the arrangement with Satyam.
"NAB is closely reviewing the Satyam matter but for the time being the company is continuing to meet its contractual obligations," she said. "NAB has contingency plans in place to ensure continuity of service."
BusinessDaily also learned that a team of Satyam IT consultants from India were deployed last year to work on a technology project at Medibank Private's headquarters in Melbourne.
Medibank spokesman James Connors told said yesterday that there were contingency plans in place if the Satyam staff needed to be flown back to India.
Wesfarmers subsidiary Coles also has Satyam staff working at its Melbourne head office.
"Coles engages only a small number of Satyam employees who help support some legacy systems, and this work has been performed satisfactorily to date," said Coles spokesman Jim Cooper.
"We are obviously aware of the events unfolding with Satyam, and we are having discussions with the company.
"These developments do not pose any significant issues for our business and we will be taking these events into account as we evaluate future IT support requirements."
At Geelong yesterday, Deakin's acting vice-chancellor John Rosenberg declined to write off the software laboratory project.
"At this stage we don't know what is happening and we are still hoping that it can go ahead," Professor Rosenberg said.
Last night, the State Government was in talks with Satyam about saving the jobs of the company's Victorian employees and about the plans the company had for future expansion.
Herald Sun | George Lekakis, Geoff Easdown
January 09, 2009 12:00am
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