INDIA FOREX OUTLOOK
A Brief Overview of Satyam’s Downfall
Hyderabad based company Satyam Computer Services took a deep dive on the Indian Stock Market as the companies admission of accounting fraud rocked global investors and rival outsourcing company Infosys Technoligies. This has as a result demanded Infosys to have increased regulation to restore confidence.
It is important to know that 45% of Satyam’s business came from so-called Enterprise Solutions. This has helped firms manage their supply chains – the division of the Infosys may see the biggest boost to India’s financial services and the manufacturing sector.
This was very unexpected as the timing of the scandal is unfortunate for a sector which is already suffering as big U.S. firms, particularly as those in the financial services leading to cut back on their spending on technology, and other consultancy services. This has led the Reserve Bank of India to cut its benchmark rate by a percent point, while the government topped up its $4 Billion Fiscal Stimulus Plan with the new infrastructure spending, highlighting the deteriorating outlook for the country.
According to Infosys Chief Executive, Kris Gopalkrishnan, “The whole incident is deplorable and the government and regulators must investigate the matter to get to the bottom of this and that they should make the required changes to regulations so that such incidents do not take place in the future”.
But we should also take into account that though this has happened with India and it happened to be in the industry of outsourcing, what happened had nothing to do with the sector of the country, but with a specific individual and company.
After many surveys from India’s Top Investment Bankers it has been understood that Satyam fallout will be palpable. So at a time when the entire world is facing a financial squeeze, the Satyam scandal shall become a double whammy, especially for smaller unlisted players.
For more information on business and financial related news – Sydney Forex Review
About the Author
Mar 30, 2009 Weekly Forex Outlook