How the World Cup Has Resurrected India's Enron

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Alessandra Tarantino / AP

The Italian national team sit behind a Mahindra Satyam advertisement billboard during a training session for the World Cup at Southdowns College in Irene, June 21, 2010.

Being a part of the World Cup is a soccer player's dream. On the pitch, reputations can rise — or fall — in a matter of moments as the world's best compete. This year in South Africa, however, one key player at the World Cup is fighting for redemption without ever stepping on the pitch. For the Indian IT company Satyam (now called Mahindra Satyam), just being a part of this international spectacle is a milestone in a comeback story that seemed all but impossible just 18-months ago.

During the World Cup tournament, the company has been the technological glue, setting up complex networks to sell over three million tickets, coordinate the over 130,000 volunteers, the logistics of travel and accreditation, security and the broadcast of the games around the world.

Coordinating such a complex event is a monumental task, and a successful finale will mark a startling turnaround for the company, which just last year was dubbed "India's Enron." In January 2009, Satyam's Chairman, Ramalinga Raju, announced that he had cooked the books of the Hyderabad company. The billion dollar accounting fraud was India's largest and the fallout was severe. Shares of Satyam, then India's fourth largest IT provider, plummeted as the scandal unfolded and the one-time rising star of India's most recognizable industry was in crisis.

Uncertain about the extent the fraud and worried that the damage might take down more than just Satyam, the Indian government stepped in. "The key thing was trying to shore up 'Brand IT India,'" says Partha Iyengar, head of research for Gartner India, a technology research and advisory company. "If the credibility and the blue chip nature of 'Brand IT India' was in doubt, then the industry as a whole would suffer long term and become less relevant."

To protect its showpiece industry, the Indian government took over the operations of the company. It dismissed Satyam's top management and appointed a new board. Rivals swarmed, looking to pick off lucrative contracts from the embattled company. The new interim management set out to reassure Satyam's clients that the damage was isolated and that the Government would ensure that the company could still deliver. The message resonated and helped soften the fall, says Iyengar. "It was a surprise to everyone that Satyam didn't lose as many clients as people thought."

In April 2009, Tech Mahindra, an IT telecomm service provider and part of the $7 billion Mahindra Group conglomerate, bought a majority stake in Satyam and installed CP Gurnani, head of Tech Mahindra's international operations, as CEO. But Satyam was still in dire straights. "The Government did a great job, but the company was still in the Intensive Care Unit," says Gurnani. "At the top management level, everybody had gone to prison, so there was a vacuum in leadership."

To get the company back on track, Gurnani assembled a new management team and cut Satyam's workforce, laying off 10,000 employees. Instead of jettisoning the tarnished Satyam name, the company decided to stick with the Satyam brand. Opting to reform the company, rather than starting over, has its risks, says Sudhakar Balachandran, an accounting professor at Columbia Business School. "But if you have recognition and contracts already signed, sometimes its better to move forward."

The newly formed Mahindra Satyam began by reaching out to clients around the world — like General Electric and Citibank — to reassure them that the company was still up to the task. One of those calls went to FIFA, soccer's governing body that puts on the World Cup. In 2007, Satyam had won the contract to provide all of the IT services for the South African World Cup, but with the company in disarray just a year before the event, FIFA was anxious, says Hari Thalapalli, Chief Marketing Officer at Mahindra Satyam.

The Indian government had tried to assure all of Satyan's customers that the company would be able to perform in the immediate aftermath of the fraud, even under new management; but FIFA remained wary. "FIFA had to be assured not only that we were sincere, but that we would still have the capabilities to deliver," says Gurnani. It took two months to get a definitive answer on the World Cup deal, but the Mahindra Satyam's pitch was convincing and FIFA stuck with the company.

Holding on to the World Cup job boosted Satyam's employee morale, and also created an instant, high-pressure timeline for the company's rehabilitation. Toward that end, the company chose not be an unseen behind-the-scenes operator at the World Cup, but instead went on a PR offensive, buying up pricey pitchside ad space along with other global giants like Budweiser and McDonalds. The company has also brandished the slogan "FIFA Trusts Mahindra Satyam. Discover Why" on its website. The publicity has been nearly as important as Satyam's IT performance at the World Cup. "It was a coming out party for us," says Thalapalli.

Mahindra Satyam hopes that with a successful World Cup under its belt, the party will continue and newfound momentum will open up markets in Latin America and Africa. But some significant challenges remain. The company has yet to file its corrected financial statements, something it must do to put to rest lingering doubts about its financial health and transparency. Lingering uncertainties have hindered Mahindra Satyam from landing new customers. Still, the resurrection has been remarkable so far. Says Thalapalli. "We will all be very proud one day that we were able to turn it around."