DealZone

Outsourcing bailout funds

January 8, 2009

SATYAM/Unsurprisingly, scandal-slammed Indian outsourcing firm Satyam says it may need some liquidity support to stay alive. Satyam founder and chairman Ramalinga Raju said he inflated his company’s reported cash and bank balances by more than 50 billion rupees ($1 billion). He seems to have taken to the Hyderabad hills — the company says it has no idea where he is. In a state known for its separatist tendencies, he may well stay disappeared for some time.

The interim CEO and company officers say they are committed to picking up the pieces. But this little “liquidity support” bombshell could prove to be a tricky one if it is directed at the biggest bail-out office currently handing out cash: the U.S. Treasury. Not being a U.S. company, Satyam probably doesn’t have the chutzpah to seek TARP funds directly. The company’s primary function as an outsourcing center would make the use of U.S. bailout funds politically repugnant to U.S. officials.

But the idea of foreign companies applying for U.S. taxpayer support is not a new one. Financial institutions the world over, saddled with dud U.S. mortgage-backed debt, have grumbled that they should get the same consideration as U.S. investors.

Having invested a lot of time and energy firing Americans and outsourcing their work to companies like Satyam, U.S. companies would face some risk from a meltdown in the outsourcing business. Might it even cloud their chances for recovery, or – gulp – force them to reverse the outsourcing trend and start hiring at home again? Sounds like a recipe for economic recovery.

Other Deals News:

* Privately held bearings maker Schaeffler is poised to take control of larger auto parts rival Continental, when it collects the bulk of shares tendered after its 11.3 billion euro ($15.4 billion) bid.

* German utility RWE is the leading candidate to take over Dutch peer Essent, Dutch financial daily Het Financieele Dagblad reported, adding bids were around 10 billion euros ($13.6 billion).

* Land Securities Group is to sell its Trillium outsourcing unit for 750 million pounds ($1.13 billion) to property investment and services firm Telereal, streamlining Land Securities’ business and bolstering its balance sheet amid miseries in the UK property market.

* Aviva, Britain’s biggest insurer, said its joint venture with state-owned ABN AMRO in the Netherlands would continue after the Dutch government reversed a decision by ABN’s previous owner to end the deal.

(Photo: Labourers clean Satyam building in Hyderabad. REUTERS/Krishnendu Halder)

Comments
One comment so far | RSS Comments RSS

Having invested a lot of time and energy firing Americans and outsourcing their work to companies like Satyam, U.S. companies would face some risk from a meltdown in the outsourcing business. Might it even cloud their chances for recovery, or – gulp – force them to reverse the outsourcing trend and start hiring at home again? Sounds like a recipe for economic recovery.

Damn right, I am sick of seeing my friends get fired only to be replaced by guys who aren’t citizens of this country, don’t own homes, don’t have a mortgage, don’t have a car payment, stuff 5 guys in a 2 bedroom shoebox, and could care less because when they go home, it’s to ANOTHER COUNTRY!

Posted by BravNwWrld | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/