Outsourcers On The Outs

[OhioChick]

01.12.09, 11:10 AM EST

Sector faces a setback over another IT services firm embroiled in controversy.

India's blighted outsourcing sector suffered another setback Monday as Wipro, one of the country's biggest outsourcing firms, was blacklisted by the World Bank for "providing improper benefits to Bank staff." Also on the list was Satyam Computers, which faced controversy last week after Chairman Ramalinga Raju resigned and admitted to falsifying the company's earnings for several years.

Shares of Wipro Technologies (nyse: WIT - news - people ) had fallen 9.4%, to 227.40 Indian Rupees ($4.67), in late-afternoon trading in Mumbai on Monday, after the World Bank published a list of three companies which had been "debarred from receiving direct contracts" in the "interest of fairness and transparency."

Under the bank's "corporate procurement program," Wipro will be barred for four years, beginning last June. The other two on the list are also outsourcers: Satyam and a smaller rival called Megasoft Consultants. Satyam was accused of providing improper benefits and also "failing to maintain documentation to support fees charged for its subcontractors," while Megasoft was barred for "participating in a joint venture" with staff from the bank, while also conducing business with the bank.

A World Bank spokesman couldn't be reached for comment about specifics of the ban.

Wipro said Monday that it had offered stock, in accordance with America's Security and Exchange Commission rules, at the time of its initial public offering of American Depositary Receipts, which gave U.S. investors an opportunity to buy shares of the company. The offer was made through the bank's chief information officer, and a "senior staff" and $72,000 of shares were bought at the IPO price. "All participants in the program signed a conflict of interest statement that their purchase did not violate any ethics or conflict of interest policies of their company."

More: http://www.forbes.com/markets/2009/01/12/wipro-satyam-india-markets-equity-cx_vr_0112markets11.html

[Ian David]

1. What will Wipro be reincarnated as in its next corporate life? n/t

[lapfog_1]

4. a tick? Well, some sort of parasite that kills the host. - n/t

[Deja Q]

9. Reincarnated? Or split? I'm thinking a couple of Tatas, myself...

:hide::hide:

[ChromeFoundry]

2. Satyam....and now Wipro?

The dominoes begin to fall.

[lapfog_1]

3. I guess they need a bailout... and there is still another $350B to hand out! - n/t

[Tandalayo_Scheisskopf]

5. This is just what we know.

What we do not know is the disposition of all that data they have on their servers. Under the circumstances, if I was one of the companies that had outsourced to these people, I would be really concerned. Desperate, flailing people do all sorts of bad things.

[OhioChick]

6. Exactly.

Many people think that it's "only" the company's (corporate) data that's in jeopardy....not realizing that it's also their own personal information.

[ihavenobias]

7. To the greatest.

K & R

[OhioChick]

8. Wipro ban deals blow for Indian IT

Wipro ban deals blow for Indian IT

January 12 2009 19:24

India’s outsourcing sector suffered a fresh blow on Monday when the World Bank revealed it had barred Wipro Technologies – the industry’s third biggest outsourcing company by revenue – from doing business with it.

The allegations against Wipro, which the bank accused of “providing improper benefits” to bank staff, come less than a week after news that the sector’s fourth largest operator, Satyam Computer Services, had been fixing its accounts in a fraud worth more than $1bn.

The ban on Wipro sent the group’s shares tumbling 9.3 per cent to Rs228.35 amid growing concern over governance in the sector – one of the country’s showcase industries with export earnings of more than $40bn.

Wipro, one of three Indian IT outsourcing companies affected by the World Bank ban, was barred in June 2007 for four years. The others included Satyam, barred in September 2008 in a case unrelated to the present scandal, and Megasoft Consultants, a smaller operator.

http://www.ft.com/cms/s/0/0e700c7e-e0dc-11dd-b0e8-000077b07658,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html

[bvar22]

10. Couldn't happen to a nicer bunch of SCABS!

Protectionist????

Damn Straight.
Some things are worth protecting.

[OhioChick]

11. I couldn't agree with you more. n/t

[Azlady]

12. Damn right!

Totally agree with you!