Satyam May Cut Wages of Some Staff - WSJ

By ROMIT GUHA

BANGALORE -- Fraud-hit Satyam Computer Services Ltd. plans to put about 8,000 employees who aren't working on any projects on standby for new contracts, and cut their salaries as part of its measures to reduce costs, two people familiar with the matter said Friday.

"Most of these people are already on a sabbatical and haven't been billed in recent times," one of the people told Dow Jones Newswires, asking not to be named.

The person said the company is considering paying only about 40%-50% of basic pay to employees on the bench.

Information-technology companies generally keep a part of their employees on standby, or the bench, to quickly deploy them if the company gets new projects. Satyam is considering putting employees on the bench and cutting their salaries as laying off such a large number of people could be difficult.

A decision on staff rationalization is yet to be taken, both the persons said, without giving any timeline for a decision.

India's federal Minister of Corporate Affairs Salman Khurshid recently said that Satyam's acquirer, Tech Mahindra Ltd., should deal with the issue of surplus employees with "sensitivity."

Tech Mahindra Chief Executive Vineet Nayyar, also now a member of the Satyam board, said last month that Satyam had an excess staff of around 10,000. The company has a total of about 40,000 employees.

The person said the employees put on the bench will remain entitled to medical reimbursements and provident fund. "They could be called back to full duty when projects are available," the person said.

While a company spokesperson could not be immediately contacted, T. Hari, Satyam's global marketing head, said, "We are exploring the most humane ways to tackle this issue."

Earlier Friday, the Business Standard newspaper reported that Satyam's board may meet June 11 to discuss the issue.

Satyam was plunged into turmoil when founder B. Ramalinga Raju said in January that he cooked the company's books, overstated profits and revenue, and created fictitious cash balances.

In April, a government-appointed board sold a 31% stake in Satyam to Tech Mahindra unit Venturbay Consultants Pvt. Ltd. Venturbay's open offer for an additional 20% stake in Satyam is slated to start June 12.