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Cost-cutting: Satyam asks staff to defer expenses
BS Reporter in Hyderabad | February 19, 2009 14:13 IST
The new chief executive officer of the scandal-hit Satyam Computer Services [Get Quote], AS Murty, has asked the company's employees (associates as they are called) to reduce, avoid or defer operational expenses wherever and whenever possible "to keep the company's business running smoothly and competing effectively in the market for new business".
"The global economic condition and outlook remain dismal, even as we begin our own financial recovery. This means, our challenges are extraordinary, and meeting them will require extraordinary efforts. To do this, we must control costs and conserve cash ... and the Task Force has reviewed and recommended a few action points," he said in Newstoday, the company's internal newsletter to its associates, on Thursday.
These include cutting costs onsite (high-cost countries). As a policy, pre-sales, solution architects, delivery support and operations support personnel will be located in low-cost countries. "Exceptions to this rule will be rare, of at all, and considered on a case-to-case basis," Murty said.
Satyam has also asked all its business units to sharply reduce non-billable domestic and international travel by more than 60 per cent. While unavoidable travel will continue for consulate appearances, visa stamping etc, virtual meetings will be adopted wherever possible.
"Business class travel � where permitted � is suspended until further notice, and hotel stays are suspended for all associates in cities where Satyam has guest houses. As much as possible, overnight stays to be based on absolute need. Besides, for associates at their base stations, the use of car services for intra-city conveyance is suspended and associates are encouraged to use their personal transportation and claim eligible reimbursement, or hire a 'call taxi'. For associates onsite, the use of public transit (tube trains and trams) is encouraged. Limousine service is suspended," the new CEO said.
Satyam has identified several rented premises whose lease will be terminated to provide sizeable savings. This space is in excess and was invested based on anticipated growth. The company will be requesting associates on 'business-wait-to-operate' in shifts to optimise available space.
Murty said the company has asked the employees to keep communication expenses to the barest minimum and utilise low-cost modes, while participation at events and conferences and business entertainment activities, external training and all advertising and marketing collateral expenses are being suspended. "All capex expenditures, unless required to meet customer deliveries, are being suspended till further notice. This includes time-bound renewal of laptops and office renovation," he added.
"These measures are necessitated not just because of our financial situation, but are relevant given the larger economic slowdown. Once our situation eases and conditions allow, we will revert to normal practices," Murty said.
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