Do not protect jobs at Satyam

Do not protect jobs at Satyam
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First Published: Tue, Jun 02 2009. 01 18 AM IST

Illustration: Jayachandran / Mint
Illustration: Jayachandran / Mint
Updated: Tue, Jun 02 2009. 11 23 AM IST
So, the government wants to get involved in the layoffs that Satyam Computer Services will need to effect?
There are several reasons it shouldn’t. The most significant one is that what the company chooses to do or not do operationally is none of the government’s business. Layoffs are a business decision, and should be treated as such.
The second reason is that employees in the software business, irrespective of whether they are coders or marketeers, will likely find a new job even though this might entail them taking a cut in salary. Such employees shouldn’t be confused with employees of export firms in the unorganized sector, whose jobs the government should perhaps be trying to protect.
Illustration: Jayachandran / Mint
Finally, of course, the government doesn’t own a stake in Satyam, and there is no taxpayer money invested in the firm.
To be sure, the government has some representatives on the board of Satyam who played a part in reviving the company which was hit by an accounting scam perpetrated by its founder, B. Ramalinga Raju. But the government hasn’t extended a line of credit to the company. Nor has it handed out lucrative government contracts to the company to help it tide over its difficulties.
Boards do sometimes get involved in decisions to lay off people, but such instances are few and far between, and it is the rare board that will try to second-guess its management.
The government’s desire to still be involved in Satyam is also unlikely to go down well with Tech Mahindra Ltd, the software services company that has acquired a controlling stake in the beleaguered Hyderabad-based firm. The company has signalled with its chequebook its intent to put Satyam back on track. It would be unfair to Tech Mahindra if the government were to involve itself in the operational aspects of running the software company—something the government isn’t particularly equipped to do.
It might also be pertinent to remember that several software companies here, as indeed many companies in other businesses, have laid off people in an effort to cut costs and increase efficiencies. The government has chosen not to get involved in any of these decisions, so why should what is happening at Satyam be any different?
India’s new corporate affairs minister should recognize that he would be setting a bad precedent—one that harks back to the worst days of the licence raj—by getting involved.
Should the government intervene in Satyam’s layoffs? Tell us at views@livemint.com
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First Published: Tue, Jun 02 2009. 01 18 AM IST