US investment bank Merrill Lynch is to move much of its contract work with IT outsourcer Satyam over to rival Tata Consultancy Services, according to Indian newspaper The Economic Times.
The bank has not stated whether the move is a direct reaction to Satyam’s corruption scandal. In September 2008, Merrill Lynch was acquired by Bank of America, which is a TCS customer, so this decision could be seen as a consolidation play.
“IT companies win and lose contracts all the time,” Satyam chairman Kiran Karnik told The Economic Times. “I do not know why the media has to report it all the time.”
Nevertheless, Satyam customers uncertain of the company’s future will almost certainly note Merrill Lynch’s decision with interest.
The company has already seen customers including US insurer State Farm withdraw their business, while US engineering giant Caterpillar has reportedly approached Satyam seeking termination of its contracts. The two companies had previously shared a particularly close relationship: Satyam acquired Caterpillar’s market research and customer analytics operations for $60 million in April 2008.
Satyam has received some good news, however. World Bank, a former customer that banned Satyam from pitching for business for eight years following a data-theft scandal, said today that it will reconsider the ban if the company can prove its trustworthiness.