The letter by Raju to the Board: The Satyam fiasco

The Chariman of Satyam Computer Services Ltd. Ramalinga Raju resigned after saying he falsified earnings and assets, prompting a collapse in the stock of India’s fourth-largest software-services provider.

Raju unsuccessfully tried to sell two companies to Satyam last month in a final attempt to plug 50.4 billion rupees ($1.03 billion) of “fictitious” cash on the company’s balance sheet, he wrote in a letter to Hyderabad-based Satyam’s board today. Profits have been inflated for “several years,” he said.

Here is what he presented to The Board of Directors at Satyam with copies marked to Chairman, SEBI and the Stock Exchanges:

How to succeed in the Offshore Software Development

A Software Development model that emphasizes on global delivery of quality software build by talented pool of professionals from a development center that is located in a foreign land at a highly economical cost is called Offshore Software Development.

India, China, and Russia are the three leading countries that currently control the offshore programming market.

Today the very promising competition of the offshore software development asks for the best of resources and innovative strategies with brilliant business intelligence. These companies into offshoring try not to leave the smallest of the details which has been overlooked by other businesses to win client interest.

Huge cost savings, time optimization: there are several benefits but these opportunities and advantages in this nascent business are also accompanied by challenges. Though the software vendor has hi-tech professionals with the best of technical skills with delivering quality output, there are few challenges faced which cannot be overlooked. These challenges are communication gaps, non-clarity of the project status, improper estimation in terms of resources and budget therefore and of course cultural hindrances.

Cost cut without compromising on quality is the key objective for this business and to achieve this objective, there has to be a smooth coordination between offshore client and the software vendor. This should start with the best possible approach by both the parties the offshore client and the software vendor.

The most important aspect in the offshore software development other than the required technical skills is the smooth communication between the two parties. Seamless communication oils the project speed. The communication in writing, video conferences along with and apart the verbal ones is more constructive. This is accomplished by implementing the work-schedules that intersect the time-frames for both the countries. Generally the offshore vendor works in accordance with the client for the later’s convenience but it is better if you as an offshore vendor also have a local presence for the client. This is like an added privilege, since this strengthens the client’s confidence into the offshore vendor. This helps the client to approach the vendor easily.

Another very important factor is the Resource and Budget forecast for the project. The Technical and Business Analysts should take the following points into consideration:

1. The risks involved in the undertaking the project and its measurement.
2. Whether the rates quoted are in accordance with the requirements of the project.
3. The terms of payment/billing: whether it should be hourly, weekly, per month or on the project completion, etc.
4. Will the quality standards set by the vendor be able to meet in carrying out the project or quality would get compromised for quoting an attractive price.
5. Double-Check for the specifications of the Project sent by client. Check whether there are any milestones in the project which has dependency on the client end. Check whether there would be any re-works or change-requests from client side.

Once the project starts, both the offshore client and the software vendor should coordinate on regular basis on the project flow. The communication has to be transparent between the both.

The offshore vendor must see that the project flow is smooth and the status is well communicated to the offshore client time to time.

This gives client a kind of satisfaction and confidence in the vendor’s work. Also, the vendor should target to complete every deliverable in the project in 80% of time committed. A buffer time of 20% of the actually committed is always good to balance if any sudden problems faced.

Also, it is better to have a single point of contact at both the ends to have a smooth and proper communication throughout the project development. But at the same time, everyone associated in the project should be aware of the communication going on between the two parties.

If you as an offshore vendor feel that any milestone in the project that puts a dependency onto client is approaching, you should intimate that to client at least 3 working days before depending on the weight of that milestone.

Though how much the project team strives to put up an error-free product, some problems or unpredictable issues may turn up and thus slow-down the project process. But these should be handled and solved with mutual cooperation and proper coordination from both the software vendor and the offshore client to achieve the objective.

Hence forth, to bring success to any offshore software development projects, it is the joint effort from both the ends that ultimately works out. But the most important factors here would be transparent and clear communication, proper forecast on resources and budget and smooth coordination on deliverables.