India has discovered its own Enron in software vendor
Satyam, writes John Hill. The revelation has shocked the country’s
IT community and, coupled with a World Bank statement on outsourcer
Wipro, shone an unwelcome spotlight on India’s $50 billion
financial technology industry.

The rapid fall from grace of Indian IT services giant Satyam
after the founder and chairman Ramalinga Raju was arrested for
orchestrating one of India’s largest ever frauds has left the
country’s $50 billion IT-to-outsourcing sector in disarray,
scandalising the industry and its corporate governance standards in
the middle of the savage global economic downturn.

India - top 10 software companies by profit after tax, FY07Satyam, India’s
fourth-largest software services provider has been embroiled in a
fraud investigation after Raju admitted inflating the company’s
balance sheet by over INR50.4 billion ($1 billion), wildly
overstating the group’s profitability, cash reserves and other
assets for several years.

Satyam, which specialises in business software, outsourcing and
consulting, has since appointed a new board in the hopes of
boosting confidence, including Deppak Parekh, chairman of HDFC
Bank, India’s third-largest bank by market cap and C Achuthan,
director at India’s National Stock Exchange.

But in a further knock to the Indian IT industry, the World Bank
recently banned Satyam from bidding for orders for eight years as
well as local IT rival Wipro, the country’s third-largest
outsourcing vendor, for four years.

The World Bank stated that both companies had been providing
“improper benefits to bank employees” in the form of shares offered
to its staff during the software companies’ IPOs in the US.

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For investors and banking clients alike, the main worry will be
whether Satyam’s disgrace is an isolated incident or an indication
of problems throughout the Indian IT sector. NAB, one of its major
clients, has said it is already in the process of reviewing its
relationship with the company.

A spokesman for Tata Consultancy Services (TCS), the biggest
player in the Indian IT sector and ranked sixth overall in the
world in last year’s Financial Insight Top 100 list with financial
services revenues of $2.31 billion (see RBI 603), said in
a statement that the company is still confident: “[Satyam] has not
affected the credibility of our company. In fact it is business as
usual for TCS.”

Of the three IT companies larger than Satyam, neither TCS,
Infosys nor Wipro have as yet suggested any plans for an
acquisition or merger, or indicated any interest in buying up
smaller chunks of the beleaguered company. India’s second-largest
IT services company Infosys said they were largely prepared for any
fallout from the scandal.

Kris Gopalakrishnan, CEO of Infosys, said: “We are not
proactively canvassing for Satyam business for obvious reasons. It
is not the right thing to do.

“Infosys is very well prepared. Whatever questions that clients
have, we are able to answer. We have increased our level of
disclosure; we want to make sure that we give comfort to customers,
prospects, investors, about [our] corporate governance

Infosys recently reported record-breaking third-quarter results
after many cost-cutting clients looked to increase their
outsourcing practices.

Net income was up 33 percent to $336 million, sales jumped 35
percent to $1.2 billion, while revenue was $1.17 billion, just
under the company’s October forecast of $1.18 billion.

IT Contracts 
RBI Fintech DealWatch tracks recent major technology
contract wins with a focus on the retail financial services
industry as well as fintech mergers and acquisitions and innovative
new product launches
Country Participants Type/value Details Date announced
South Korea Kookmin Bank, IBM

Core banking contract win

Korea’s Kookmin Bank has selected IBM System z10 mainframe
technology and DB2 servers as the foundation for a next-generation
core banking application platform designed to consolidate all of
the bank’s different business units across the world.

15 January


Rafidain Bank, Misys

Project launch Rafidain Bank, the largest bank in Iraq, has gone live with a
turnkey solution from Misys. Rafidain Bank’s international
branches, comprising operations in Jordan, Lebanon, Egypt, Yemen,
UAE and Bahrain, have all been fitted with the new system. Misys’
regional partner, B-Plan Information Systems, will commence
roll-out of the system to 147 of the bank’s branches across

14 January

Central and Eastern Europe

Raiffeisen, Infosys

Contract win Raiffeisen International has selected Finacle from Infosys to
standardise its technology platform and enable consolidation of
operations across Central and Eastern Europe. Infosys will
implement Finacle Universal Banking Solution across multiple
countries in parallel. This will include deployment of Finacle core
banking, CRM, e-banking, mobile and alerts solutions.

14 January


Santander, Norkom Technologies

Core banking contract win

Spain’s Banco Santander is set to roll-out anti-money
laundering (AML) software from Dublin-based Norkom Technologies
across its AML units. Santander can deploy this suite across all
its European and Latin American operations with the first
implementation planned in Spain.

12 January


Kotak Mahindra Bank, IBM

Core banking contract win

India’s Kotak Mahindra Bank has agreed a $5 million IT
infrastructure services deal with IBM for the construction and
maintenance of a green data centre and IP network infrastructure.
The aim is to save $1.2 million in operational efficiency and
reduced energy costs over the next five years.

8 January


Philippine Farmers Bank

Contract win Philippine Farmers Bank has chosen Misys to help it strengthen
its lending business.

7 January


Goldleaf Financial Solutions, Integrated Bank

Acquisition Tennessee-based Goldleaf Financial Solutions has agreed to sell
its core processing and teller automation systems to Integrated
Bank Technology (IBT). A strategic alliance will also see IBT
provide core, teller and outsourced item processing to Goldleaf
clients. The move is part of a strategy to focus on its payments
technology business.

6 January


Alfa Bank, Misys

Core banking Misys has extended its partnership with Russia’s Alfa Bank to
continue the development of the bank’s consumer banking
infrastructure until at least 2020.

5 January


MasterCard, Orbiscom

Acquisition MasterCard is acquiring Orbiscom, an Ireland-based payments
solutions software provider for major financial institutions, for
$100 million.

5 January


Citigroup, Wipro

Acquisition Citi is to sell its captive Indian IT outsourcing arm Citi
Technology Services to Indian outsourcing specialist Wipro for $127
million. As part of the transaction, Wipro and Citi will sign an
agreement for the supply and maintenance of Wipro services to Citi
for a period of six years. The agreement provides for the delivery
of at least $500 million in service revenues over the

5 January


Mercantile Credit Bank, Neptune Software

Core banking contract win

Uganda’s Mercantile Credit Bank has selected Neptune Software’s
Banking Platform to power its retail banking activities.
31 December
South Africa

Gemalto, NamITech

Acquisition French smart card vendor Gemalto has agreed a deal to buy
Allied Technologies’ NamITech South Africa business as it looks to
expand its presence in the region. NamITech, with revenues of
around €15 million ($19.7 million), provides secure cards and
services in Southern Africa.
18 December

KIT Finance Bank, IBM, Chordiant

Core banking contract win

Chordiant Software, the leading provider of customer experience
software and services, has announced that it and its global partner
IBM have completed the pilot implementation of Chordiant’s
front-office Cx solution at the retail arm of Russia’s KIT Finance
17 December
China Shenzhen, Yucheng Technologies Contract win Shenzhen Development Bank (SDB) has selected a platform from
local vendor Yucheng Technologies to revamp its online banking
17 December

Egypt Saudi Finance Bank

Contract win Misys has announced that Egyptian Saudi Finance Bank (ESFB) has
chosen Misys Equation for its 11 branches across Egypt. The
solution is the latest version of the retail banking solution from
17 December

Fiserv, i_Tech, First Interstate

Acquisition US fintech vendor Fiserv is to acquire i_Tech Corporation from
First Interstate BancSystem for $40 million. i_Tech provides
outsourced account processing services as a licensee and reseller
of the Fiserv ITI Premier core banking system to 158 financial
16 December

BCA, Wincorp Nixdorf

ATM contract win Indonesia’s BCA has selected Wincor Nixdorf’s kiosk and
cash-dispensing technologies for the expansion of its multi-channel
self-service network. BCA will deploy 283 ProCash1500xe ATMs and
200 ProInfo 1000 kiosk systems.
16 December

Alfa Bank, Aladdin Knowledge Systems

Contract win Russia’s Alfa-Bank has rolled out 20,000 USB smartcard
authentication devices from Aladdin Knowledge Systems to its online
banking customers.
15 December

DSB Bank, Finacle

Core banking contract win

DSB Bank has selected the Finacle universal banking system from
Infosys to overhaul its retail operations and power a new online
savings bank. The bank will replace its legacy systems with the
Finacle core banking and integrated customer relationship
management technology.
15 December

Punjab National Bank, Finacle

Contract win India’s Punjab National Bank (PNB) is set to roll-out the
Finacle universal banking system from Infosys across six regional
rural banks covering 1,300 branches. The move is part of public
sector bank PNB’s rural banking initiative, designed to improve
customer services and gain new customers outside of urban
12 December

Chase, Washington Mutual, Tsys

Contract termination JPMorgan Chase is bringing Washington Mutual’s card processing
in-house, terminating the bank’s current deal with Tsys. Chase will
pay Tsys an undisclosed fee for deconversion and termination. The
deconversion should happen by March, after which Chase will process
the WaMu portfolio in-house on a technology platform it licenses
from Tsys.
3 December

United Bank for Africa, Actimize

Contract win Nigeria-based United Bank for Africa is rolling out fraud and
anti-money laundering technology from Actimize across 700 retail
distribution centres in the country. The bank has signed for the
Actimize Risk Management platform and Enterprise Risk Case Manager
to help it detect and mitigate employee, electronic payment, ATM
and debit fraud, as well as money laundering.
3 December

Standard Chartered, SmartStream

Strategic partnership Standard Chartered has selected technology from UK-based vendor
SmartStream Technologies to power a new global reconciliations
platform. The bank has selected SmartStream’s technology to
integrate its existing reconciliations process into a single
2 December

China Postal Savings Bank, CUP Data

Contract wins China Postal Savings Bank (CPSB) has agreed a multi-year credit
card processing deal with China UnionPay Data Services (CUP Data).
CPSB holds more than $200 billion in deposits and has more than
36,000 branches throughout the country.
1 December

Dubai Islamic Bank, Fiserv

Core banking contract win

Dubai Islamic Bank has instituted centralised reconciliation
technology from Fiserv’s CheckFree unit. Following rapid growth,
the bank has moved to consolidate all reconciliation and exception
management activity in Dubai at a “centre of excellence” using the
CheckFree system.
1 December

Jack Henry, Saylent Technologies

Strategic partnership Jack Henry & Associates has established a strategic
alliance with Saylent Technologies, a pioneering provider of
payment intelligence software.
21 November

Source: RBI