National Australia Bank has decided to suspend future work with Indian outsourcer Satyam.
"Until the longer term future of Satyam becomes clearer, NAB has also decided to suspend all work currently in the early stages of transition to Satyam," an NAB spokesperson said today. NAB advised its IT employees of the outcome this morning, following an ongoing internal review of its dealings with Satyam.
The decision is expected to affect around 90 Satyam staff, around half of which were located in India, according to the bank. NAB spokespeople had previously told ZDNet.com.au that the bank had the equivalent of about 500 staff in India.
The work that was being done by Satyam will now be carried out by NAB's technology team, the spokesperson said.
NAB's ties with Satyam, however, won't be totally severed; application development and maintenance work that had been contracted to Satyam during 2007 and 2008 will remain with the outsourcer.
In a move to cut technology costs, the bank in 2007 outsourced testing, maintenance, SAP software development to both Infosys and Satyam.
"Satyam continues to meet service level commitments and contractual obligations, and systems and technology are performing at correct levels," said the spokesperson.
Despite the headaches caused to the bank's technology strategy by Satyam's financial woes, NAB intends to stick with its strategy to push more technology work offshore.
"As the longer term future of Satyam becomes clearer in the coming months, NAB will consider whether to continue to transition this work to Satyam or another offshore partner," they said.
Other key Australian clients of Satyam include Qantas and Suncorp.
I am sure NAB has its own reasons to do what it is doing. But how on earth does it think that Satyam will repair itself with clients like NAB putting work on hold. While the numbers in this report seems small and i am sure Satyam and its Board of Directors have plan B for them, I think this is the time, such clients should stick around and contribute to the rebuilding.
NAB's current decision is deifnately not good. I think NAB should reconsider its decision and continute towards Satyam's growth.