IBM interested in Satyam

International Business Machines Corp. and Accenture Ltd. are in a stronger position to win new contracts after the fraud at Satyam Computer Services Ltd. tarnished the credibility of India’s outsourcing industry.

Companies seeking to outsource some of their operations -- such as handling customer calls or testing software -- may turn to U.S. firms in the short term as they grow wary of the risks of working with smaller companies abroad, said Moshe Katri, an analyst at Cowen and Co. IBM and Accenture are the two largest U.S. computer-services providers.

“It’s going to create a temporary or near-term crisis of confidence in the sector,” said Katri, who is based in New York. “This is really the first time this has happened in our industry.”

Satyam Chairman Ramalinga Raju’s admission that he fabricated $1 billion in cash and assets will force India to strengthen corporate-governance regulations or risk undermining an industry that took a decade to develop, Katri said. Satyam, based in Hyderabad, writes software and manages computer systems for clients such as ArcelorMittal, the world’s largest steelmaker, and Nissan Motor Co., Japan’s third-biggest carmaker.

“This to some extent pollutes the entire industry, just gives other U.S. and Europe-based companies another reason to be hesitant before sending business to an emerging market,” said Karl Keirstead, an analyst at Kaufman Bros. in New York. “It’s the last thing the Indian outsourcing industry needs.”