Tuesday, March 3, 2009

We Talk with Some Renowned Attorneys about the Satyam Scandal, India and the Future of Outsourcing (Part II)

Larry and I recently had an opportunity to talk with Randy Parks and Jim Harvey, attorneys at Hunton & Williams LLP and co-chairs of its Global Technology and Outsourcing practice about the impact of the Satyam affair on global outsourcing. Hunton & Williams has 1,000 attorneys in nineteen offices worldwide. The Black Book of Outsourcing (http://theblackbookofoutsourcing.com/ ) ranks them as the number one outsourcing law firm in the world. Randy and Jim focus on the customer side of outsourcing deals although they have done some suppliers. This is the second of three blogs from this interview.

Randy and Jim both emphasized that “serious deals need to be done seriously.” They noted that in the early days of outsourcing/offshoring deals there was a great deal of anxiety and tension along with less care than now. Satyam is a good reminder of the need for attention to detail and care.

www.pharmservices.blogspot.com also serves the interests of the consulting community supporting the life sciences industry, Larry and I naturally asked about their involvement in outsourcing transactions. Randy and Jim replied that for sophisticated transactions there is a role for both professional advisors and law firms. Communications between them should be open. Their roles are complementary. They felt that consultants have superior research facilities to do the empirical analysis.

We returned to the Satyam affair and asked if they thought that might be other occurrences in the future. “Who knows?” , they replied. Human nature being what it is, sure, recurrences are possible. The hope is that regulatory changes that will inevitably arise from this will prove effective. Satyam is regrettable but shouldn’t be repeated.

Randy and Jim declined to speculate on what other outsourcers may have problems in the future and were unaware of any such circumstances.

Jim noted that there were no public events that rise to the extent of what happened at Satyam. He added that moving data overseas exposes it to the risk of theft. But where data theft has occurred, it has been in the developed world, not in India or the Philippines. Jim was reluctant to feed the fear because these incidents are isolated not systemic with what we know today. He cited Enron as an example. Just because Enron had problems doesn’t mean that every energy company is run that way. Enron was only one company with many lessons learned. Similarly, Satyam will cause India to look at the regulatory oversight of its companies. Information security laws have already moved quickly because of the Satyam incident.

Larry asked about Indian regulatory impacts. Jim suggested that the interlocking boards of directors across Indian companies would be looked at. He speculated that as with the Enron aftermath, the regulatory reaction will be strong, swift, severe, and, perhaps, overdone.

As always, we welcome your feedback. Please contact us at larryrothmansblog@gmail.com. We look forward to hearing from you.

Contributed by Guy de Lastin

No comments: