Telstra cancels $32mn deal with Satyam

Melbourne, Mar 17: Australian software major Telstra has dumped scandal-ridden outsourcing partner Satyam from an applications support contract believed to be worth 32 million dollars a year.

EDS will pick up the embattled Indian outsourcing firm's IT contracts with Telstra, sources told The Australian.

Telstra chief executive Sol Trujillo, who leaves the company on June 30, sat on the board of EDS before joining TELCO in 2005.

Telstra declined to confirm or deny having dropped Satyam, saying the decision about its supply arrangements with individual vendors would not be announced to the media.

It is understood new Satyam chief executive A S Murty flew to Australia last week in a last-ditch bid to retain the Telstra contract.

Sources said Satyam put a compelling case to stay on Telstra's books, but its financial fraud scandals proved its undoing.

Satyam customers were put on notice in January when co-founder and chairman B Ramalinga Raju admitted to inflating the company's cash reserves by a billion dollars. The fallout from the scandal has led National Australia Bank to re-evaluate its relationship with the outsourcer.

NAB has delayed plans to send several core technology functions to Satyam's Indian operations.

The decision was made by a Telstra advisory board, which received advice from a US tender management company, sources said.

ANI