"For years, Raju was lionized as one of the whiz-kids of the IT [information technology] sector," says Paranjoy Guha Thakurta, a New Delhi-based commentator. "There is no doubt this is a heavy blow to India Inc.'s [squeaky-clean] reputation overseas."
It isn't clear if the Satyam scam will deter multinational companies from outsourcing business to India or entrusting Indian outsourcing firms – attractive for their cheap labor and efficiency – with sensitive confidential data.
The National Association of Software Services Companies, India's IT watchdog, emphasizes that Satyam's case is an exception.
"This is a stand-alone case of the failure of corporate governance, and it is critical that it be viewed in this light," it said in a statement.
But it is a blow to the outsourcing industry, reeling under a slowdown. "The timing could not have been worse," the Indian Express, a national daily, editorialized Thursday. "We are less than a fortnight away from the inauguration of the least globalization-friendly American president in decades. At the cusp of a possible attitudinal shift in US policy towards offshoring, the collapse of one of the biggest Indian outsourcing companies amid allegations of ethical breaches is simply catastrophic."