MUMBAI (Reuters) - In India’s biggest corporate scandal in memory, the city of Hyderabad has achieved what it has long yearned for: clamorous media attention and recognition.
Once touted as a rival to Bangalore, for long the first choice of local and foreign software firms, Hyderabad never quite achieved the fame of a Bangalore or Mumbai despite its efforts.
For the 400-year old city, where crumbling mosques and minarets sit amicably by the side of gleaming malls and gated communities, Satyam Computer Services was a showpiece company with which the state lured other local and foreign firms.
Its former chairman Ramalinga Raju, who on Wednesday admitted to inflating profits for several years, was regarded as a true son of Andhra Pradesh state, and called the “Narayana Murthy of Hyderabad,” in a reference to the well-regarded founder of larger rival Infosys Technologies.
Now, the “pride of Andhra Pradesh has been hurt,” local newspapers rued, its reputation damaged by “India’s Enron.”
“Hyderabadis are taking it very personally,” said R. Prasad, a software engineer at a multinational firm in the city.
“Everyone was very proud of Satyam and of Raju.”
Raju was regarded as a close ally of former chief minister Chandrababu Naidu, who is credited with the vision of attracting investors and transforming Hyderabad into “Cyberabad” to rival Bangalore, considered the Silicon Valley of India.
Fiscal sops and a focus on improving infrastructure drew several global giants including Microsoft, Dell, Oracle, Amazon and Google to Hyderabad even as Bangalore, with its gridlocked roads and power outages, began to look increasingly unattractive.
Microsoft’s sprawling facility, with its tennis courts and football tables, is its largest outside its Redmond headquarters.
First-time visitors to Hyderabad, famed for its lustrous pearls and flavourful biryani, are often pleasantly surprised by its charming gardens and modern airport, one of the first examples of a successful public-private partnership.
“Naidu marketed Andhra and Hyderabad very aggressively, and there was a huge investor interest,” said V.K. Jairath, a consultant and former bureaucrat in Maharashtra state.
“It had the advantage of a talent pool for IT, and it was a smaller city whose growth could be properly planned,” he said.
A significant number of professionals at India’s top software firms Tata Consultancy Services, Infosys and Wipro, as well as at Microsoft and other global firms come from Andhra Pradesh.
In addition to its mission to create a software hub, Hyderabad had other grand plans: a film city to rival the one in Mumbai, home to Bollywood, and a business school to outclass the elite Indian Institutes of Management.
But the glitzy Ramoji Film City remains a distant second, and on Thursday, the dean of the Indian School of Business resigned days after he stepped down as an independent director on Satyam’s board amid growing criticism from students and residents.
Rao had been dean since 2004 at ISB, whose governing board includes such names as LVMH chairman Bernard Arnault, Goldman Sachs head Lloyd Blankfein and Dell chairman Michael Dell.
“We are far from seeing the end of the controversy surrounding Satyam,” Rao wrote in his resignation letter.
It may also be a while before the wounded pride of Hyderabadis is repaired, dented already by the negative press from a bridge collapse last year and bomb blasts the year before.
But they are hopeful: “Good times will be back again,” an employee at Satyam, which means truth in Sanskrit, wrote on a banner outside the Satyam campus.
Additional reporting by Sumeet Chatterjee in HYDERABAD; Editing by Alistair Scrutton and Sugita Katyal