Satyam Computers Gram IT An Indian IT Giants CSR Model

Case Study Reference No. CSR0059C

This case was written by Lekha Ravi, Icfai Business School Research Centre, Chennai. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. This case was compiled from published sources. 2008, Icfai Business School Case Development Centre No part of this publication may be copied, reproduced or distributed, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or medium electronic, mechanical, photocopying, recording, or otherwise without the permission of Icfai Business School Case Development Centre.

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Satyam Computers Gram IT An Indian IT Giants CSR Model

If work can shift from the U.S. to a city in India, why can't work from cities in India shift to villages in India? 1 Ramalinga Raju, Chairman of Satyam Computer Services Ltd. and founder of the Byrraju Foundation. On an August evening of 2005, in Jelli Kakinada, a dusty remote village in the South Indian state of Andhra Pradesh, the residents were expectant and excited over the buzz in their premises. Little did they realise that they were on the threshold of a dramatic change in their lives. The village was all geared up to be initiated into an experience which had already become pass in the rest of the world- Information technology services in their very own rural milieu. It was the launch of Gram IT which was to take business process outsourcing to the educated unemployed youth in villages. Gram IT was a key initiative of the Byrraju Foundation, an NGO promoted by Indian IT Giant Satyam Computer Services Ltd (Satyam) and a pet project of Satyams Founder B.Ramalinga Raju; also the Chairman of Satyam Inc. Two years later in October 2007, there was much jubilation amongst the ranks of Satyam when the company bagged the Asian CSR award under poverty alleviation category.2 The vision was to act as a catalyst for sustainable rural development through employment and technology. How did this unique technology platform survive the travails of growth usually associated with NGOs toiling in developing countries? What were its critical success factors? Having firmly set its foot in the right direction where does Gram IT go from here? This is the predicament, that the Satyam Chairman and Founder of Gram IT, Ramalinga Raju is staring at.

Satyams CSR approach

Satyam Computer Services Ltd. is a leading global consulting and IT service company. It is one of the youngest companies to touch the billion dollar mark in annual revenues.3 Comprehensive advancement into community welfare being the favoured portfolio, Satyam set up its own foundation in 2000. Satyam leverages its core business- Information Technology to bridge the yawning digital divide. Working through Satyam Foundation, Satyam organizes initiatives for social transformation- primarily in the fields of education, environment and healthcare in urban areas.4 As a value adding move to Satyams social mission, they setup their own Foundation (Byrraju Foundation) as a platform for sustainable rural transformation. Both foundations draw heavily upon Satyams management know-how to convert each of its developmental projects into economically sound business ventures. They build employment opportunities for the underprivileged and
1 Steve Hamm, Gram IT: Taking BPO services to villages, http://www.rediff.com/money/2007/jan/22bpo.htm , January 22nd 2007 2 Satyam Clinches Asian Corporate Social Responsibility Award http://www.efytimes.com/efytimes/fullnews.asp?edid=21797, October 3rd 2007 3 Beyond Corporate Social Responsibility: The Scope for Corporate Investment in Community Driven Development http://siteresources.worldbank.org/EXTSOCIALDEVELOPMENT/Resources/244362-1164107274725/31823701164201144397/Beyond_CSR_CDD_2006.pdf, December 21st 2006, [Report No. 37379-GLB] 4 Beyond Corporate Social Responsibility: The Scope for Corporate Investment in Community Driven Development, op.cit.

consequently emerge as self sustaining entities. As Satyam Foundations numerous projects are associated with IT skills development, they also make an express business contribution to Satyam.

Satyam Foundation
Satyam Foundation is the Corporate Social Responsibility arm of Satyam Computers. It is a platform for the Satyam associates to reach out to the community especially the underprivileged sections of society by volunteering. (Annexure I) The prime objective of the Foundation is to positively transform the quality of life of the urban poor and operates largely around those areas where Satyam offices are located. Satyam Foundations chapters are located in Hyderabad, Chennai, Bangalore, Bhubaneswar and Pune.5 The goal of the company is that more than 20% of its associates spend more than 5% of their time annually on volunteer initiatives.6 For each of its areas of operation, the foundation has a forum, consisting of a small core of foundation members, extended by the large force of Satyam volunteers. Satyam has a fellowship commitment measure for volunteering by its associates, where the target is that 10% of Satyamites spend at least 10% of their personal time in CSR activities.7 Satyam Foundation carries out its programs primarily through Satyam Volunteers, following a three tier Pyramid model8 that comprises the following: (Exhibit I) A base of large number of volunteer-driven events requiring small time commitment A narrower level of activities with higher volunteer engagement- specific skills, longer time commitment A top level- to advocate right causes using Satyam strengths Exhibit I The pyramid model of Satyam Foundation

TOP Few

NARROW LINE Longer time, specific skills; more numbers BASE LEVEL More numbers, less time

Compiled by the authors

Beyond a billion,http://www.satyam.com/investors/documents/ar05-06/fy_arfinal.pdf,April 2006 Ibid. 7 Satyam foundation, http://www.satyam.com/society/satyam_foundation.asp 8 Ibid.

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The Byrraju Foundation Initiating Gram IT

Byrraju Foundation flagged off as a non profit organization under the banner of Satyam Computers in 2001.9 The Foundation was set up as a tribute to the Late Byrraju Satyanarayana Raju, who founded the Satyam group of companies. (Annexure II). Its mission is- To create a world- class platform for sustainable rural transformation.10 Its vision was quoted thus- The Foundation seeks to build progressive self-reliant rural communities, with a holistic approach, by providing services in the areas of healthcare, environment, sanitation, primary education, adult literacy and skills development.11 The foundation launched the Gram IT program in the rural areas of South India in 2007. Gram IT is a rural Business Process Outsourcing (BPO) initiative of Byrraju Foundation that enables rural youth to create wealth for themselves by honing their computer and English skills for world class service delivery. It is an attempt to initiate rural India into the nucleus of the new economy by using innovative technology and best business practices. (Annexure III) Gram IT is dedicated to bringing economic expansion into the non-urban areas and has a vision for the future of Rural India. The vision is referred to as SMART sourcing - Serving Markets and Accelerating Rural Transformation. (Exhibit III) The chairman of Satyam Computers, Ramalinga Raju, said the foundation had in a short span of time taken up development work in 150 villages.12 Exhibit III Gram ITs SMART sourcing Model

Source: www.byrrajufoundation.org/html/gram-it.htm

Who we are?, http://www.byrrajufoundation.org/html/who-we-are.htm Ibid. 11 Ibid. 12 Gram IT to take BPO to rural hinterlands, op.cit
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The Impact
The impact of Gram IT is multifaceted, the foremost being the employment factor. (Exhibit IV) The rural educated have a unique opportunity to be gainfully employed. Then there is the multiplier effect of the rupee being spent in the village because of the non migratory nature of the employment provided. This has a direct impact on their living standards. Gradually this leads to an increased demand for supplementary and better basic services in the villages. On a broader perspective the availability of educated and working role models in the villages and its influence on the next generation is invaluable in a developing economy/community. If one were to speak in terms of rural wealth created, one Gram IT (Rural BPO) centre generates wealth equivalent to that of 500 acres of wet land. The Gram IT initiative also focuses on continuous improvement. The program prevents rural migration to cities and gives a major economic boost to the villages by creating many livelihoods. In a very short time, three rural BPO centres have been set up employing more than 300 villagers whose productivity levels have surpassed the city BPO norms.13 The centre at Jelli Kakinada employs 200 youth from the village who would have otherwise moved to cities in search of job opportunities.14 Exhibit IV Key differentiators of Gram IT More than 1, 50,000 person-hours of quality training sessions. More than 500,000 person- hours of world- class service delivery 45% of the total Gram ITians are women. 100% of the Gram ITians are trained in Six Sigma paradigm ISO 9001:2001 certification An innovative last mile wireless connectivity solution brings broadband to the villages State of the art technology infra structure
Source: GramIT, http://www.byrrajufoundation.org/html/gram-it.htm

Global consulting and IT services companies in India are outsourcing a large number of its internal processes to Gram IT. Some of the key areas of operation are travel bills verification, lateral recruitment, travel booking and business data management. The State Government has also partnered with Gram IT for timely access to audit data on its Employment Generation program15.

Satyam Bags Asian CSR Award, http://www.businessgyan.com/content/view/3434/169/ ,October 3rd 2007 Gram IT to take BPO to rural hinterlands, op.cit. 15 On the basis of recommendation of the High Power Committee report, submitted in May 1994, headed by the then Prime Minster of India, the KVIC (for Khadi and village industry commission) launched Rural Employment Generation Programme (REGP) with effect from 1st April, 1995 for generation of two million jobs under the KVI sector in the rural areas of the country.
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According to P.K.Madhav, Lead partner at Byrraju, the villagers are given ownership of the centres and the foundation only negotiates terms with MNCs on their behalf and manages the contracts. Madhav claims that the scheme has proved extremely successful with rural staff not only by proving more cost effective than their urban counterparts; but also delivering competitive performance levels.16 Twenty seven year old Shanthi Nadimpally lives with her husband and child in Ravulapalem, a village in Andhra Pradesh. A chemistry graduate, Shanthi was a house wife till Gram IT opened a centre in nearby Ethakota. I applied immediately as I wanted to update my skills, says Shanthi. Since I earn Rs.3000 per month, I can contribute to the family income. Also since I work the 6a.m to 2 p.m shift, I am able to care for my family17. Kishore Pallas story is similar. I found a job soon after I graduated in 2005 but gave it up as the posting was in Hyderabad and I couldnt leave my aged parents, he says. Now I have a part-time job, and can be with my parents.18

Will Satyams CSR Model Sustain?

Reports say that Satyam Foundation supports and strengthens the vulnerable and underprivileged sections in urban areas with the aim of transforming the quality of life through technology and volunteerism.19 All the initiatives of the foundation are targeted towards the urban disadvantaged population in villages. Satyam Computers took the privilege of being the first customer of Gram IT and outsourced several of its in-house functions in areas of administration, HR and accounting. Satyams Byrraju Foundation has also struck alliances with other organisations such as IBM, Wipros Azim Premji Foundation, UNICEF and The TCS foundation. However many including Azim Premji are sceptical about the models sustainability. According to the Wipro Chief, The concept isn't an easy sell. It would be very hard to achieve international standards for service and to scale up the operations of village-based outfits. Further many critics feel that, as GramITs major customer by date, Satyam benefits most from the venture as it helps cutting back office costs almost in half. Further they add that villagers speak very little English which can become a major handicap in outsourcing. "There's a fair amount of scepticism about the abilities of the villagers to provide quality services," says J.K. Manivannan, the Byrraju partner in charge of Gram IT. "But if we show it can be done, others will follow." 20 He has already received significant queries from a few global corporations. The Gram IT recruits, most of who are at least graduates, earn only $800 per annum, as compared with $2,000 to $5,000 annually paid to their urban counterparts.21 But the other side of the picture

James Murray, An Indian Diary - part 3, http://www.infomaticsonline.co.uk/itweek/comment/2157052/indian-diary-part, May 26th 2006 17 Menon Priya M., Corporate Care, http://www.newindpress.com/sunday/sundayitems.asp?id=SEH20071109032300&eTitle=Cover+Story&rLink=0 November 9th 2007 18 Corporate Care, op.cit. 19 http://www.satyam.com/society/satyam_foundation.asp 20 GramIT: Taking BPO services to villages, http://www.thehindubusinessline.com/2005/08/11/stories/2005081102311900.htm, August 11th 2005 21 Ibid.
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is that Gram IT's centers see just 5% annual turnover of its workforce which is any day significantly better than the 60% rate in places such as Bangalore22 Satyam has addressed the issue of poverty alleviation with the twin weapons of employment and technology. As a responsible corporate citizen, Satyam is very proud of the efforts and transformation they have brought about in the lives of millions of rural poor. But will the success story continue? Byrraju has been able to influence no more than 400 villages, but there are 29000 rural villages in the Andhra Pradesh state alone where the majority of the adults are illiterate, clean drinking water is scarce and many more do not have basic sanitary facilities.23 Ramalinga Raju definitely has something weighty to ponder over- The long term sustainability of the unique technology platform he has created!

Annexure I Satyam Foundation Areas of operation-A snapshot of achievements Transforming the urban underprivileged Working through Satyam Foundation, Satyam organizes initiatives for social transformation primarily in areas of education, environment and healthcare in the urban areas. Reaching out to the community through Satyam Associates and volunteers, the Foundation has consciously decided against being a cheque-book charity organization. Instead, it encourages direct involvement of Associates to resolve issues vexing the underprivileged populace. And the thousands of spirited Satyam Associates along with their family members, who volunteer their collective time, are guided by the belief that amazing things can happen when not just money, but people come together! The result-driven Satyam Foundation is working towards a goal where more than 20% Associates spend at least 5%of their time as volunteers. Satyam Foundation chapters are located in Hyderabad, Chennai, Bangalore, Bhubaneswar and Pune. The UK chapter of the Foundation has already been inaugurated, and chapters are slated to unfold at all Satyam locations having a critical mass of Associates. Livelihoods Environment Healthcare Street Children Education HIV /AIDS Disaster Management (Need-based) 4,300 registered volunteers (including members from Associates families) Over 77 Magnificent Seven teams working in various projects Nearly 4,000 units of blood have been donated by Satyam Associates to the Indian Red Cross Society; Satyam is one of the leading blood donors among various IT companies
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GramIT: Taking BPO services to villages,op.cit.

Towards eGovernance, http://www.cdac.in/html/press/archives/otdn99/spot08.asp,

December 10th1999

 Adopted 4 Urban Health Posts (UHPs) in Hyderabad; 47,761 beneficiaries have availed medical facilities Free eye checkups conducted at health clinics, in which, 4 people were identified for cataract and operations were conducted in association with Balanagar Lions Club. Free distribution of 101 pairs of spectacles. 153 schools have been adopted, and quality education has been provided to over 47,000 students through Notebook Drives, Science Skits, Quizzes, Hygiene Awareness,Tree Plantation and RegularTeaching by the Magnificent Seven team members 587 students trained in IT skills, spoken English and personality development through the IT school program; 225 students are placed in jobs with an average income of Rs. 2,500 Planted 13,000 saplings Constituted 284 water warriors in Satyam for disseminating information on Rain Water Harvesting within Satyam and across communities by conducting road shows Tsunami relief reached out to a population of 9,647 out of which 3,015 are children. 15 information centers were set up, and 5 youth clubs were registered Software and hardware support to Jeevan Blood Bank Exhibition for Handicrafts by Mahila Sanatkar; Raised Rs. 75,000 in exhibitions organized for Satyam Associates Conducted training for 20 Associates on Traffic Management
Source: Beyond a Billion, http://www.satyam.com/investors/documents/ar05-06/fy_arfinal.pdf , April 2006

Annexure-II Core values of Byrraju Foundation

Involving People

We believe involving a large number of people is a prerequisite for rural transformation to become a truly successful movement. We have fostered relationships with innumerable individuals and organisations from all over the world for their expertise and resources. To connect without time and space boundaries, participation is also enabled through virtual platforms. Peoples' involvement is channelled through formal processes to ensure accountability and transparency. Applying knowledge This value is about strategic excellence. A vast body of knowledge on almost every aspect of rural transformation is already available in the world. Information and communication technologies have developed dramatically to enable tapping into the existing and emerging knowledge base almost on a real-time basis. Therefore there is no need to "reinvent the wheel": what is required is a creative adaptation of this knowledge to design and test the solutions. The tacit and explicit knowledge resulting from these experiences needs to be shared with a global audience. The Foundation, therefore seeks to remain a learning organisation at all times. Making things happen This is about operational excellence through timely and flawless execution. As the plans are executed, the progress is constantly monitored and deviations rectified proactively in real-time. The solutions are refined continually to reach the global benchmark. This requires a process-oriented and metrics-driven approach. Therefore, the Foundation has embraced Six Sigma as its framework.
Source: GramIT, http://www.byrrajufoundation.org/html/gram-it.htm

Annexure III Gram ITs working model Gram IT - the Rural BPO model of Byrraju Foundation - addresses issues of sustainable wealth creation in villages through the twin conduits of employment and technology. The model focuses on building a village BPO to supply quality services (outsourced) at a competitive price to Indian corporates and Government. Particular candidates who were short listed were offered training free of cost. The skills imparted include computer skills, general awareness, processing ability, and spoken & written English. At each centre, the rural youth who joined Gram IT after a rigorous selection process were put through a 12-week full time training programme that improved their fluency in English, reading, writing, speaking and comprehension. After training, they were put to work at the Gram IT centres, which served as back offices for Indian companies, governments and other institutions. Typically, each Gram IT centre was planned to be a 50- seater facility, employing 100 people in two shifts.
Source: GramIT to take BPO to rural hinterlands, http://www.thehindubusinessline.com/2005/08/11/stories /2005081102311900.htm, August 11th 2005

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