Satyam Computers Gram IT An Indian IT Giants CSR Model

Teaching Note Reference No. CSR0059C-1

This teaching note was written by C. Sai Geetha under the direction of Lekha Ravi, Icfai Business School Research Centre, Chennai. It is only an illustrative orchestration of this case study. It is never meant to limit the learning outcomes. Copyright 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

Teaching Note
Pre-requisite Conceptual Understanding
To comprehend the concept of CSR- Porter Michael.E and Kramer Mark.R The competitive advantage of corporate philanthropy, Harvard Business Review, December 2002 [Ref. No. 242X]. To understand CSR policies of Indian conglomerates: Business and Community Foundation, http://www.bcfindia.org/menbers.html To comprehend the working of Gram IT: Gram IT to take BPO to rural hinterlands, http://www.thehindubusinessline.com/2005/08/11/stories/2005081102311900.htm, August 11th 2005.

Synopsis of the Case Study

The case study may be used by students pursuing courses in business ethics, corporate social responsibility and management studies. Set in 2008, it profiles the CSR model of the Indian IT giant, Satyam Computers. The case helps to comprehend the impact of Gram IT, Satyams award winning CSR initiative. It also debates the sustainability of these CSR activities Teaching Objectives The case study has been structured to understand and analyse Concept of Corporate social responsibility Significance of sustainable CSR practices by leading corporates The challenges of implementation of CSR initiatives in a rural developing economy The impact of strategic CSR in improving the companys bottom line

Assignment Questions I. Expectations of business behaviour are rising all over the world - and another trend, therefore, is a growing debate about what responsibility businesses have for the misuse of their products and services.1 Give a brief account of emerging CSR trends throughout the world with due references to India. II. Gram IT is dedicated to bringing economic expansion into the non-urban areas and has a vision for the future of Rural India.[Section: The Byrraju Foundation Initiating Gram IT, para 2 of the case study]. Critically evaluate the working model of Gram IT. III. What challenges did the Byrraju Foundation face in the implementation of Gram IT in rural India?

Teaching Plan Both the Structured Assignment and Teaching Note follow the same sequential order as presented in the Teaching Plan [Annexure (TN)-I].

David Grayson, Trends in Corporate Social Responsibility, http://www.davidgrayson.net/CSRTrends, February 2007

Case Analysis

I. Expectations of business behaviour are rising all over the world - and another trend, therefore, is a growing debate about what responsibility businesses have for the misuse of their products and services.2 Give a brief account of emerging CSR trends throughout the world with due references to India.
Globally CSR underwent a drastic change during the1950s. [Exhibit (TN) I]. The CSR trends in Indian market in early 1950s were limited to corporate philanthropy which included construction of houses, temples and schools. Tata Motors were the pioneers in this. The concept then changed to corporate social responsibility which was mainly corporate involvement in natural disaster management. Exhibit (TN) - I Changing Trends in Global CSR 1953 drawn up by 1970 Robert Owen gave the definition of CSR in the concept of employee welfare it The word Corporate Social Responsibility (although seldom abbreviated) was in common use. The term stakeholders came into existence. Nike was at the centre of controversy over international labour practices- Nike case which popularised the concept of CSR. Triple Bottom Line (social, financial and environmentally responsible) advocated by John Elkington. Institutionalising CSR - SAI (Social Accountability international). International Social and Environmental Accreditation and Labeling (ISEAL). UN Global Compact - 9 Principles. Tenth principle about corruption added in UN Global Compact. Shareholder resolutions filed (CSR reporting). Triple Bottom Line became the dominant approach of corporates

1980 1990

1994

1997 1999

2004 2005 2007

Compiled by the authors

CSR then changed to include the sustainability aspect when the stakeholder theory started gaining acceptance. Critics like Milton Friedman argued that the main social responsibility of the corporate is to satisfy the interests of its share holders. Sustainability theory comprised the basic concepts of CSR and stakeholder theory. The corporates started using their CSR practices for the sustainability of their businesses in the long run. ITCs e-choupal is an outstanding example for corporate sustainability. It empowers the rural poor through usage of Information technology which helps the corporate in decreasing the cost involved in its existing supply chain. It is also used as a distribution channel for the companys products. British Petroleum, an oil company which is directly linked with the use of fossil fuels is faced with major
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Trends in Corporate Social Responsibility, op.cit

environmental challenges on a global scale. BP has been successfully re-orienting its business to adapt to the needs of the society in order to sustain its business. Identify the critical success factors of an ideal CSR model for an Indian MNC. Corporate Social Responsibility (CSR) is a concept whereby organizations consider societies interest and take responsibility for the impact of their activities on all aspects of their operations; on customers, suppliers, employees, shareholders, communities and the environment. A CSR model should ideally include a healthy relationship with stakeholders, play a major role in the business, nationally and locally. Critical Success Factors of CSR of an Indian MNC Should endorse good corporate governance Should apply to the multilayered Indian society Lead to product responsibility as illiteracy is widespread Fair employment conditions Due employee rights amongst all classes of workers Provide training and education Corporate compliance with legislations Corporate responsibility as a tax payer Good relation with suppliers, distributors Effective customer relationship management Positive image among shareholders

After discussing the CSFs of an ideal CSR, the faculty may lead the discussion to the concept of sustainable CSR. Theres widespread scepticism about the commercialization and publicizing of this responsibility and the authenticity of the triple-bottom line reporting. Discuss the concept of sustainable CSR Sustainable CSR is a new way of corporate social responsibility which aims at satisfying the base of CSRstakeholders. Corporate sustainability is achieved when the needs of the society, margins for stakeholders and the accountability of the corporates are in synchronization. The concept of Sustainability can be well defined by Exhibit (TN)-II.

Exhibit (TN) II Sustainable CSR

Source: Wilson Mel, Corporate sustainability: What is it and where does it come from?, http://www.iveybusinessjournal.ca/view_article.asp?intArticle_ID=405, March / April 2003

The four pillars of corporate sustainability are Sustainable development- Sustainable development is balancing the need for economic growth with environmental and social safety not only in the present but also in the indefinite future. Corporate social responsibility- CSR is a concept in which the organizations consider the interests of society by taking responsibility for the impact of their business activities on its stake holders. Stakeholders Stakeholders include the customers, suppliers, employees, shareholders, communities and the environment in which the business operates. Corporate accountability Corporate accountability is the legal or ethical responsibility to provide estimation of the actions the corporate is responsible for. Sustainable CSR should have sustainable goals for which the organization would work. Sustainable goals should be laid in such a way that it satisfies all the stakeholders of the corporate. The basic concept of sustainability is that a corporate is liable to give something back to the society where it operates and draws resources from; but without affecting the interests of stakeholders. After discussing the concept of sustainability and emerging trends in Indian context, the faculty could lead the debate towards the CSR approach of Satyam.

II.

Gram IT is dedicated to bringing economic expansion into the non-urban areas and has a vision for the future of Rural India.[Section: The Byrraju Foundation Initiating Gram IT, para 2 of the case study]. Critically evaluate the working model of Gram IT.

The class may discuss the CSR approaches of Satyam before pondering over their pet project- Gram IT. Working through Satyam Foundation, Satyam organizes initiatives for social transformation- primarily in the fields of education, environment and healthcare in urban areas [Section; Satyams CSR approach, para 1 of the case study]. 0utline the working of the Satyam Foundation. What do you infer about Satyams CSR approach from the above discussion? Satyam has a wide CSR network with 11,644 registered volunteers, 217 Magnificent Seven teams3 and four CSR arms4 namely Satyam Foundation, Byrraju Foundation, Emergency Management and Research Institute (EMRI) and Health Management Research Institute (HMRI). Satyams Focus Areas are as follows: 1. Environment : Satyam has several projects like Green cover Tree plantation, Solid waste management, Water resources, Energy management, Traffic and transportation, Cityscape and identity, Microclimate and pollution which aim at environment protection. 2. Education: The Education Forum of Satyam Foundation focuses on improving the quality of education in primary schools, upper primary schools, and high schools run by the government through various initiatives and service offerings. They have introduced some programmes like learning to Read (Pratham Methodology), Kid smart, Science Kits, Furniture Distribution, Computer distribution, Inclusive Education for Disabled Children, Notebook Distribution, Summer Camps, Inter-School competitions and Motivational Tours. 3. Health care: Health is wealth and Satyam knows its importance. Satyams services includes Providing primary healthcare for the urban poor Providing healthcare services to people affected by non-communicable diseases. Providing awareness and education about primary healthcare, the importance of hygiene, and preventive measures

Programmes like blood donation drives, launching of health information help line 1056 (HIHL)5, ATTAC (Arogyam through Targeted Action Campaign)6 are run by Satyam. 4. HIV/AIDS: Satyam offers four services on o o o o Information, education and communication Workplace policy interventions on HIV Care and support to people with HIV Research and advocacy

Their Target group includes Satyam Associates7 at all locations, educated youth, youth in slums, youth working in various corporate bodies, people living with HIV.
The magnificent seven (M 7) is usually a team of about seven volunteers, who take ownership of a specific project under a forum .The team identifies requirements and provides full life cycle leadership to the identified project. 4Satyam Foundation, http://www.satyam.com/society/satyam_foundation.asp 5 HMRI provides information on health services to the public through Health I nformation Help Line, toll free number 1056. The State Government bears 95% of the cost and the balance by the Satyam Foundation 6 Satyam, NSS and COVA create awareness about diseases like chicken guniya in rural parts of Andhra Pradesh through ATTAC (Arogyam through Targeted Action Campaign) 7 Satyam Associates are the employees of Satyam Computers.
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5. Creating livelihoods: Satyam is always ready to Help People Help Themselves. Their services includes IT school IT school run by Satyam teaches the rural people the basics of IT and helps them to overcome the general fear about computers .Escape velocity program- This program was developed by Satyam Foundation to prepare students for the opportunities presented by the fast growing IT industry. BPO 4 BOP (Business Process Outsourcing for Bottom Of Pyramid)- This program is aimed at providing a means of communication between entrepreneurs and potential employers through a set of Internet tools. Bottom of Pyramid refers to the poorest socio- economic group of customers. Training in construction engineering trades Satyam provides the initial training in construction and engineering trades. Design for change- Satyam helps rural people to reorient and adapt to the changes brought about through the advent of IT industry. Consumer cooperatives- The Consumer Cooperative supplies essential commodities at a cheaper price and with a minimum credit thus enabling beneficiaries save their monthly expenditure on essential commodities. Business process reengineering - Using Business Process Re engineering Satyam foundation is designing a process that aims to promote women employment and their income enhancement. 6. Street Children: Satyam supports services through partners to restore helpless children back to their families or place them in institutional care in Satyam locations. 7. Community welfare: Main service offerings of Satyams community welfare is through Partnershipwith NGOs and agencies Awarenessinternal and external Edutainmenteducational and entertainment activities IT supportWebsite creation, networking, training staff, and children in IT courses/other skills Capacity-building trainings for children and staff of NGO

8. Disaster management (Need-based): Tsunami relief and earth quake relief are the concerns of Satyam foundation. The adoption of tsunami affected villages is an ongoing project. Then, the class may be led to a discussion on Byrajju Foundation and the Gram IT project, which is aimed at poverty alleviation by providing employment to the rural educated youth. Give a brief on Satyams CSR arm The Byrraju Foundation. Byrraju Foundation is a NGO founded by Satyam Chairman and Founder B. Ramalinga Raju in the memory of his father. . The Byrraju Foundation is dedicated to rural transformation. It has significantly enhanced the quality of life of people in most of the villages of the state of Andhra Pradesh in India. It offers high quality services such as healthcare, education, livelihood, sanitation and drinking water. Unlike other foundations, Byrraju foundation doesnt have an external donation system. The donations are from its foundation directors. The key differentiators of Byrraju Foundation are application of knowledge and technology which is backed up by a systematic project management approach. Satyam is a major alliance partner for the rural BPO initiative.

The Foundation follows a scientific process while adopting a village to implement its services. Following are the steps taken to involve the community so that objectives and goals are synchronised with ground realities.

1. Identify needs - The Foundation conducts a preliminary profiling of the village covering the following aspects: Demographic, social and economic profile of households. Basic amenities already available in the village. Availability of and access to welfare institutions. Resource base and utilization. Employment status of residents. Existence of village based organizations. Village 'Visioning' exercises. 2. Design solutions - With the identified community needs, the Foundation creates a proposal for delivery of services using available best practices identified as the most appropriate for the village in question. 3. Test & Validate -The processes are then tested and validated in consultation with domain experts. Once validated, the solutions are cleared for implementation. 4. Vision for self-reliance - Stakeholders from every village are selected by identifying their ability to contribute to the visioning process. The group should be heterogeneous, including youth, older people, women and when possible, elected members of the local panchayat. 8 5. Capacity Building - The Foundation enhances the inborn capacity of the community by training people and providing opportunities for skill development, thereby creating community leaders. 6. Community Leadership - Community Leadership is encouraged by strengthening the skills of people who participate in the effort of shaping the future of the community through team building, facilitating change and building consensus on the village vision. 7. Franchising - The Foundation believes that franchising is a way to leverage expertise and effectively use the resources of the community. Franchisees are selected using a pre-determined criteria, which seek to determine the commitment, credibility and willingness of the franchisee to accept the approach of the Foundation. 8. Replication - The Foundation's programmes are field-tested before investment of resources and people. Once tested, the programme will be replicated where communities do not have to wait for a development programme to be initiated. After having discussed the Foundation and its working, the class may open a discussion on Gram IT, the innovative initiative by the foundation. Gram IT is dedicated to bringing economic expansion into the non-urban areas and has a vision for the future of Rural India.[Section: The Byrraju Foundation Initiating Gram IT, para 2 of the case study]. Critically evaluate the working model of Gram IT.

The Panchayat is a part of village politics in India. Panchayat means assembly of five wise and respected elders chosen and accepted by the village community. The panchayat helps in solving disputes among the villagers.
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Byrraju Foundation attempts to bring about a dramatic transformation in rural areas through its pet projectGram IT. It sharpens the skills of the rural populace by leveraging the capabilities of educated, unemployed villagers, through special training. These trained people are then hired to work in rural business process outsourcing facilities where they are taught to manage a broad range of critical business processes for numerous clients, including Satyam, which has outsourced several internal processes to Gram IT facilities through a unique technology platform developed internally. The Gram IT initiative also focuses on continuous improvement. Apart from computer and English language training, the rural BPO employees are also given training in Six Sigma9 training. The program prevents migration of rural population to cities and gives a major economic boost to the villages by creating many livelihoods. Satyam aims to act as a catalyst towards sustainable rural and urban transformation. Gram IT addresses issues of sustainable wealth creation in villages through the twin channels of employment and technology. Satyams Gram IT bagged the prestigious Asian CSR award10 in poverty alleviation category for its contribution to the society. According to Azim Premji, Wipro11chief, 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.12 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. [Section: Will Satyams CSR Model Sustain? para 2 of the case study] While critics raise these issues, the Byrraju partners are confident of becoming a pioneer in providing quality services through rural employees. Satyam may be said to be in a win-win situation by this approach as the remuneration paid to the rural graduates is far lower when compared to the scales of their urban counterparts and the annual attrition rate at Gram IT centres is also lower than in urban areas. The faculty can then lead the class discussion towards the challenges faced in the implementation of Gram IT.

III. What challenges did the Byrraju Foundation face in the implementation of Gram IT in rural India?
As discussed above, there were many doubts raised on the abilities of rural youth for meeting the standards of foreign clients. Many critics doubted the sustainability of the GRAM IT model. The challenges faced by Byrraju foundation during the implementation may be summed up thus Irregular power and poor / unreliable telecom facilities Virtual absence of computer literate staff Disinclination of supervisors to move to rural areas Transportation difficulties to and from neighbouring villages Lack of skills amongst the trainees as required by industry soft skills / customer orientation etc Many rural youth had only Intermediate / degree certificates which had no value in jobs arena Poor command over English Chances of attrition over a period of time there could be attraction of higher salaries in metros for trained personnel

Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects in any process -- from manufacturing to transactional and from product to service. 10 The Asian CSR Awards Program recognizes and honors Asian companies for outstanding, innovative and world-class products, services, projects and programs in five categories: Best Workplace Practices, Concern for Health, Environmental Excellence, Poverty Alleviation, and Support and Improvement of Education. 11 Wipro is a leading Indian software MNC. 12Hamm Steve, GramIT: Taking BPO services to villages, http://www.rediff.com/money/2007/jan/22bpo.htm, January 22nd 2007
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However Byrraju foundation was able to counter these challenges with their effective training modules. After discussing the challenges faced by GRAM IT, the faculty may lead the discussion to the sustainability of this model. 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.[Section: Will Satyams CSR Model Sustain?, para 2 of the case study]. Do you think Satyams CSR serves the companys bottom-line? Validate your answer. Yes, Satyams CSR serves the companys bottom line; in fact it serves its TBL(Triple bottom line) . Triple bottom line takes into account the environmental and social performance in addition to financial performance. The concept of TBL demands that a company's responsibility is greater to its stakeholders rather than only its shareholders. Stakeholders refer to anyone who is influenced, either directly or indirectly, by the actions of the firm. Though critics may prefer to dismiss Satyams CSR activities as a brand building exercise or a PR activity, it can be analyzed that these CSR ventures are doing well and garnering praise from society and government alike. The fact that the Gram IT bagged the Asian CSR award is testimony to that. Satyams efforts on Gram IT have been commended by industry experts and philanthropists. It serves the community by addressing the issue of poverty alleviation, rural employment and education. "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." [Section: Will Satyams CSR Model Sustain? para 2 of the case study] Shareholders are satisfied with the way Gram IT is moving forward. This initiative has cut down operating costs and also reduced the attrition rate. The sustainability of the corporate is taken into consideration in this project. These discussions lead to the conclusion that Satyams CSR initiatives does serve the companys bottom line. Re-affirming its role as a contributing member of the social and economic milieu, Satyam believes in aligning its business operations with social values.13 Can Satyams technology platform sustain in the long run? Justify your opinion with valid arguments. According to Ramalinga Raju, chairman of Satyam- If we do not engage with the disadvantaged we will lose out. Satyam is the largest private company in Andhra Pradesh. The company, in many ways, is ideally placed to address socio-economic problems, as it brings to [the] fore strong leadership and management skills together with application of new age technologies.14 Rajus argument was that leadership in the corporate sector must find solutions that would benefit the whole ecosystem including disadvantaged communities, society and the companies themselves. Ramalinga Raju added, We have been grappling with the scale issues for a long time and there is no reason why we cannot adapt their learning for making things happen in the social development arena. What we contribute is not just financial capitals, which is a diminishing problem, but bring solutions to scale and enlarge the impact several times over. Our experience is that, given todays knowledge base, we dont have to wait decades before seeing results. In a couple of decades, we believe that we could bring all these people into the mainstream. Why not do it sooner?15 Though Byrrajus members are gratified with the award won for their venture Gram IT, they are not resting on their laurels. They are working towards opening more BPO centres in more rural areas. Given the number of Indias educated unemployed, Gram IT will have its hands full for the entire decade. Satyam Inc. has also been doing extremely well at the business front. Hence, it can be conclusively stated that Satyam can confidently march forward with its Gram IT programme. Final Thoughts
Satyam Computer Services Ltd, http://www.bcfindia.org/menbers.html Business culture - Indian insights http://www.ethicalcorp.com/content.asp?ContentID=4766 15 Goyder Mark, Business culture - Indian insights, http://www.ethicalcorp.com/content.asp?ContentID=4766, December 14th 2006
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To conclude the discussion, the faculty can highlight that GRAM IT- the rural BPO is transforming itself into a profit centre for its parent organization- Satyam. Given the rural population of the Indian villages, Gram IT and other such initiatives by Indian MNCs have the ability to transform the lives of millions of rural youth without straying from its duty to protect its stakeholders needs. Annexure (TN)-I

Teaching Plan Pre-requisite Conceptual Understanding

To comprehend the concept of CSR- Porter Michael.E and Kramer Mark R., The competitive advantage of corporate philanthropy, Harvard Business Review, December 2002 [Ref. No. 242X] To understand CSR policies of Indian conglomerates: Business and Community Foundation, http://www.bcfindia.org/menbers.html To comprehend the working of Gram IT: Gram IT to take BPO to rural hinterlands, http://www.thehindubusinessline.com/2005/08/11/stories/2005081102311900.htm, August 11th 2005.

The Big Picture: Expected Learning Objectives Challenges in sustaining CSR practices in the long run.

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Teaching Plan Flow

Sl.No.

Analysis Section

Expected Learning Objectives

Forward Linkage

Ideal Duration (minutes)

CSR in India

Emerging trends- CSR in India The critical success factors of an ideal CSR model in a country like India To analyse the concept of sustainable CSR To outline Satyams CSR approach-Satyam Foundation and Its NGOs To evaluate the role of Byrraju Foundation Analysis of the Gram IT model

Highlights the CSR trends globally and its reflection in Indian MNCs.

30

Satyams CSR Model-The Gram IT

Helps analyse the CSR model of Satyam and explore the sustenance of the model

30

Sustenance of Gram IT-Prospects & Challenges

Challenges faced in the implementation of Gram IT in rural India Does Satyams CSR service the companys bottom-line? Can Satyams technology platform sustain in the long run?

30

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Detailed Teaching Plan CSR in India Emerging CSR trends globally and in India CSF of an ideal CSR for an Indian conglomerate What is sustainable CSR?

Satyams CSR Model-The Gram IT Highlight Satyams CSR approach Critically evaluate the role of Satyams CSR arm The Byrraju Foundation Discuss the Gram ITs working model

Sustenance of Gram IT-Prospects & Challenges

What challenges did the Byrraju Foundation face in the implementation of Gram IT in rural India? Does Satyams CSR service the companys bottom-line? Can Satyams technology platform sustain in the long run?
Prepared by the authors

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