Trust and consequences


Amongst all the hand-wringing and words of anger about the behaviours of some companies in the financial sector, here’s hard proof that when you really mess with your customers’ trust in your business, the direct consequences can be severe.

From today’s Economic Times of India:

Around 46 customers of Satyam Computer Services have moved their outsourcing contracts to rival tech firms such as TCS, Wipro, IBM and Accenture, ever since the company’s founder and chairman Ramalinga Raju admitted to a financial fraud of over $1 billion.

[…] Top customers such as semiconductor firm Applied Materials, Kansas State Bank, Telstra, Emerson, Nissan, State Farm Insurance and Sony apart from dozens others have either moved out their projects completely, or are in the process of migrating current Satyam work to other outsourcing vendors, as these clients seek to mitigate the operational risks by working with more stable vendors.

Those 46 companies would be in the top left blue bar in the graphic above. That graphic comes from the 2009 Edelman Trust Barometer, published last month.

Trust in business around the world is, generally, lower today than it was a year ago, according to the Edelman report. And, generally, CEOs and other leaders aren’t held in especially high esteem.

What happened at Satyam Computer Services is unusual (didn’t they say that, too, about Enron and WorldCom?) and the company probably will recover, especially as they have a new CEO.

But that still requires huge trust. And 46 big customers clearly didn’t want to take another risk.

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Neville Hobson

Social Strategist, Communicator, Writer, and Podcaster with a curiosity for tech and how people use it. Believer in an Internet for everyone. Early adopter (and leaver) and experimenter with social media. Occasional test pilot of shiny new objects. Avid tea drinker.

  1. David Brain

    Neville that is indeed the ‘money slide’ in the whole trust deck. Almost as interesting though is the second bar which shows that 72% of those questioned have criticised to others companies and organisations they did not trust. So the effect is both personal AND viral.

    And this year we asked people about actions thaey had already taken rather then ‘would’ take. Trust is a money issue as I guess is the point of your post about Satyam.

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