Satyam scraps $75 million deal in Victoria

More than 2000 potential jobs for technology and learning centre lost at Deakin University campus

Indian IT outsourcer, Mahindra-Satyam, has pulled out of a $75 million deal to build a technology and learning centre at Deakin University's Waurn Ponds campus near Geelong, Victoria.

The project would have provided more than 2000 jobs that will now be scrapped. The cancellation comes despite the completion of water, electricity and sewage infrastructure construction to the site.

In a statement, Satyam said its current global capacity did not warrant additional investments in infrastructure to deliver IT services at this stage.

“We have been evaluating the business case in the last couple of months and this decision, made in the last two weeks, was in discussions with the various stakeholders including the Victorian Government, Deakin University and City of Greater Geelong,” the company stated.

A spokesperson for the Victorian IT minister confirmed a letter has been sent by Satyam promising the return of funds paid by the government to encourage the deal.

Deakin University’s COO, Graeme Dennehy, said the university was disappointed the deal had fallen through.

“This is disappointing news not only for the University but also for the Geelong community,” he said in a statement. As consolation, Satyam has offered to provide 100 internships in India for Deakin University students.

“This initiative will provide Deakin information technology students with 12-14 weeks training at Mahindra-Satyam’s world-class Software and Development Campus at Hyderabad in India,” Dennehy said.

The deal's cancellation comes as a blow to the embattled outsourcer's reputation as it tries to re-brand and rebuild itself. In early 2009, Satyam's chairman, B. Ramalinga Raju, said the company had greatly inflated its financial results for several years.