The Rise and Fall of DSQ Software: A Tale of Innovation and Intrigue

In the bustling city of Chennai, India, in 1992, a new player emerged on the burgeoning IT scene. DSQ Software Ltd, originally known as Square D Software Ltd, was founded by the ambitious Dinesh Dalmia. This publicly listed company quickly carved out a niche for itself in the international IT services industry, offering a wide range of services from mainframe and midrange computing to telecommunications and CAD. Throughout the 1990s, DSQ Software was a beacon of Indian technological prowess, primarily catering to Western markets and serving as a significant hub for project services and technical manpower.

The Golden Years

By the close of the millennium, DSQ Software had established itself as a formidable force in the IT world. With over 2,000 employees and reported revenues of $60 million in 2000, the company was thriving. Hewitt Associates, a leading US-based human resources consultancy, valued the company's human resources capital at a staggering $1 billion. DSQ's impressive client list spanned the globe, with significant operations in the US, Europe, and the Asia Pacific. In 2000, DSQ became the first Indian company to establish itself as an Application Service Provider, launching DSQworld.com to offer internet-based services from India.

The Sudden Decline

However, the tide began to turn in 2002. DSQ's vibrant market presence started to fade as its operations and client service contracts were sold to a private entity. By 2003, the company was a shadow of its former self, its activities drastically reduced. Rumors swirled that Dalmia, the company's promoter, had vanished to evade legal proceedings. Despite ceasing operations in India in 2002, DSQ continued trading under various names in the UK until 2004, reporting group revenues of £76 million GBP, with the US entity accounting for over 98% of this revenue for the financial year ending March 2004. When AllServe Systems Plc, a renamed DSQ entity, entered administration in November 2004, it marked the company's final chapter, culminating in liquidation by 2010.

Scandal and Legal Battles

Behind the scenes of DSQ's meteoric rise and fall was a web of controversy. From 1998 to 2001, Dinesh Dalmia was embroiled in a series of share market scandals involving dubious share allotments and equity transfers. In 2006, his past caught up with him when he was arrested in Delhi on multiple fraud charges. Investigations revealed that from 2003 to 2006, Dalmia had been in the United States, attempting to orchestrate fraud in the computer equipment leasing market through businesses under false identities. Often spotted in New Brunswick, New Jersey, driving luxury cars and dining at the Udipi Cafe, Dalmia was eventually indicted by the FBI in 2006 for fraud.

The saga continued as Dalmia was released on bail in all cases in India by 2011, amid rumors of a settlement in the United States. DSQ Software became synonymous with major corporate scams in India, alongside the infamous Satyam Scandal. Observers pointed to a broader issue of inadequate corporate governance, particularly in India's family-owned business sector.

Regulatory Action

The Securities and Exchange Board of India (SEBI) intervened in October 2013, barring Dinesh Dalmia and DSQ Software from the capital markets for seven years. In January 2019, SEBI imposed a further fine of ₹1 crore on Dalmia for failing to comply with its directives.

Legacy

Today, DSQ Software is a dormant entity, its once-prominent presence reduced to a cautionary tale of corporate greed and regulatory oversight. Despite its public holding of over 70% and equity capital exceeding ₹300 million, the company serves as a stark reminder of the vulnerabilities in corporate governance and the potential for innovation to be overshadowed by scandal.

Sources

For more details, visit the Wikipedia page on DSQ Software.