In a further effort to cut costs and make the troubled Satyam Computer Services more attractive to potential bidders, its new chief executive officer, A S Murty, has withdrawn the variable pay system for all employees from 1 April, as ''primary costs of the company are people-related.''

In an e-mail addressed to the staff yesterday, Murty said only the minimum guaranteed amount of 25 per cent would be paid towards variable pay for the third quarter (October-December 2008) and the fourth quarter (January-March 2009) to all associates.

While the fixed compensation would continue, a revenue-linked allowance would be introduced from 1 April only for associates working in approved 'billable' roles and who were allocated to billable customer projects.

Murty said maintaining a healthy balance between achieving aggressive goals, retaining talent, and lowering expenses, was the key. Urging the employees of all levels to contribute to the financial restructuring of Satyam, he said job security and job retention were to be given the highest priority in spite of temporary inconveniences.

However, he said cost optimisation efforts should not come in the way of recognising ''extraordinary and exemplary performance''. Expressing gratitude to the staff for taking part in the efforts, he wanted them to explain the rationale for this inevitable measure to their respective families and seek their support and understanding.

Meanwhile, the process to sell Satyam Computer Services is expected to kick off this week. The guidelines for potential investors have been prepared by the government-appointed board and sent to the Company Law Board and Securities Exchange Board of India, according to sources close to the development.

The 'bid-pack', according to reports, comprises details of Satyam's geographical revenue break-up, the revenue of the top five or 10 clients (but not their names) and the contract life of major clients and likelihood of them staying with the company.

The minimum reserve price is understood to be based on Satyam's current gross block (the total value of all the assets) and is linked to the past two weeks' average share price. The books are not open for due diligence.

After the deal, the new buyer is likely to have a majority of its members on the new board. A 51-per cent stake is necessary for the buyer to institute a new board immediately.

However, bidders will not be allowed to revise their price after submitting the bid. The new buyer will have a three-year lock-in period.

The process assumes urgency since around seven big and medium-sized clients are understood to have moved out, with three others reviewing their contracts. If the process does not conclude by the end of March, more clients are expected to exit.

Both IT and non-IT firms like Larsen & Toubro (which now has a 12-per cent stake in Satyam and has invested around Rs670 crore in the company so far), B K Modi-owned Spice Group, Tech Mahindra and private equity firm KKR (which bought Flextronics three years ago for $900 million) are said to be the serious bidders still in the race.

Meanwhile according to another report, Tech Mahindra is thinking of bidding jointly with a private equity firm for Satyam. The diversified Mahindra & Mahindra Group, which holds a 44 per cent stake in Tech Mahindra, has started scouting for funds for the purpose.