Shares in India's fraud-hit Indian outsourcing firm Satyam jumped on Friday after it was given the green light for a global bidding process to sell off a 51 per cent stake in the company.

Satyam's government-appointed board said it would "initiate the process to invite expressions of interest" from bidders shortly.

Satyam has been battling for survival since January when its founder B Ramalinga Raju, now in jail, stunned the corporate world by declaring he inflated the firm's balance sheet by more than one billion dollars and fudged its profits for years.

Shares of India's fourth-largest outsourcer surged 19.94pc or seven rupees to 42.1 on the Bombay Stock Exchange following news that the sale had been given regulatory approval.

Satyam says it wants to find a buyer soon - even though it could be months before the full truth about the disgraced outsourcing giant's finances emerge.

The Business Standard reported that IBM, the world's largest computer services provider, was one of the leading contenders for the stake.

If IBM won the race to acquire Satyam, it would become the largest IT services player in India, with more than 125,000 staff. Satyam employs over 50,000 people.

Analysts said Satyam's low-cost structure could give IBM the leverage to compete with Indian IT service providers.

Indian engineering firm Larsen & Toubro and the Hinduja group have also been mentioned as potential suitors.

Under the approval given by market regulator the Securities and Exchange Board of India, the sale will proceed in two phases.

The buyer would first acquire newly issued shares of the company representing 31pc of its share capital.

The purchaser would then make an open public offer, mandatory under financial market regulations, to acquire another 20pc of the firm, the statement said, raising its total stake in Satyam to 51pc.

"Qualified investors are expected to have total net assets in excess of 150 million dollars," Satyam said.

In line with Indian law, a lock-in period of three years will prevent the investor from selling these acquired shares, the regulator said.

Satyam supplies back office services to close to 700 clients including 185 firms ranked in the Fortune 500 in nearly 70 countries around the world.

The sale of India's fourth-largest software services exporter has taken on a sense of urgency with client uncertainty reportedly mounting over the company's future following India's biggest ever corporate fraud.

But it is likely that bidders will demand a discount to cover possible black holes in the balance sheet and liabilities that may arise from lawsuits filed against the company by furious US shareholders, analysts say.