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Satyam and the ‘Shadow Board'

Zafar Anjum | March 14, 2011
Beleaguered Indian IT Services giant Satyam recently announced it is making a comeback towards greater stability and success, but acknowledges that its leaders and employees have their work cut out.

Satyam also used social media in a big way to report the FIFA events. On Twitter, they had nearly 25,000 followers.

“We now jointly own the IT with FIFA,” says Gandhi. “We were also the sponsors, so the Mahindra Satyam branding was also important at that point of time. It had a huge impact. The brand recall was amazing. After this, we have started a sports vertical now.”

The client side of the story

For Mahindra Satyam, there were some positive signs to begin with, at least in the Asia Pacific region. “Now, in Asia Pac, we have not lost customers,” he says. “On the contrary, we have found 12 new significant customers, netting in large, multimillion dollar deals. We have found a new customer in the Singapore government. We signed up with a large financial institution in Australia, a new customer in the area of platform BPO vertical. That is something people are talking about.”

Gandhi outlined Satyam’s growing expectations for Japan. “From an existing customer in Japan, we were managing certain parts of their applications. Another major player was managing the other part. With an open tender, we could significantly increase our share and grow our Japan business.”

In Singapore, Satyam has signed multiple deals with the Singapore government, says Gandhi. “Employee strength in our office in Singapore has doubled in one year.”

Challenges for Satyam

Satyam announced early this week that it is on the recovery (its revenue and net profits grew in the third quarter ended Dec. 31, 2010).

On Monday (14 February) the firm said that revenue had grown to 12.8 billion rupees (US$281 million), up by about three per cent from the previous quarter, while net profit had more than doubled to 590 million rupees (US$12.9 million) from 233 million rupees in the previous quarter. The results are in accordance with Indian accounting rules.

The company is now stable at the $1 billion - $1.1 billion revenue level, and there is no longer an exodus of customers.

Satyam has also started focusing on select markets, but these efforts have not yet translated into high revenue and profits growth for the company, although the outsourcing market is bouncing back.

The company’s operating margins are still very thin, at less than four per cent, Apte said. Going by current revenue levels, the company may show a revenue drop of about eight per cent in its fiscal year ending March 31, 2011.

Even though Satyam has stabilized its revenues, it remains saddled with a lot of potential liabilities and costs, including a claim by some 37 companies who say they want to be repaid 12 billion rupees (US$260) they have allegedly advanced to Satyam.

 

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