15 | Patni Computer Systems: Wider Portfolios

The past year generated mixed emotions at Patni. There was euphoria at the
33% revenue growth, matching or beating the Top 5. There was worry about
declining profit (from 39% to 16% operating profit), squeezed by attrition and
rising salaries. And a recent IRS (income tax) review of its US operations has
landed a tax charge of $33 mn for earlier years, and there could be more ahead.

However, business was good. Patni added 74 new clients, including Disney
Mobile and ABN Amro, taking the number of active customers to 199. There were 11
new $5-mn-plus accounts, taking the total to 19, where revenues from the top 10
grew 59%, but the other nine grew 80%.

Million-dollar relationships increased from 46 to 61. Non-ADM (application
development) services grew at over double the lower-margin ADM growth of 25%.
And the dependence on GE, long an Achilles' heel, came down from 26% to 22%.

Patni did not make any acquisitions last fiscal. But it set up several
strategic alliances to complement expertise. It joined hands with high-end SPs
including Savvion for BPM, InsureWorks for insurance, and Clear Technology for
financial services and healthcare. Later, in 2006, it acquired ZaiQ
Technologies, for design engineering services.

A strong focus on the BFSI, manufacturing, telecom and product engineering
verticals paid off, and it also stepped up growth from Europe and Asia, though
most of its business is still US-based. To add to its near-zero domestic
business, a strategic alliance with SAP India will address the SMB segment:
Patni will provide mySAP ERP solutions, with special focus on the rubber and
tyre industry.