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20 - All Guns Blazing

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DQI Bureau
New Update

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color="#FFFFFF" SIZE="2">CHAIRMAN:



B RAMALINGA RAJU

This 10-year old Hyderabad-based company has been

jumping by a factor of 10 in the last three years in terms of ranking–from 41 to 30

to 20 in 1997-98. With this, another software company enters the DQ Top 20 elite club. The

entry was effected in great style: with an export turnover of Rs 178.5 crore, an increase

of 109 percent over the previous year’s turnover of Rs 85.22 crore. Given its growth

of 55 percent in 1996-97 over 1995-96, it appeared as though Satyam was settling down to a

sedate growth. However, with three-digit growth in 1997-98, it has once again become a

company to reckon with.

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Satyam’s doubling of turnover has come as a result

of moving in several directions simultaneously–diversifying its product portfolio

offerings, from software services and engineering services to systems integration

solutions on ERP and Oracle Financials, electronic
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align="right">commerce, software product development and management

consulting. Which is the result of its strategy of competing on service instead of price.

Leveraging on the Y2K opportunity per se has

opened up doors of very large companies for Satyam. By providing quality and efficient

service, Satyam has managed to entrench itself in the top solutions providers league and,

today, it has over one hundred Fortune 500 companies in its customer list. As far

as markets were concerned, it spread itself across manufacturing, telecom, financial

services and banking, insurance, health, and transportation sectors.

S T R A T

E G Y
  • Focus on building competency in technology areas and

    develop domain expertise to deliver value to customers through solutions and compete on

    service as opposed to price.

T A C T I C S

  • Two to four hours of training to retain people at junior

    and senior level.
  • Set up global competency centers.
  • Train people from other industries to increase the

    knowledge base.
  • Leverage on the domestic market for global requirements.
  • Product development in the web arena and in

    decision-support systems.
  • O B J E C T I V E S

    • Sell products as part of its consulting solutions in the

      enterprise segment.
    • To get to SEI-CMM Level 4.
    • Reach Rs 350-360 crore by 1998-99 and an additional Rs 50

      crore from the other four companies.
    • P E R F O R M A N C E  H I G H L I G

      H T S

      • Exports revenue jumped by 109 percent; entered Top 20 at

        number 20.
      • Net profit grew by 86 percent; earned Rs 67 crore as net

        foreign exchange.
      • Attrition rate for project leaders at single digit.
      • Implemented GAAP.
      • Over 70 percent of its business came from existing

        customers.
      • PRODUCTS AND SERVICES:

        Software Development, Consultancy * COLOR="#000000"> START-UP YEAR: 1987 * COLOR="#000000"> EMPLOYEES: 2255 * COLOR="#000000"> QUALITY CERTIFICATION: ISO 9001 Tick IT & ITAA 2000 color="#ff0000">* ADDRESS: 1-8-303/36, SP Road,

        Secunderabad 500003
        * TEL:

        843222
        * FAX: 813166,

        868726

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        It is, therefore, not surprising that the Y2K

        opportunity proved to be a major contributor to last year’s growth, bringing in

        nearly 30 percent to its revenue—thanks to its SOS methodology which, the company

        claims, is the first Indian methodology to receive the ITAA 2000 certification. This is

        expected to bear fruit in this year and in anticipation of this, Satyam formed separate

        divisions to further leverage on its existing competency in technology and domain areas.

        The company has formed Satyam Renaissance Consulting,

        Satyam Infoway Ltd, and Satyam Enterprise Solutions to exploit the market in India for

        management consultancy, ecommerce and web-related products and services, and systems

        integration on ERP and Oracle Financials. This way, it could stand on the expertise in the

        local market to push its case globally, and therefore push itself up the value chain of

        competing on service instead of price.

        However, as of now, these companies’ direct

        contribution is still small—last year Satyam Enterprise and Satyam Renaissance

        contributed Rs 11.51 crore and Rs 2.46 crore respectively. Satyam Infoway is expected to

        start operations only this year. Another of the company’s new initiatives-to set up

        ‘offsites’ for customers—has come to pay rich dividends.

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        These centers—conceptually somewhere between onsite

        and offshore—will operate as independent units within Satyam. For the customer, it

        will be like interacting with a local company. Unlike other offshore activities carried

        out, the activities carried out under this category are for customers whose work calls for

        extensive interaction. A case in point is GE Capital. Satyam not only enhances and

        maintains GE Capital’s financial products from India but also makes them fail- and

        tamper-proof.

        All these initiatives are expected to change the current

        revenue-sharing equation of 29:36:35 from Y2K projects, legacy systems and their

        maintenance, and new client server applications in this financial year. Among the other

        initiatives that are likely to have a greater bearing on the company’s revenue is

        packaged (not necessarily shrink-wrapped) products. The first such product from the

        company is Search Pad, an intelligent web search agent that is expected to retail for $ 70

        and is already into its second version. A suite of Executive Information Systems (EIS)

        products are also being beta-tested for launch this year.

        alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/8fc1ec1d6aa02655c888db09cf7ea5c9b61171a5bcc8eef1eb4b295c541e757b.jpg (15396 bytes)" border="0" hspace="2" vspace="2" align="right"> size="2">These products, however, will get bundled with Satyam’s consultancy services

        on ERP, globally as well as locally. Unlike the Search Pad, however, these are unlikely to

        be branded and sold in the immediate future. All these products will be brought out by

        Satyam subsidiary (which will come into effect shortly) Satyam Spark Solutions (P) Ltd.

        Satyam has also decided to go in for SEI-CMM Level 4

        certification, which will enable the company to tap further into global markets,

        especially the non-US markets like Asia-Pacific and Japan. While the US continues to be

        its major market contributing 72 percent of its revenue, all other markets, including

        Europe, Japan, Asia-Pacific and rest of world, put together made up for the balance. The

        company is anticipating a revenue of 50 percent from markets other than the US by the year

        2000. Toward this end, it has opened up offices in the UK and Australia. Also, last year,

        Japan contributed 8 percent to its revenue and this again is poised to increase in this

        and coming years. In all likelihood, Satyam the group should succeed in getting to its

        stated goal of Rs 400 crore next year.

        Satyam was constantly in the news last year for a reason

        other than software—its stock price on the BSE. The company’s consistent

        financial performance has made it one of the IT blue chips. Last year, Satyam made 20

        percent net profit after tax on revenues of Rs 191.02 crore. In the process, the company

        also declared a tax-free dividend of 20 percent to its shareholders.

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