In Expansion Mode

Satyam Computer Services is abuzz with activity. In just a week's time it
made three announcements-a near-shore center in Hungary, plans to enter
Brazil, and a tie-up with Singaporean government agencies to market IT
outsourcing services. Going by all these measures, one surely expects big-time
growth. But are they necessarily going to form a good base for competition,
customers and the company's own growth?

It appears that the board has an ambitious roadmap to strengthen its global
presence, particularly in Europe. Its chairman B Ramalinga Raju has scripted the
plan dexterously, to tether between development and growth a complex web of
factors deterring business growth. Doubtless, the opening of a near-shore center
in Budapest, Hungary, is a good initiative for growth as this facility could
bring access to considerable resources. Also it can make use of the potential
markets in surrounding regions like London, Romania, Poland, Czech Republic,
Russia and others. With over 57 customers and presence in 14 countries in
Europe, the Budapest center presently has a seating capacity of just 60 with the
option of employing several hundreds.

It is also an attempt to gain a toehold in the European markets and to
substitute the otherwise expensive engineering prowess of Germany with slightly
lower-cost manpower. Such expansions also help the company generate new
business, and potential sales, though an efficient sales and marketing
infrastructure are necessary to pitch in for more business.

Though North America contributed a major share-71%-of the company's
total revenues as on the second quarter of 2004, the 16% from the European
operations for the same quarter is slated to increase tremendously. While in
2002-03, North America accounted for 76.9% it declined to contribute 73.3% in FY
2003-04. There are several reasons for this decline, including increasing
competition, diminishing rupee value, etc, while, in stark contrast, the
European share was untroubled and kept increasing, going on to contribute 13.7%
in FY 2003-04, up from 12.4% in FY 2002-03.

Secondly, its plans to start operations in Brazil will guarantee rapid growth
from the Latin American market, which, so far, Satyam has been servicing from
the US office. By establishing itself locally, and by adding over 100 associates
in the next few months, the company is expecting growth from existing customers
and new prospects as well.

Satyam was the first Indian software company to set up its business
continuity center in Singapore, which now mans the entire Asia-Pacific
operations out of the Singapore base and is the third largest revenue market for
the company. Also, given the tie-up with the Singapore government to market IT
outsourcing services, Satyam is perforce opting for a second-best solution where
it can expect better business opportunities.

The company, no doubt one of the major forces in India's IT-though
falling much behind the likes of Infosys, Wipro and TCS-serves more than 325
global customers, of which 109 are Fortune Global 500 corporations, operating in
45 countries, across six continents, is also diversifying into verticals as
varied as banking, financial and insurance services, telecom and manufacturing
and engineering.

Interestingly, however, despite structuring the company as a global
organization, the processes need continuous refinement and the HR policies need
a shift from being India centric. This refurbishment every so often is essential
as Satyam has to dip further into the global talent pool to man its operations
across the world.

Besides, the board strongly believes that the corporate model of
"Thinking-Doing-Communicating" (TDC) is their strategy for meeting
their diversified global requirements. However, the company still needs to
manage the "C" of its TDC model: while it can be said to be doing
extremely well on the "Thinking" and "Doing" front, the
company still needs to do lot of work on the crucial "communication"
front for it is the brand image that not only brings better deals, it also
brings in better people and people are the key assets in this knowledge
business.

Sunitha Natti in Hyderabad
CyberMedia News