In Expansion Mode

DQI Bureau
New Update

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


Sunitha Natti in Hyderabad

CyberMedia News