Rank 6: SATYAM COMPUTER SERVICES: Consolidation Time

This was a year of some fundamental changes at Satyam Computer
Services. Hit by the slowdown–as was everyone else–Satyam’s revenue growth
rate fell to nearly half of that in the previous year. But at 42%, it was still
among the healthiest in the DQ Top 20 companies. Net profit growth, again down
from 134% to 55%, was still reasonably robust at Rs 490 crore. And a projected
growth rate of 21-23% for the ongoing fiscal is also in line with the industry
average projections.

Performance Highlights Greater thrust toward non-US geographies Consolidation of key verticals–banking and finance (from 20.8% to 25% of revenues) and manufacturing (up to almost 33%) Strengths Consolidation in its two key verticals gives it strong domain expertise in these segments Rationalization of subsidiaries will make the company more focused Weaknesses Despite the NYSE listing and SEI CMM Level 5 certification, branding remains an issue Company far too centered on the Raju family Satyam Computer Services Ltd. l Startup: 1987 l Products & services: Software services l Address: Satyam Technology Center, Bahadurpally Village, RR District, Andhra Pradesh 500 043 l Tel: 3097505 l Fax: 3097515 l WebSite: satyam.com

But the Satyam story in 2001 was not really so much about numbers. It was
about how it utilized the slowdown–more so than most other companies–to make
some fundamental changes in the way it did business. The most important was an
aggressive and reasonably successful push into non-American geographies. It set
up a Middle East Solutions Center in Dubai and launched what it called ‘Mission
Europe 2001’, which contributed to doubling of revenues from Europe. In
Asia-Pacific, it opened offices in China, Hong Kong and Malaysia, with plans for
Korea in the near future. The long-term goal–to expand and handle the region’s
business from China and Taiwan. The big event, though, was the setting up of a
global development center in Australia, with two key customer breakthroughs–a
product development deal from a global consulting company and a datawarehousing
project with an Australian public sector railway company.

Like all other exporters though, Satyam faced intense billing rate pressures
and a fall in new projects. As a result, revenues from software maintenance went
up from 21% to 30%, while software design and development revenues were down
from 64% to 52%, respectively. Similarly, engineering design services took a
hit, falling from 8.6% to 4.3%, while packaged software implementation more than
doubled from 6% of total revenues to 14%.

Other big events included a listing at the New York Stock Exchange in May
last year and a rationalization of its various subsidiaries–most of which
would have been shed by the end of the ongoing year. For Satyam, this was a
tough year, but not a bad one.