Advertisment

Rank 6: SATYAM COMPUTER SERVICES: Consolidation Time

author-image
DQI Bureau
New Update

B Ramalinga Raju
Chairman

B Rama Raju



Managing Director

Ram Mynampati



Executive V-P and COO


K Kalyan Rao


Executive V-P, CTO & Head (VBU-Telecom)


AS Murty


Director and Sr V-P


(Global HR)


V Srinivas


Sr V-P and CFO






Advertisment

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.

Advertisment