Scoring a Goal

India would be participating in the 2010 FIFA World Cup football in South
Africa as well as in the 2014 edition in Brazil. It would also be a part of two
FIFA Confederations Cups that fall within the 2007-2014 period. And the major
representation would not come from Bengal or Goa (the Meccas of Indian
football), but from Hyderabad (once a nursery of Indian football, but now more
renowned for its IT prowess).

Lest we are accused of daydreaming, it would be prudent to make it clear that
its this IT prowess, rather than any footballing skills of the Bhaichung
Bhutias, that would ensure Indias presence in the ultimate footballing arenas.
Dont know how much succor it would give to the numerous soccer aficionados
across the country, but every Indian should be proud of the fact that
Hyderabad-based Satyam becomes the first Indian IT services company to ink a
deal with FIFA to become the official IT service provider for its flagship
event.

The agreement was endorsed in a joint signing ceremony recently between
Joseph S Blatter, president, FIFA, and B Ramalinga Raju, chairman and founder,
Satyam, in Durban. While this was a major feather in the cap of not just Satyam,
but the entire IT services sector in India, it was typical of the company and
its head, Raju, to not make a big splash about it.

But why has such a low-profile company taken such a high-profile event
sponsorship? Does it mean a change of Satyams branding strategy? Does it mean
it will now resort to the high decibel marketing similar to that of a company
that it is often compared withHCL?

Far from that. Satyams FIFA sponsorship is less about high-pitch marketing
and more about targeting the new white space of media and entertainment. White
space from the point of view of the Indian IT services industry. A secondary
reason is to reach its name out to as many as possible without making too much
noise.

Satyam Chairman Ramalinga Raju is creating value by taking derisking to new levels, even while retaining his and the companys low profile

A Change in Strategy?

For some time Satyam has been working on its differentiation, though chief
strategy officer Shailesh Shah is quick to explain that differentiaition for
Satyam does not mean differentiation in terms of projecting one ability or the
other, unlike, say, HCL does.

We believe that the markets we are serving are much larger than the
traditional view our peers take in defining themwe say we are in the business
of offering knowledge and technology enabled services while our peers call
themselves IT and BPO companies, says Shah.

The definition of a market is where Satyam is trying to position itself
away from the top three Indian IT services providers. Catering to multiple
verticals, under what is called a verticalization strategy, was started by the
likes of Infosys and TCS and followed even by the tier-2 players like Patni,
Hexaware, and MphasiS among others. While this strategy has been quite
successful for most companies, there remains the possibility of all verticals
not receiving the same focus across multiple geographies.

What Satyam has done is an intelligent mapping of both geographies and
verticals to determine smaller niche areas where it can more easily attain
critical mass. When the strength of a company is knowledge- and technology-led
services, the markets it serves cannot be confined to specific geographies
and/or industries. This creates a large market, and to ensure choices are made
and focused on, the need is to look at it in smaller constituents, says Shah.

Some examples would reiterate the point better: while auto companies from
around the world are clearly pursuing larger markets, the way in which issues
arise and get addressed are distinctly different when one views auto companies
in Japan, France, Germany, or in the US. One way of looking at the industry is,
says Shah, we think of all auto companies as being similar and pursue solutions
thereof. However, there is clear distinctness in the needs of our clients in
each of these geographies, arising out of local economic conditions, policies,
and competitive pressures.

Accordingly, it is very important for us to look at the world of auto as
several distinct markets.

Similarly, there are clusters of companies in oil and gas, chemicals,
pharmaceuticals, metals, financial services, discrete manufacturing, travel and
logistics, retail, public services, telecoms, technology infrastructure, media
and entertainment, and in consumer durables and non-durables. And Satyam has
been active in taking advantage of these clusters rather than going for the
full-fledged verticals.

Consequently, it is sharper for Satyam to focus on financial services in
India as a market, pursuing metals in Europe, and pharmaceuticals in
North-eastern US. By doing so, it looks at the world of about 150 distinct
markets, and the way it serves its 600 clients in each of these markets becomes
that much sharper. It impacts the companys economics from both a build
perspective and a focus perspective and also helps in building a solid derisking
strategy.

Obviously, this has also helped the company in increasing the profitability
of contracts. And, thanks to its markets, Satyam has continued to bring in new
customers and retain existing business. CEO Ramalinga Raju recently confirmed
that Satyam was working toward eight new engineering deals, worth $20-25 mn.
Satyam also added twenty-nine new customers in the last quarter with the $5 mn-plus
customers increasing to sixty-five clients in total. Its approach also helped
Satyam to leverage on its offshore mix and to more favorable terms for
operations, helping negate a $25 mn currency loss in the first quarter of 2007.

If this redefinition of markets into clusters and the de-risking it enables
have helped Satyam to differentiate itself, the third USP has been the way it
managed its white spaces. Unlike most of its peers who have gone for much
high-profile M&As, Satyam has made smaller acquisitions, but most of them have
been critically mapped to these white spaces it has determined.

Growth Through Acquisition

Therefore, in the last four years, Satyam acquired four times: in asset
management consulting, business intelligence, infrastructure management, and now
in management consulting. We will continue to do so to fulfill our growth
strategies, and will take cognizance of both geographic and competency
requirements in determining what next! In fact, the next big white space
could be animation and entertainment where the company is moving, strategically,
the inorganic way to build critical mass for itself.

Growth through acquisition was first initiated with Knowledge Dynamics in
Singapore and Citisoft in England. Since then, Satyams acquisition strategy
focuses on access to specific technologies and exploit synergies, with the goal
of expanding service delivery centers globally to increase market entry
leverage. This, in turn, folds into increasing customer value through localized
relationships. This strategy seems to be the common denominator across all major
outsourcers today.

Satyam has also consolidated delivery in a manner where its ability to
leverage in the short term while creating consulting- and solutions-led levers
for longer-term growth get balanced appropriately. This has been markedly
different from the approaches of Infosys and TCS, which went for high-profile
consulting arms with much hype; not that Satyam claims that the biggies model
has not succeeded, but perhaps for tier-2 players it would be better to emulate
Satyam.

After all, Satyam is a conservative South Indian company as its top
managers would like to reiterate and, therefore, prefers not to go the high
profile routes to success.

Says Shah, It has become critical for us to ensure that we deliver
exceedingly well in providing counsel to our clients and services. Each area has
a different resourcing approach and, while our client managers ensure we fulfill
SLAs and have measures in place to track performance proactively, our delivery
teams are focused on balancing competency with distinctively superior projects,
continuous streams of work, and shared services.

Increasingly, we are noticing that our ability to reuse components, be more
process-oriented, move closer to zero defects (not unlike manufacturing), ensure
we have greater bandwidth to create exciting teams, and manage career
expectations of our team members, are rapidly improving to create new
standards, he adds.

In the ultimate analysis, its clear that Satyam has not just differentiated
itself from other top IT vendors, but has succeeded in building a solid platform
for itself out of these differentiations. Long regarded by analysts as the
conservative entity of Indian IT, Satyam might just prove that even simple
guys could win the race. And might just inspire the real Indian football team to
also qualify for the FIFA World Cup one day.

Rajneesh De

rajneeshd@cybermedia.co.in