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B Ramalinga Raju |
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Signing off the year in style with higher returns across all verticals,
Satyam Computers saw some hiccups only on the margins front. Margin and billing
pressures, which have snapped at the topline over the past few years, had
subsided in 2004, but again came up last year. Operating margins dropped 2%.
Revenues from Japan fell marginally, but this was more than compensated by an
expanded client list, further resource ramp-ups and Satyam's Shanghai and
European operations beginning to show healthy growth.
First quarter revenues of 10% clearly validate all the above. Some hard
bargaining from newer clients saw slower growth into the second and third
quarters, while billing pressures were in moderation compared to the same period
in 2003-04. The fourth quarter stabilized things for Satyam with a 7% revenue
growth and net profit rising about 52%. Full-year net profit jumped 39% as
Satyam won 28 new customers in the fourth quarter alone. Satyam ended the year
with over 70 Fortune 500 companies on its client list.
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The Shanghai operations fuelled Asia-Pacific region revenues to 52% growth in
FY 2005. The collective European and Asia-Pacific operations helped trim the
sizeable US presence, while maintaining the onsite-offshore mix at a balanced
57:43. This was despite US revenues dropping about 7% following the greater
focus on the Asia-Pacific operations. The company's European plans will
further gather steam in fiscal 2006.
Satyam's package implementation and outsourced app development operations
showed 81% growth, but the surprise was on the R&D front. In fact, revenues
from high-end engineering design and embedded software development alone grew
155% last fiscal. Currently at 7% of Satyam's revenues, this points at new
directions in developing cross-platform competencies and multi-vertical
expertise, besides opening up strong IP possibilities in the coming year.
While there was pruning in the 5-10 years experience category to 3,625 people
from over 4,000 last year, Satyam's recruitment showed a high 49% fresher
intake. Though over 600 new employees had over 10 years of work experience.
Maintaining margin profitability could be less of a challenge this year on
the R&D front. The thrill of breaking the $1bn mark in fiscal 2006 should
more than compensate for the hurdles ahead.