Mumbai: Pulling itself out of the rubble of India’s largest accounting fraud, Satyam Computer Services Ltd is aiming to regain its spot among India’s top software exporters by 2012.
In a recent document circulated among employees, the new management of the company rebranded as Mahindra Satyam says 2012 is “our point of arrival” to be “among the top five Indian IT (information technology) companies”.
“The target is not merely for reaching any revenue milestone, but also for where we want to be from a market and customer perception point of view,” said Padma Parthasarathy, head of special initiatives at the firm.
Revival strategy: Mahindra Satyam’s headquarters in Hyderabad. The firm aims to regain its position among top five IT Indian firms by 2012. Bharath Sai / Mint
Before B. Ramalinga Raju, the company’s founder and former chairman, admitted a year ago that he had doctored the accounts, Mahindra Satyam had been India’s fourth largest IT outsourcer. The firm lost several clients and executives in the following months.
“As a company, we lost a few months initially, between January and May, and the world was not standing still,” Parthasarathy said. “We did an internal review keeping in mind the industry benchmarks and our own parameters. We figured that there is scope for increasing revenue per customer.”
She didn’t give a revenue target for the firm but chairman Vineet Nayyar had said in November that the company expects to end the current fiscal year with a revenue of around $1.1 billion (around Rs5,000 crore).
That estimate suggests a steep climb for Mahindra Satyam going into 2012, when compared with its larger rivals.
For fiscal 2010, brokerage Prabhudas Lilladher Pvt. Ltd estimates a revenue of around Rs29,684 crore for Tata Consultancy Services Ltd (TCS); Rs22,265 crore for Infosys Technologies Ltd; Rs27,087 crore for Wipro Ltd; and Rs12,209 crore for HCL Technologies Ltd. These are India’s top four IT firms by revenue.
“If a revenue of around $1 billion is to be assumed (for fiscal 2010), Satyam would be in competition with MphasiS Ltd for the fifth spot, after TCS, Infosys, Wipro and HCL,” said an IT analyst with the Indian arm of a foreign investment advisory. He didn’t want to be named as he is not authorized to speak to the media.
Mahindra Satyam set up dedicated teams to work with and get more business from its long-time customers as well as to bring back clients who had left.
Parthasarathy said Mahindra Satyam has won back some clients but declined to name any.
Another senior executive said on condition of anonymity that Mahindra Satyam has been making aggressive pitches to its largest clients including US drug maker Pfizer Inc., data storage device maker SanDisk Corp. and technology firm Apple Inc. “We expect to see ramp-ups in these accounts very soon.”
According to the executive, the scope of the Pfizer account, currently serviced by around 1,500 Mahindra Satyam employees, is likely to be expanded and may require an additional 200 staff.
The company is also trying to convince former clients to return, including Swiss computer peripherals maker Logitech International SA, which it lost to Cognizant Technology Solutions Corp.; Applied Materials Inc., lost to TCS; Agilent Technologies Inc.; and Cisco Systems Inc.
“Clients who left us during the time of (the) crisis did not have any concerns about the quality of service delivered by Satyam,” the executive said. “They were worried about business continuity risk. But now that we are stable again, we are confident of bringing them back on board.”
Currently, one hurdle Mahindra Satyam has to deal with while bidding for large projects is the lack of audited financial numbers. The firm’s accounts are being restated by Deloitte Touche Tohmatsu India Pvt. Ltd and KPMG India and it has been given time till 30 June to bring out audited financials.
However, according to Parthasarathy, being a part of Mahindra Group—Tech Mahindra Ltd bought a controlling stake in Satyam in April—has helped in convincing some clients to give more business to the company.
Mahindra Satyam is already “in the right verticals and geographies and the macro-environment is improving”, said Shashi Bhushan, an IT analyst with Prabhudas Lilladher.
“Once the company releases its audited result, it could grow faster than (the) industry average. If the current revenue run rate is around $1.2 billion, it is tough but achievable to get back to the same old revenue run-rate within the next few years,” he added.