Singapore: Satyam Computer Services Ltd., India’s fourth-biggest software services exporter, will open a development centre in Vietnam by April 2009 to take advantage of lower labour costs in the Southeast Asian nation.
The company plans to hire as many as 2,000 people at the centre in the next three to four years, said Virender Aggarwal, senior vice president in charge of Satyam’s Asia Pacific, Middle East, India and Africa operations, in an interview in Sydney. He estimates a centre in Vietnam will save Satyam at least 20% in wage costs.
Satyam is diversifying operations out of India to locations such as China and Malaysia to reduce rising labour costs as salaries and employee attrition rates increase at home.
“One reason why we are diversifying out of India to many of the locations like Nanjing and Malaysia is primarily because, on a long-term basis, the kind of advantage India enjoys in costs may not be valid any more,” Aggarwal said in the interview on 26April. He declined to say how much the company would spend to establish the centre in Vietnam.
According to a survey by the National Association of Software and Service Companies and credit-ratings provider Crisil Ltd., Satyam and other Indian computer-services providers may post as much as a 400 basis-point decline in profit margins by 31March, 2010, on rising wages. A basis point is 0.01 percentage point.
The centre in Vietnam would be similar to the campus-style unit opened in Nanjing, China, this February and would be effective for handling Satyam’s testing and embedded software services.