Chennai: Indian computer services firms are finding the going tough in the current fiscal year due to an economic downturn in the US and currency fluctuations. Securities firm CLSA Asia Pacific Markets has warned that the country’s second largest software exporter Infosys Technologies Ltd may miss its projections in the second quarter that ends in September due to these reasons. B. Ramalinga Raju, chairman of Satyam Computer Services Ltd, a smaller rival of Infosys, said in an interview that there are no surprises and the firm would meet its revenue target for the year to March 2009. Edited excerpts:
How is the demand for IT (information technology) services? Are companies talking about slowdown spreading further? What are your customers saying?
We have given guidance for fairly positive growth, in spite of the fact that the base is growing quite significantly—for Satyam and the industry as such. Some of the challenges we have faced, particularly in the US, have arisen mainly out of the financial services sector. We are hoping this would not extend to other sectors, and so far, we are doing quite well against the guidance.
Are customers taking longer to decide?
When we deal with five-six hundred customers, it is difficult to bracket them in one kind of approach. But generally speaking, there are two forces at play. In some instances, there may be a slowdown in decision-making. But in others, it is all the more reason why they have to do something different.
If the slowdown is not very deep, one would expect these things to balance out. As far as this year is concerned, we believe we are on fairly firm footing.
Upbeat stance: A file picture of Satyam Computer Services chairman B. Ramalinga Raju.
There has also been talk of the pain shifting to Europe and the UK in the next few months?
If that were to be the case, it is certainly not reflected in our interactions with our customers. It is (also) not reflected in our guidance in the current year.
Would you stick to the guidance of 24-26% growth in dollar revenue and a rise of 32-34% in rupee revenue?
We are confident of meeting the guidance.
What about currency fluctuations?
We do not unduly worry about things not in our control. Therefore, we are trying to do our best to increase efficiencies in our operations, both at the level of customer-facing functions as well as delivery. We had to convert some of these challenges into opportunities. Here is an opportunity for us to improve efficiencies within the organization so that, even in testing times, we are able to do fairly well.
Is it the reason why we are seeing Satyam laying off people?
No, I think it is misreported. It is what we call as the performance improvement plan that has existed for a number of years now. We take action on our bottom-most performers to keep the organization’s efficiencies tight. It is nothing new. And, we have given guidance that we will recruit a certain number of people and that, too, has not changed. So in that sense, things are as we anticipated and moving along expected lines.
Does the rupee falling to 45 (against the US dollar) offer any comfort?
For any exporter, a depreciating local currency is always good news. One wishes the volatility is not as high as it is because that comes in the way of the company’s ability to plan activities and judicious decision-making.
Are you seeing an uptake in volume growth? The industry early this year was saying the second half of the year would see improved business.
We stand by the guidance. Things are progressing as expected. We constantly take stock of developments, and all I can say is that there are no surprises.
In the SAP (enterprise resource planning) practice, we have seen Infosys acquiring a company recently. Would you also look at expanding this segment?
We have always given lot of importance to acquisitions and continue to do so. That which best fits with our requirements and enhances synergistic value, we will continue to acquire. We are glad that many Indian companies are expanding their talent pool much beyond Indian shores. What organisations such as Infosys are doing speaks of the fact that certain competencies that was existing in an organisation has much value today than it may have been few years ago. That we made investments into SAP for quite a number of years is now being vindicated.
There have been reports that you are focusing on big-ticket buyouts. How true is that?
The key word is not size but synergy.
Any update on Upaid (Satyam is fighting a lawsuit by UK-based online mobile payment company Upaid Systems Ltd)? You had a setback in the courts recently (Satyam lost an appeal at the UK court of appeal that upheld a previous high court order barring the Indian IT firm’s moves to block Upaid’s fraud and forgery claims against it in Texas, US)?
I would prefer not to talk about it. We have taken necessary steps to deal the case in an appropriate manner in the courts. Whatever judgements you may be referring to are issues of jurisdiction, not issues of fundamentals of the claims.
How are you faring in the domestic market?
This time, we are giving lot of importance to India as a market. We believe there is going to be a wave of services that would dominate operations in IT companies because they are not any longer seen as limited to technology. We look at ourselves as knowledge companies. In that sense, we expect more revenues from transformational services, putting behind us the issues of application, development and maintainence and enterprise solutions. While they continue to be important, they would be supplemented by transformational services.
How do you see growth in emerging markets?
We earn around 20% of our revenues from Asia Pacific. We have seen greater growth in Europe and Asia Pacific than in North America. That is the reason you find the size of our revenues from North America below 60% from a point where it was above 80%. So, emerging markets will play an important role in our future growth. We expect growth from Europe and Asia Pacific to be faster than the rate of which the company may be growing.