Bangalore: Indian IT firms used to selling their services to banks and manufacturers are now looking to the world of sport for new business, after a breakthrough deal with football’s governing body Fédération Internationale de Football Association, or Fifa.
Testing waters: Satyam’s headquarters in Hyderabad
Satyam Computer Services Ltd, India’s fourth biggest software firm, has blazed the trail, signing a seven-year agreement to be Fifa’s official IT services provider and its first major sponsor from cricket-mad India. Satyam estimates that the sports industry is a $1 trillion (Rs39.8 trillion) business, which spends $40 billion annually on IT services—and is growing at an annual rate of 8%.
Kiran Karnik, president of the National Association of Software and Service Companies, said Satyam’s deal with FIFA demonstrates the vast potential of the sports market for India’s IT firms.
“It is a huge market and, in general, Indian IT companies have not tapped into it,” Karnik said. “One example is the Beijing Olympics—there is a lot of IT spend there, but that’s an opportunity we haven’t utilized,” he said. “By the time the Commonwealth Games gets under way in Delhi (in 2010), hopefully Indian IT firms would develop the expertise to capture more business in this area.”
Wipro Ltd, India’s No. 3 software maker, is open to tapping opportunities in the world of sport “as and when they arise,” said company spokeswoman Sunanda Sanganeria.
Satyam, which earns 97% of its revenue from overseas, will target sports that have a global appeal, according to its head of marketing Hari Thalapalli.
The Fifa sponsorship “clearly opens up avenues for us to work with similar organizations in a very big market space,” Thalapalli said.
Under the agreement signed in Durban last weekend—the value of which was not divulged—Satyam will provide IT support for the 2010 and 2014 football World Cups to be held in South Africa and Brazil, respectively.
Satyam is the fourth World Cup sponsor to be signed by Fifa, following fast food chain McDonald’s, US brewer Anheuser-Busch and South African telecommunications group MTN, with two more to be finalized.
World Cup sponsors form the second tier of Fifa’s commercial hierarchy, behind the six official “Fifa Partners”—Adidas, Coca-Cola, Emirates, Sony, Visa and Hyundai.
“Football is one of the world’s biggest sports and the World Cup is the most watched sports event, so the deal increases Satyam’s visibility and will probably bring it more business,” said Harit Shah, analyst at Angel Broking.
“At the end of the day, every company wants greater visibility and this will give Satyam that,” Shah added. “Whether we can extrapolate that to other IT firms is something I’m not certain about.”
The 2006 Fifa World Cup broadcast more than 76,000 hours of coverage over 376 channels worldwide, reaching a cumulative audience of 26 billion viewers.
Satyam has been doing “mission-critical work” for Fifa for the past year, designing and managing the football body’s IT systems, said Thalapalli.
The company, which employs 42,500 people, in October announced second-quarter net profit growth of 27.9% to Rs409 crore.