Satyam bullish under 'umbrella of governance'

ZDNet Asia, July 03, 2009

SINGAPORE--It has had the dubious honor of being dubbed the "Enron of India", but the revamped Satyam is now "extremely bullish" about its Asia-Pacific market prospects and confident of its governance, say company executives.

The newly-minted Mahindra Satyam--after the successful bid by Indian services giant Tech Mahindra--has tweaked its model of governance, which had been a "perceivable flaw", said Vineet Nayyar, executive vice chairman of Tech Mahindra and Mahindra Satyam.

Former Satyam Chairman B. Ramalinga Raju admitted to fraud and resigned in January amid a scandal over inflated profit reporting.

Speaking at a media briefing in Singapore Friday, Nayyar noted that the company's governance model has since been reorganized to allow greater responsibility and accountability. He added that incentives between sales and delivery teams have also been realigned, and there is greater transparency in the reporting of costs and profitability in the various business units.

"What you see in Mahindra Satyam is the congruence of the capabilities, skills and depth of knowledge of Satyam...now under the umbrella of governance which will adhere to the highest ethical standards [that Mahindra is known for]," he said.

Region's business picking up
Nayyar acknowledged that Satyam lost out on a large Telstra request-for-proposal issued earlier this year, but said the company's customers in the region still have "fairly positive" sentiments toward the company.

"It's not as if we've been banned or barred... We did lose a very large order, but there's still life beyond that [Telstra] order," he said. "On the other hand, all other clients [that] have stayed with us are staying with us, and are giving us further orders."

Philip Carter, IDC's associate research director for services in the Asia-Pacific region, told ZDNet Asia that apart from Mahindra Satyam losing a couple of key clients such as Telstra and the National Australia Bank, the company has made at least one recent deal in the region. Singapore's Land Transport Authority, he said, had awarded Mahindra Satyam a contract several weeks ago.

Over in the United Kingdom and Ireland, Satyam's existing clientele had signed US$2.5 million worth of contracts with the company during the first quarter of financial year 2009, Satyam's U.K. and Ireland head for noted earlier this month.

Carter said Tech Mahindra's coming into the Satyam picture has had a positive touch, but there were also challenges moving forward. A number of Mahindra Satyam executives hailed from Tech Mahindra, essentially a second-tier player focused on one vertical--telecoms. That presents management credibility issues, as well as a danger of talent attrition given management changes.

In addition, while the backing of Tech Mahindra may offer credibility in terms of financial stability and corporate governance, there is a "long process" in terms of sustaining and that credibility in the regional market, said Carter.

"There's been positive energy in terms of credibility building up, but I won't go as far to say they'll make the shortlist for every single major services contract," he pointed out.

Expansion in the pipeline
According to Mahindra Satyam's Asia-Pacific managing director Rohit Ghandi, the company is "extremely bullish" about the way forward.

The new Satyam, he added, would "be gunning very strongly for new business", through a combination of selling additional services to existing clients and pushing for new customer wins. For instance, the company is planning to roll out infrastructure services as well as BPO (business process outsourcing) services in Australia and New Zealand (ANZ).

Ghandi said Mahindra Satyam would concentrate on growing market share in countries Satyam formerly was active in--ANZ, China, Japan, Malaysia, Singapore and Thailand--before making expansion moves. However, Indonesia is a likely target as Tech Mahindra has an existing strong presence in the market.

The Asia-Pacific region, he added, is targeted to contribute 10 percent to 15 percent to Mahindra Satyam's overall revenues. Singapore, with headcount in excess of 400, will remain the regional headquarters for the company. Mahindra Satyam has over 2,000 employees across the region.

Nayyar added that Tech Mahindra and Mahindra Satyam will "for the time being" be run as separate entities but will tap on each other's relevant expertise as well as cross-selling opportunities. The two companies, he noted, have synergies that may result the merging of operations, but that would not take place at least in the next one to two years.