Bibhu Ranjan Mishra / Bangalore Dec 18, 2008, 00:45 IST
Companies dissatisfied with ‘intent and focus’ of tech major.
Around six to eight strategic clients of Hyderabad-headquartered IT services major Satyam Computer Services are understood to be thinking of re-evaluating their contracts as they are "no longer satisfied with the intent and focus of the company".
IT outsourcing contracts of over $200 million (around Rs 960 crore) is up for renewal. Some of the major clients who have long-term strategic relationship with Satyam include Unilever, Nestle, DuPont, Cisco Systems, GE, Sony and Applied Materials. The current move by Satyam could trigger a possible review of their relationships with the company.
"It's not just the investors, but also Satyam's clients who have not reacted positively to its move to get into the infrastructure and real estate business. They are questioning the long-term intent of the company in terms of supporting clients' requirement in the IT and BPO sector. Even though the acquisitions of the two companies have been called off, some of them are of the opinion that the intent of the management is under question," highly-placed sources familiar with the development told Business Standard.
Besides, many clients are seriously considering a vendor consolidation, and Satyam is expected to lose out to its competitors in India, including Tata Consultancy Services, Infosys Technologies and Wipro. The current economic environment has spurred majority of the clients of domestic IT services company to ask for a re-negotiation of contracts.
Driven by many external and internal factors in the wake of a global recession, most clients are going in for a major cost-cutting exercise, which is adversely affecting the Indian IT outsourcing industry.
While volatility on part of the clients was already present in the mind of the most of companies, the recent move by Satyam has only added to the rising discontentment and "has painted a very negative picture for the entire IT community", a leading analyst said on condition of anonymity.
"If the focus of the company is going to change, there will be a significant risk for the clients. While outsourcing the IT contracts to vendors, overseas clients take decisions based on the reliability of the vendors. The long-term sustainability of a service provider is a very critical factor for any client before they start engagement with them. This, of course, is the reason why a service provider is required to their clients take into confidence before making any strategic decision, which might deviate from their long-term goal," said Sabyasachi Satpathy, an expert in outsourcing advisory services, and co-founder of Mindplex Consulting.
It might be quite a while before Satyam's management can bring back the confidence not only into the market, but also its client base and in the process of which "there might be a major churn in the key management", Satpathy added.
The practice of corporate governance by most Indian companies are also under question, despite the restriction of Sebi and other controlling bodies.
However, most of the IT services companies, including Infosys and TCS, are known for their strong focus on corporate governance. According to an estimate, many Indian listed companies skip their annual general meeting, and don't take shareholders' approval before taking major decisions.
"The percentage of people who have invested in IOP or secondary market is very low in India. The large number of investors in India are retail, public and small investors who are highly unorganised, and are being taken for a ride in India. This is not sign of good corporate governance," said Diptarup Chakraborti, principal analyst, Gartner India.
this article seems good and i wish and pray god for this.if satyam will get its image back, it will be the success of every indian. definitely satyam was the pride of india and attraction of investors, but this type of news can't be accepted eaisly.
did the client called you or mesaged you ??? i think u have a close relationship with all the clients of satyam ... gr8 man ... u ll surely acheive gr8 heights ...
this is a shameful example of poor management, still i dnt understand how ppl in Satyam are still in air...contracts and projects grabbed by using unethical path are of no use now...everything is going to get over soon..
Bibhu,
U write this just for the sake of writing... ? or u r just an fresher in journalism who wants to create \"sansani\" by wrting such ?
Did any of the client call ur home and informed that they r gonna revisit the contracts ?
This is a nonsense article aimed at spreading speculation
Satyam has Mature Practices DWBI & ERP. HCL had to spend over 0.5 Bn to get the ERP skills which we already have. they just save $ 0.5 Bn
Satyam FY08 was the 5th successive year of >35% Growth in Net Income. Show?s how they have got profits year after year. Satyam 32% revenue coming from New & Emerging vertical : Satyam has diversified and expanded is industry depth.
I am sharing some facts only to share with you why Satyam still is a fundamentally sound company: 1. Satyam has Presence across the Globe (20 Industries ,65 Countries) more diverse than Wipro & INFY. This spread helps Satyam in tough economic conditions. Did you know outside India in Asia Pac Satyam revenue are more than any of the Top 3 Indian IT services firm. De-risked Geographic revenue distribution 21% Europe, 17% Asia Pac, 62% America?s. Best present to leverage emerging markets.
You have been absolutely true on the evaluation of corporate governance in Indian companies and esp. Satyam, once considered the backbone / pillar for the IT industry... everything goes in vain for only and only 1 single wrong / greedy step!
They deserve to be treated that way, and all wise investors should exit the script now, before being left BANKRUPT by a nonchalant and covetous management!!!
You have been absolutely true on the evaluation of corporate governance in Indian companies and esp. Satyam, once considered the backbone / pillar for the IT industry... everything goes in vain for only and only 1 single wrong / greedy step!
They deserve to be treated that way, and all wise investors should exit the script now, before being left BANKRUPT by a nonchalant and covetous management!!!
Did the clients call you and tell they were re-evaluating their contracts with satyam. Dont write crap just because you have to write something. People like you are a toxic waste on this planet.
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