The Hindu Business Line : ‘Systems integrators poised to garner global transformational deals’

Hyderabad, Jan. 28 With a broad spectrum of expanded services portfolio, Indian systems integrators are now gunning at integrated technology, management and consultancy transformational deals.

A traditional domain of the likes of IBM, HP, Accenture, these large deals, as and when they come up for renewal, Indian systems integrators poised to slice them out.

If some of the recent major deals are anything to go by, this is in for acceleration, according to Mr Ram Mynampati, President, Commercial and Healthcare, Satyam Computer Services.

In a conversation with Business Line, Mr Mynampati provided insights into sector direction and how outsourcing will only get better even if there is slowdown in the US, as some experts believe.

He argued that all companies who tasted the fruits of outsourcing and its cost advantage to companies, the slowdown actually could mean more outsourcing business.

For one who operates out of the US, Mr Mynampati has the feel of the IT pulse. Excerpts from interaction.

How do you perceive the outsourcing business in the backdrop of concerns of slowdown?

We are at an interesting inflection point in a market where the ability to do business can be defined by the company and its ability to meet service demands. Number one Indian services providers like Satyam are now better positioned than ever before.

Customers are increasingly becoming global in their outlook and need globally distributed services providers. Once they enjoy the fruits of labour, by outsourcing their work, they do not want to give up the advantage of lower price point.

So what are the drivers?

Broadly, there are three macro drivers. The pace of change is so rapid be it in the marketplace, technology or business environment, no organisation or enterprise has clue on how to deal with such pace of change. Therefore, they require external expert assistance.

Interestingly, market size and not finances that will define the business choice. This is not a zero-sum game. Innovation will be a key driver. Creating a right framework is what they need. Manufacturing and financial services have traditionally been major outsourcers. This has now encompassed new sectors such as energy and utilities. Oil companies and energy producers are all seeking ways to cut down on costs. This is both at supply and demand side.

We see US no longer as the main centre for outsourcing. Fastest growing markets are now outside the US, be it China and India. The recent orders for aircraft from Airbus and Boeing reflect this growth momentum.

Verticals such as retail, have emerged driving investments and companies such as Wal-Mart are looking at entering new markets. This growth is technology intensive in areas of customer interface and logistics. This can be gauged from the fact that Satyam has had 35 per cent growth from the logistics and transportation sectors.

What about deal patterns?

Indian enterprises too are making big outsourcing moves. Bharti Airtel and IBM deal of $250 million announced recently is one such. Business calls for a critical evaluation and cannot be driven by predictability.

The sub-prime crisis is due to credit squeeze. There is no indication of a cascading effect. The question is whether this is boon or bane. We believe that it is a boon as enterprises would like to explore more effective management approaches. This will pave way for integrated transformational deals, where a services provider would be incentivised for deliverables. This will also mean flexible pricing patterns.

The deal sizes, systems integrators are pursuing, are spiraling up from $50 million to $200 million and upwards. Last four major deals for Satyam were from Australia, Middle East, the US and Germany and spread over retail, media, banking and utilities verticals.

Transformational deals were traditionally domain of the likes of IBM. With Indian services providers broadening their services portfolio and offering consulting capabilities, they are now able to compete with them, significantly at different price points.

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