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BL Research Bureau Mahindra Satyam’s deal with defence and security solutions company Saab brings in long-term revenue visibility for the former.

The deal, estimated to be $400 million over a five-year time frame, marks a continuation in the series of large deals that the company has won in recent times.

In an interview to the media, a company official had indicated that Satyam was construed to be a $1-1.2-billion annual run-rate company. If that is indeed the case, this deal, if apportioned equally over five years, will account for over 7 per cent of Satyam’s annual revenues.

Satyam and Saab have a partnership in building a centre of excellence, focussed at developing solutions for mission-critical defence operations.

Saab has also won several deals in India from the defence.

With spends on internal security in India likely to go up, Satyam may be well placed to tap into incremental opportunities that arise from the association with Saab.

From Satyam’s standpoint, the last few months have seen the return and revival of several of its large clients. GE, GlaxoSmithKline, OC Tanner and the deal from Saab are all multi-million, multi-year deals that the company has won in recent times.

This also suggests the return in confidence of clientele with the new management in place, allaying fears of a mass exodus that was envisaged earlier by the markets.

Satyam’s workforce has also reduced considerably. From an employee strength of over 48,000, Satyam has a rather trim headcount of around 28,000, which may have helped optimise costs substantially, especially seen in context with its likely revenues.

More Stories on : Stocks | Outlook | Software | Satyam Computer Services Ltd

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