The Hindu Business Line : Play is on, rain or shine

In the second and concluding part of the interaction with Shailesh Shah, Director and Senior Vice-President, Corporate Strategy and Consulting and Enterprise Solutions, Satyam Computers, we focus on how the company is geared to combat the US slowdown if and when it happens, along with how it proactively manages such a scenario.

If the US economy were to slow down, how do you think it will play out for Indian players?

It would be a hockey stick situation. First-quarter-and-a-half, you'd see a slowdown in terms of new development spend coming into India. However, we are in the cost game. Where else would they go if they want to cut costs?

I understand that for the maintenance part of the business, but will development spends slow down... .

Out of say, $350 billion (of IT spending). How much of that spend is discretionary and how much of that is spend is non-discretionary. The next question is how much of spend is RFP (request for proposal) and non-discretionary. At least 35 per cent is the latter. Why would they not look at us?

How have you derisked your client portfolio for a slowdown situation?

One of our biggest advantages is that players want to be in every vertical. That is the biggest derisking one can have. Even bigger is we don't look at say, auto as a vertical, it is different across geographies. Metals and mining in India is different from that in the UK or China.

In a slowdown, how does you strategy change for the different markets you operate in... .

The moment I define these markets differently, I can sense which of these are going to slow down and quickly change the portfolio of offerings I have for these different markets.

Take, for instance, the pension problems in the auto component sector in the US. I am going to take them solutions that rapidly take the costs out.

Again for the US, how do I make them not spend money on new items and offer solutions for legacy problems? So, you leverage the fact that they are going to cut costs.

What is different now compared to 2000, since the last slowdown? What did we do wrong then, that might not be repeated now?

Three things: portfolio of offerings, strength of client relationships and three, what did we know beyond technology then? We were not really trying to fix business problems. Not that the top guys in our companies did not know these problems but in terms of execution on the ground, we weren't there. Now, all of us have become smart.

Do you actively prepare for a slowdown in your strategy process?

We do. Traditionally, not only now. We have a large client in auto components sector.

We know what is happening there. We look at different geographies - India/China, Japan, Europe is all very important for us in this sector.

We'll do things with them, with their CFO, plant management department, managing payroll.

These are things they cannot run away from. This is where we can help reduce costs, where they have to do it ad nauseum.

Do you stress test your clients?

We have something that we call A, B and C clients. `A' clients are 35, `B' clients are 65 and the rest is on the C list.

It shows us how strategic these clients are, in terms of current or near-future revenues. It shows what is happening in the sectors and geographies we service.

The latter two define our markets. For us, a market has to be a contributor, which creates critical mass. We talk to about seven or eight players with potential to go up in the market.

Are the clients and markets consciously mapped out?

It has to be done on a dynamic basis, even to the extent of tracking stock of 6,600 companies that we track across the globe.

We track them to figure out where the action is, the cluster and market we are talking about. Take oil & energy, for example.

So much is happening east of the Nile to Australia. Qatar having the largest gas field in the world and it changes the whole game.

Or in terms of building competency in say, healthcare, utilities or retail, how do you do it and go after them, without spreading ourselves too thin?

Take another example. There is 600 sq.km. of sand in North Western Canada that has 20-40 per cent bitumen, called tar sand. There are only two such beds in the world, a small bed in Germany and other one mostly in Canada.

It got discovered in the sixties, but it was not possible to touch it then since the conversion was very expensive.

But, at $40 a barrel, how can I go wrong? So why would I not serve that? That's hugely strategic. That's the kind of thinking we require now to address massive plays.

It is a funny game all of us are in. Strategic thinking is happening even at the account level. The Accounts Manager has been looking at IT services in the body shopping or the legacy transformation mode in the last 10 years.

But I need to examine whether I am giving shape to change that is to be delivered? The legacy game is strong. But that non-linearity has become a necessity.

If you don't do it, you will continue to commoditise the space. While you figure out that you are less and less dependent upon the space, you need to put enough irons in the fire for non-linear growth.

The advantage is ... ... perfect timing. If you lose it this time and allow it to start happening when the US slowdown hits you, which itself will last only for a quarter or a quarter-and-a-half; if you do it then, you'll have blood all over.

This is something that the entire industry has understood.

There is a large change in the quality of account managers in place. You can't afford to have guys who sold legacy systems.

maverick@thehindu.co.in

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