In talks for 25 mega deals; outlook to stay positive in near term

Our Bureau

Riding high

Attrition levels

down to 18.3% from 19.6%; annualised attrition rate at 15.9 %

Subsidiaries contributed

positively to margins

To add over

8,000 people

Hyderabad, Oct. 20

Satyam Computer Services Ltd added about 35 clients and inducted about 4,025 associates, the highest-ever quarterly recruitment for the company, during the second quarter ended September 30. Satyam, which now has a headcount of about 35,000 associates, maintained that increased compensation and non-monetary measures, has meant reversal in attrition. The attrition level is down at 18.3 per cent from 19.6 per cent earlier. The annualised attrition rate is now at 15.9 per cent. The company's Chairman, Mr B. Ramalinga Raju, said, "There is healthy demand environment signifying greater adoption of the global delivery model. Our interaction with decision-makers reflects that there is a positive trend in the near term. Greater part of the discretionary spending is directed towards global delivery model."

"Increasingly, we are participating in engagements that are strategic in nature dealing with business transformation issues. This qualitative change is evident across all markets segments giving rise to potential for a broad-based growth," he said.

The company's new customers include a leading airline, a Korean auto major and a European confectionary giant. The company management contended that they were in negotiations for about 25 large deals (those in $50 million over three years) and 12 of them at an advanced stage. Satyam refrained from commenting on the Qantas deal.

The Chief Financial Officer of Satyam, Mr V. Srinivas, said, "Q2 continued to witness the benefits of operational efficiencies, which helps us to mitigate the impact of salary on margins. In addition, subsidiaries, for the first time, contributed positively to the margins. While this is along expected lines, it gives us greater confidence to manage margins in fiscal 2007."

Referring to billing rates, Mr Raju said that they continue to be firm and may even go up further next fiscal. The President of Healthcare, Satyam, Mr Ram Mynampati, said that the company continued its global expansion and the latest additions Brazil and China would continue to grow. The company employs about 400 people in China.

Overall, the company expects to add over 8,000 people during the year. The new Vizag facility that can house about 700 people will be ready by early 2007.

Regionwise break-up

Regionwise, North America accounted for 65.87 per cent, followed by Europe (18 per cent), Rest of the World (14.48 per cent) and Japan (1.65 per cent). Time and material contracts accounted for about 60.65 per cent and fixed bid the balance 39.35 per cent.

Banking, financial Services and Insurance, manufacturing together accounted for about 56 per cent of total business. The company now has about 154 clients with revenues of $ 1 million and above, 54 clients with $ 5 million plus and 32 clients with $ 10 million and above in contribution. Top 10-client contribution has come down to about 34 per cent reflecting that the company has significantly de-risked its exposure. The existing business accounted for about 86 per cent.The CFO said that the wage costs had gone up by about 4 per cent from 57 to 61 per cent and were marginally more than those in the same league. The company has set apart about 2 per cent of equity to offer RSUs or restricted stock units to reward potential leaders.

(This article was published in the Business Line print edition dated October 21, 2006)
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