Indian Outsourcer Satyam Crosses $1B Revenue

Indian software and services outsourcer Satyam Computer Services crossed US$1 billion in revenue in its fiscal year that ended March 31, riding a boom in offshore outsourcing.

The company’s revenue and profit growth was higher than that of other large Indian outsourcers. It reported revenue of $1.1 billion for the year, up 38 percent from revenue of $793.6 million in the previous year. Profit grew by 62 percent to $249.4 million, from $153.8 million the year before. The figures are based on U.S. generally accepted accounting principles.

Satyam has forecast revenue growth of between 24 and 26 percent in its current fiscal year, ending March 31, 2007.

The market has been very buoyant, bringing Satyam big new deals as well as more business from existing clients, said Ram Mynampati, president of Satyam’s commercial and health-care businesses. The company has improved its profit margins through higher pricing and better cost management, he said.

Based in Hyderabad, Satyam is India’s fourth-largest outsourcer. Its biggest customer is General Electric, of Fairfield, Conn., which accounted for about 10 percent of revenue in its last fiscal year.

The company had about 29,000 staff as of March 31. Its strategy is to have 30 percent of its staff outside India, and it has development centers in countries including China, Hungary and Canada.

India’s top outsourcers—Tata Consultancy Services, Infosys Technologies and Wipro—have also reported strong revenue and profit growth for the year that ended March 31.

Revenue growth rates for Indian outsourcers may decline, however, as multinational services companies like Accenture and IBM expand their operations in India, said Siddharth Pai, a partner at the sourcing consultancy firm Technology Partners International in Houston, Texas.

Competition has increased, with multinational service providers now bidding even for small contracts, and at rates comparable to those of Indian outsourcers, Pai said.

Indian providers still have an edge in offshore application development and maintenance, he added.

Multinational service companies are under pressure from customers to set up offshore operations, to get the value that Indian outsourcers like Satyam can offer, Mynampati said. Although there is competition from the multinationals, this has been going on for three years or so, he said. “There is enough business going around,” Mynampati said.

-John Ribeiro, IDG News Service

For related news coverage, read Indian Outsourcer Satyam Looks to China.

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