Satyam struggling to retain business
27 January 2009
Outsourcing contracts worth anywhere between $350-$500 million are up for renewal by Satyam customers this year, making it critical for the company to ensure that none of these contracts go to a rival firm such as TCS, Wipro and Infosys.
Satyam's top executives Ram Mynampati, Virender Aggarwal and Keshab Panda are reported to be working overtime at retaining their international clients.
Satyam generates 97 per cent of its revenues from outside India. These executives have been meeting with customers in their regions to personally assure them of Satyam's ability to deliver despite its recent setbacks and its strong commitment to customers.
Satyam, which claims that its customer base includes 185 members of the Fortune 500, may get more than half of its $2 billion in annual revenue from the US, according to analysts.
State Farm Insurance Company, a Fortune 500 giant, had cancelled its long-standing contract with Satyam Computer Service Ltd earlier this month. It was the first company to do so though there have been talks of others like UK retail giant Tesco and Australian telecom firm Telstra relooking at their contract.
The value of the State Farm contract is unknown, though it could run to $50 million. It is also unclear what will happen to the 900 Satyam employees dedicated to the State Farm account, including the 400 working in the US on H1-B and L1 visas.
Gartner's advice customers of other Indian service providers
- Become more familiar with the organisational structure and governance of your providers, but continue your engagements with them, as the factors contributing to Satyam's difficulties are likely to prove unique.
- As a risk mitigation measure, consider asking for a certification of compliance to generally accepted accounting principles (GAAP) or their equivalent, certified by the CFO, CEO and the board of directors, and countersigned by the external auditors.
- If you are also a Satyam customer, as a contingency measure, consider assessing the ability of your other providers to take over projects currently run by Satyam, if necessary.