Satyam bucks US downturn, more IT business to head offshore?

Stan Beer
Monday, 20 October 2008 10:10

IT Industry - Strategy

In perhaps a clear indication that off-shore outsourcers could be poised to do well in the current global economic downturn, Indian heavyweight Satyam has posted solid growth for its second quarter, which ended September 30.

The US is one of Satyam's key markets, so the company's second quarter year on year revenue growth of 28% to post US$652.2 million and net earnings growth of 29.8% to post US$132.3 million  - both figures calculated under US GAAP - were all the more impressive.

Downturns are times when businesses are looking to cut costs and Satyam, like Indian rivals TCS, Infosys and Wipro, is in the IT cost cutting business.

The fact that Satyam was able to grow so strongly in a quarter where the US experienced one of the worst shocks in its financial sector's history, may well be an indicator that more IT services could be leaving the US and other developed nations and heading to lower cost offshore markets

"The second quarter was challenging in many respects, as problems in the US financial industry affected other regions and sectors,” said Satyam Chairman and Founder B. Ramalinga Raju.

“Despite this background, a heightened focus on operational efficiency, a comprehensive services portfolio and an ability to provide true transformation have enabled Satyam to excel."

"In the second quarter, Satyam demonstrated its ability to succeed even in difficult economic environments, an indication that our strategies provide a comprehensive suite of end-to-end services in key industries and regions is effective," said Satyam Chief Financial Officer Srinivas Vadlamani.

"While we anticipate some near-term difficulty as we move ahead, we are confident that our approach will enable Satyam to continue to thrive long into the future."