US crisis makes Satyam look East

HYDERABAD:
The Economic Times

The economic crisis in the US has triggered city-based Satyam Computer Services to expand its presence in the Middle East.

With the Middle East market set to grow in terms of IT services spending, the company expects to clinch more deals small-sized ones. The derisking strategy could help the company cushion the impact of receding revenues from the US market, albeit marginally.

“Currently, the Middle East market contributes less than 5% of our revenues. But we expect this to grow significantly in the coming years and actively looking at deals there. As the petroleum revenues of this region are expected to spiral, many companies are allocating huge budgets IT and infrastructure management," said Satyam CFO V Srinivas.

According to him, enterprise resource planning (ERP) implementation is an area where the company sees a huge potential. "We will be able to leverage our expertise in the manufacturing segment and ERP to strengthen our presence in this area," he said.

North American markets contributed to over 60% of Satyam’s revenues in the first quarter of FY09. However , with the banking and financial sector crisis deepening in the US, Satyam will have to look at other geographies to ensure good volume growth.

“We are yet to receive clear signals from the US market especially in the banking and financial service. We need time to recover from the crisis as in the early 2000. Currently, in the US fewer projects are up for bidding. With top level changes in the management, most companies in the banking sector are either delaying or cancelling their IT projects”, said Srinivas.

Besides, Merrill Lynch buyout by Bank of America will also impact Satyam’s revenues as it was one of the company’s top clients. “Our Middle East business is growing and we see traction in banking and public services segments. We are also pursuing deals in oil and gas segments,’’ said Satyam Computer Services director and senior vice-president (Asia Pacific, Middle East and Africa) Virender Agarwal