Indian Outsourcer Satyam On The Rebound

March 2, 2011

According to an article in IDG News, Satyam, India’s infamous outsourcing giant is on the rebound from a corporate scandal. The company’s net profits and revenue are reportedly up from Q3 ending in December 2010.

Satyam Computer Services was once the fourth biggest outsourcer in India before the scandal took place. The company purportedly inflated its profits and revenues to misrepresent company share value to stockholders. The firm’s actions have been highlighted as an example of the corruption that is rampant among Indian companies and withholding of information from shareholders.

Although Satyam is not close to the profit results reported by its arch rivals TCS, Infosys or Wipro, the company says it is making slow progress. It is also on the brink of a merger with Tech Mahindra, which has a majority stake in the company.  However, minority shareholders have been reluctant to go ahead with the takeover until Satyam has cleared showed profits in the green.

India’s outsourcing market experienced a rebound and industry leaders like Wipro, Infosys and Tata Consultancy Services have shown strong profit figures for the quarter ending in December.

Looking at Satyam’s figures, the beleaguered outsourcer reported a growth of $281 million, which is an incline in approximately 3 percent from figures in the earlier quarter. Satyam’s net profit to more than $13.4 million from the previous quarter. The reported figures are in line with India’s accounting rules for companies, reported IDG.

Analysts say that Satyam appears to be on stable ground with approximately $1 billion revenue coming in consistently. Sudin Apte, CEO at Offshore Insights, a consultancy firm commented that there are no signs of clients leaving as was the case during its scandal.

However, experts say that the firm’s operating margins are still on the low side – not more than 4 percent, according to Apte.


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