Indian IT services vendor Satyam Computer Services has reported strong results for its first fiscal quarter and raised its full-year forecast.
In the three months ended September 30, Satyam’s net profit rose 6.8% to IRP 378 crore ($95.4m) on sales that rose 26.8% to IRP 1,830 crore ($462m) on an Indian GAAP basis. The numbers are more impressive on a US GAAP basis, with net profit up 23% and sales up 40%.
The company also raised its sales growth forecast for its current fiscal year to between 41.5%, to 42% on a US GAAP basis. Ram Mynampati, board member and president of Satyam’s commercial and healthcare units, told Computer Business Review that despite growing concerns about the health of the global economy, the company has not seen any signs of major budget cuts among its clients.
We’ve not seen any significant pull-back of any kind, he said. Customers are wrestling with macro-economic factors and we’ll get a clearer picture of what 2008 and 2009 is going to look like in November and December. But clients are putting a greater focus on offshore, and even if budgets remain flat, we expect a larger share to be spent with offshore providers.
Satyam also revealed that it had won a 10-year deal to support Fujitsu Services on the $1bn contract that Fujitsu won with Reuters in August. Satyam did not disclose the value of its portion of the work, but Mynampati said it would provide a mixture of remote infrastructure management and applications services.
Fujitsu will manage the relationship with Satyam on behalf of Reuters. Mynampati said: Fujitsu retains contractual responsibility. We normally like to contract directly with the client but it is a substantial award… its one of our largest ever wins in Europe. Satyam will support Reuters from offshore delivery centers in Hyderabad and Chennai.
In order to boost its infrastructure management capabilities, Satyam has made a rare acquisition, agreeing a deal to pay up to $5.5m in cash for UK-based Nitor Global Solutions. The target company provides infrastructure consulting services with a focus on Microsoft software. It has 30 employees and made revenue of $3m in the year ended September 2007.
The deal is a further example of how India’s larger services vendors are getting more aggressive in their M&A activity.
High staff attrition has historically been Satyam’s weak spot in recent quarters, but the company lowered its churn rate to 14.9% on a trailing 12-month basis from 15.7% in the previous quarter.