Business - India;Q&A -Chairman Satyam Computers

HYDERABAD : B Ramalinga Raju, founder and chairman of Satyam Computer Services, finds the business environment challenging due to the global financial meltdown. But he’s not losing hope. In an interview with ET, Mr Raju said the company can leverage on its de-risking strategy to tackle the crisis. The plan is to focus more on the Asia Pacific market and look homeward to garner business. Excerpts:

What is your assessment of the business environment? How do you plan to tackle the slowdown?

Today’s situation is somewhat similar to 2000-01. But this time round, the impact is much deeper and extensive. Everyone is waiting for the economy to bounce back and if there is a quick turnaround that would be wonderful. We are taking cautious steps as we want to convert this stumbling block into a business opportunity. We had done the same in 2001 when our revenues were around $150 million and since then, we have grown 10-fold.

We follow a highly de-risked business model. Our exposure in the BFSI segment is comparatively lower than that of our peers. The US now accounts for about 62% of our revenue compared to over 80% some years ago. We offer our clients better value for money when the global business climate is under pressure. In this uncertain environment, we see transformational opportunities that can help clients to be more competitive and integrate faster during consolidation.

Is there pressure on pricing front? How strong is your deal pipeline?

We expect pricing to stablise this fiscal. Our onsite and offshore billing rates have gone down a bit mainly due to cross-currency fluctuations. At the dollar level, we have reduced our revenue guidance from 26% to 21%. About 3% of this is due to cross-currency movement and 2% is based on a reduction in volumes. We are pursuing about 20 large deals that are over $50 million in size. We are also focusing on Indian market. This market is maturing with deal sizes getting bigger across various sectors.

There are reports of Enterprise Resource Planning (ERP) licences slowing down. Will it impact your revenues in the coming quarters?

We are not unduly concerned over ERP-related activity. We have been able to build critical size and strength in this area. We have also developed special competency to address transformational opportunities. The ERP segment along with consulting accounts for about 45% of our revenues. However, it is premature to comment on the medium and long-term impact.

Are you looking at acquiring new companies? Do you want to raise promoter holding through a share-buy back?

We keep our options open. We look at targets that can add value and considerable synergies to our existing business. We continue to scan across geographies, technologies and domains for the right fit. We have already spent over $240 million for acquisitions in the past. We are also evaluating options like share-buy back to boost investor confidence, but no view has been taken yet.

Will you honour offers made to fresh recruits, given that you have scaled down your guidance on hiring to trim costs?

We decided to hire 8,000-10,000 this fiscal against the earlier guidance of 14,000-15,000. We will honour all our offers made. Our hiring will be commensurate with our business needs.

What are the other cost-cutting measures?

We have taken efforts to improve our productivity and enhance operational efficiency. We need to have people with lesser work experience doing high-end work. We have to develop much stronger internal technology processes and adopt judicious competency building. We need to have offerings that can create greater impact.