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Satyam expects to boost work done at home

Satyam Computer Services Ltd, India's third-largest listed software services exporter, plans to improve profit margins by expanding the share of software work done in India for overseas customers -- compared to the proportion done at customer sites.

Satyam, headquartered in the southern city of Hyderabad, an emerging technology centre, earned about 58 per cent of its Rs 12.42 billion ($264 million) in revenue last year from the offshore business.

An economic downturn in the United States, the main market for India's software exports, has caused many companies to scale back spending. But that can work to the advantage of Indian software service providers as foreign companies seek to get the most out of their IT (information technology) budgets, company chairman Ramalinga Raju said on Friday.

"The customer's need to evaluate prospective returns on dollars spent had made him receptive to the cost arbitrage possible in offshore practice," Raju told shareholders at the company's annual meeting.

"This increased enthusiasm for offshore work presents a potential business opportunity for the company," he said.

Offshore work traditionally represents higher margins for Indian firms compared to "onsite" work, which is done at clients' sites.

Raju also said Satyam is shifting focus to Europe, Asia-Pacific and the Middle East markets while cutting its dependence on the United States.

"Newer markets, significantly those in Europe and Japan, represent new opportunities for IT companies with the right product and service offering," he said.

North America accounted for about 76 percent of Satyam's revenues in the past financial year to March, while Europe contributed seven per cent and Japan just four per cent.

Asia Pacific and Africa accounted for the remainder.

Satyam writes software for more than 500 global companies, including over 40 Fortune 500 firms.

It raised about $162 million last year through the sale of American Depositary Receipts, which now trade on the New York Stock Exchange.

In the past year to March, Satyam's net profit rose 134 per cent to Rs 3.16 billion, on sales that surged 82.9 per cent to Rs 12.42 billion.

Satyam's shares rose Rs 0.65 to Rs 170.45 on Friday.

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