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May 4, 2001
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Money > Business Headlines > Report May 4, 2001 |
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Satyam lowers billing rates to garner more clientsNetScribes/Abhijit Basu Even as the markets expect billing rates of large Indian software companies to come under pressure, Satyam Computer is said to have decided to lower its billing rates. The move is aimed at helping the company cope with shrinking orders in the wake of the US slowdown. By reducing its billing rates, the company plans to target smaller clients, thus increasing volumes and spreading its risks. "It comes as no surprise. Satyam will have to lower rates to garner more orders in the US and Europe. With manpower utilisation rates of around 50 per cent and a number of people on the bench, it has to lower rates to improve its manpower utilisation," said Manish Agrawal, software analyst at Pranav Securities. In the fourth quarter of FY2001 ended March 31, 2001, the company added just 229 personnel, compared to 1,093 in the third quarter. "This indicates that the company had anticipated this and, therefore, lowered its recruitments. Despite this, its manpower utilisation rates are low and billing rates are under pressure," said Agrawal. Analysts also see this move as a part of the company's efforts to bag more projects. Satyam is understood to have recently bagged two large orders from the Emirates Airlines and Bank of Doha. However, analysts point out that the billing rates for these projects would be much lower than that in the US or Europe. "Satyam has been aggressively looking at low-end and low-value contracts for some time now. It plans to make up for the US slowdown with volumes, which is an aggressive move on the part of the company. This move started during the third quarter of FY2001 and is expected to go on for some time now," said a senior software analyst at Span Capital Services. Meanwhile, the company plans to hike its rates for large clients. "The company claims to have finalised a 30 per cent increase in rates with General Electric effective from May 2001 once the present agreement comes to an end. It also expects a 10 per cent increase from another large client from this quarter," says a recent report by US-based global investment bank and equity research outfit Dresdner Kleinwort Wasserstein. The report also projects that billing rates of large software companies would come under pressure this fiscal. |
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