US clients reaffirm confidence in Satyam, help IT outsourcer salvage reputation

Last week, Mahindra Satyam said it had received a three-year extension of its contract with New York-based conglomerate GE. Earlier this month, it also said that the US based human resource consulting and services company OC Tanner had renewed its contract.

Though the financial details of both the deals were not disclosed, yet, market watchers feel that they will inject substantial revenue into the cash-strapped Indian firm as both are considered as its "major clients."

Mahindra Satyam (formerly known as Satyam Computer Services) fell from grace and faced steep level of client attrition and erosion of customer confidence after its former founder and Chairman Ramalinga Raju admitted in January to having fudged its account books to the tune of at least $1.5 billion by falsifying assets and inflation profits.

The accounting scam, billed as the largest ever in India's corporate history, prompted the Indian government to initiate a multi-level probe, replace the suspect management board with hand-picked men and sell its controlling stake in an open auction where Tech Mahindra, the IT outsourcing arm of $6.7 billion Mahindra Group became the winning bidder in April.

Thereafter Satyam rebranded itself as Mahindra Satyam and actively campaigned to woo back its disillusioned clients.

Satyam, which had reportedly lost or was in the danger of losing valuable clients like Coca Cola Co., Telstra, Applied Materials, State Farm Automobile Insurance, Agilent Technologies, Lowe's Companies; Euronet Worlwide, Assurant, Visa Inc., Citigroup, Merrill Lynch, Selective Insurance Group Inc., SanDisk Corp., Novartis and Caterpillar, staged a spectacular comeback in July by bagging a 5-year-multi-million dollar contract from pharma giant and long-time client GlaxoSmithKline Plc (GSK) to provide SAP and other critical systems support to the latter's business worldwide and the latest deals have helped further strengthen its client portfolio.

"We recognize the support extended over the years by Satyam and their commitment to delivery excellence even during trying times," said Steve Morrison, head of GE's gobal development center.

Similarly, OC Tanner's Chief Information Officer, Volkmar Nitz said they were "pleased" to extend their partnership, which are "both strategic and long-term in nature."

"We are impressed by their (Satyam's) world-class talent, subject matter expertise and unwavering commitment to design and build our next generation IT assets," Nitz said.

While Satyam will provide back-end support to GE in the specialized areas of application development maintenance, business intelligence and engineering services, it will provide a range of application development services to expand OC Tanner's technology platform and extend its industry leadership position.

Expressing gratitude to the two firms, Satyam said the contracts were testimonies to the commitment its engineers demonstrated.

"We thank the leadership at GE, for reposing their confidence in us and reinforcing our resolve to excel in our deliverables to our esteemed partner for years to come. The contract symbolizes the value we have been able to add through our services to GE," said Satyam's global account executive Arvind Malhotra.

"We are thankful to the leadership team at OC Tanner for increasing our business by almost 100 percent in the last four months," said C.P. Gurnani, CEO, Mahindra Satyam.

"Impeccable on-time, on-budget delivery of high-quality code and strong account management were the hallmarks of Mahindra Satyam's OC Tanner development team, which has led to increased customer commitment and support," he added.

 Though Gurnani refused to disclose the financial details of the deal, yet, the fact that close to 130 employees would be working on it indicates that it is one of substantial value.

Shares of Mahindra Satyam closed 3.34 percent up at Rs.120.60 at the Bombay Stock Exchange on Friday.