PUNE, INDIA: IT's no surprise when NASSCOM Chairman Ganesh Natrajan makes the anti-poaching statement to all the industry members, advising them to desist from making "unsolicited offers" to the customers of Satyam. For Satyam's mud might be a Manna for others. Here's how.

Bullish: Who and why

Through 2007 and 2008 itself, Satyam had inked deals with many customers as per News reports. These ranged from work around application development, maintenance, and support (ADMS) to business transformation core technology services.

The reported clients include existing big names like Nissan North America Inc (five-year application services deal), Caterpillar Inc. along with those clinched in the recent few deals like Applied Materials (a five-year deal), the high-key contract that Fédération Internationale de Football Association (FIFA) World Cup 2010 and 2014 games that includes IT services and solutions like event management and logistics.

Satyam had claimed 185 members of the Fortune 500 club as its clientele, and its US business alone could be more than half of its $2 billion in annual revenue. So is it a right time to leverage the lucrative customer base?

For analysts like Arvind Kher, Chief Strategy Officer, Value Notes, the answer is in affirmative but for contracts under execution specifically.

"Yes, there is clearly an opportunity, as is already being discussed in the community. Existing contracts are unlikely to be affected in the short term. However, for deals won by Satyam but for which execution has not yet commenced, customers could consider awarding them to the closest competitor."

All renewals are, as Kher adds, of course, fair game.

There could be indeed more lucre in the unfortunate Satyam fiasco from angles like diversification of orders, renewal of contracts, multisourcing deals, execution of existing order books, poaching of senior talent etc.

Ekta Aggarwal, Industry Analyst, ICT Practice, Frost & Sullivan, South Asia & Middle East avers that all their contracts are vulnerable to be poached.

"It is a difficult situation to predict and no revival is in sight. Satyam's image has been badly tarnished and at this point of time it is difficult to assess what will be the residual value of its employees, clients and contracts."

But the opportunities are not as easy as they seem.

It is too early a conjecture of competitive benefit for Dana E. Stiffler, Research Director, Global Business & Outsourcing Services, AMR Research, Inc, a specialist in industry research and advisory services, who feels that Satyam's customers, if at all possible, will want to continue working with Satyam. "As long as quality and service levels are being met, and as long as Satyam employees that are key to engagements stick around, the risk of switching service providers outweighs the risk of staying with Satyam."

The opportunity is not limited to customers alone. There are other dimensions to it like the over 50,000 skilled Satyam employee bank and other strategic possibilities open and easy now with an erstwhile top-notch IT player housing competence, technology and capabilities that are still untarred.

If we look at the ripe employee pool available, there are however many riders attached.

As Kher sees it, regarding employees, at least one major has already declared hands-off. "I expect others to be somewhat circumspect too, especially as none of them is facing a severe shortage right now anyway. Specifically, hiring will follow - not precede - the winning of new or transferred contracts. In case of transferred contracts (typically renewals) the new player will prefer to hire the incumbent delivery team. Considering the vast number of talented people who are expected to make themselves available in the job market, the prospective new employers can afford to be very selective, and obtain good talent at very reasonable prices. ”

Employees as it emerges would not be that portable or poachable. That's why it is no surprise when Infosys states its intention not to act on any CVs received from Satyam's employees.

The bull has horns

All said the bull, if it emerges for someone, would have to be taken by the horns since even if competitors were to divert Satyam's business their way, and get the relevant staff, they would not be able to execute such huge volumes without the physical infrastructure, possible only through an acquisition.

Talk of takeovers, the valuation is exceptionally attractive for the quality of customers and revenue potential. However inhibitors are that nobody has a grip on the real current liabilities, nor can anyone predict the potential litigation scenario, which is what would probably surprise Kher if a rush for acquisition happens now.

In the view of AMR Research's Stiffler hopefully Satyam's new leadership and strategic advisors will be able to affect a quick sell-off or private equity backing to stabilize the situation, before competitors descend like vultures to pick it apart. "The longer they wait, the more potential there is for value erosion."