Tech Mahindra, M Satyam - a force to reckon with!

MUMBAI, INDIA: As the much talked about and closely watched merger between Tech Mahindra and Mahindra Saytam comes into effect from this fiscal 2012-13, the so-called “marriage made in heaven” is likely to change the dynamics of Indian IT sector. 

Satyam Mahindra's strength and expertise lies in IT services and enterprise solutions, while Tech Mahindra brings a strong experience and competency in the telecom sector. With both firms complimenting each other, post merger this joint entity will have a significant mileage in the enterprise business and telecom domain.   

Tech Mahindra and Mahindra Satyam's merger - ''marriage made in heaven''

''The merger of the two companies brings in immense strategic advantage to both. The capabilities and competencies brought together are highly synergetic and will thereby enhance the value to the customers,''' says Nishchal Khorana, Frost & Sullivan's head — Consulting, ICT Practice - South Asia and Middle East.

“A strong presence in enterprise business solutions along with the domain expertise in telecom offers a unique positioning to gain traction in the emerging opportunities of cloud computing and mobility,” Khorana adds. 

For instance, Satyam had started enterprise practice back in 1996, later on added BI and Dataware Housing practice in 2000. However, following the scam in 2009, Satyam's business saw some erosion in terms of customers and people but with Mahindra Group taking in-charge of the beleaguered firm, it managed to protect its created assets and architects.

Enterprise solution business — a key for Mahindra Satyam's revenue

“We are a challenging player in the market and we continue to see growth in the enterprise space. Our  enterprise business contributes close to 44 per cent of the revenue which also include the revenues from extended enterprise offerings such as content management, shared corporate services,” says Sriram Papani, Mahindra Satyam's senior vice president. 

Tech Mahindra has around 120-130 customers, which are largely serviced by core telecom solutions. However these customers also need enterprise solutions such as ERP, BI and others that are either provided internally or by some other vendors.

“We see a great opportunity to explore this channel and start providing enterprise offerings also to these existing customers as we have deep relationships with Tech Mahindra. So that's a big growth  opportunity for non-linear growth.”

“In last 12-18 months, we have put in some specific solutions and already are seeing some great success in terms of penetrating into Tech Mahindra's customer base,” Papani explains.

Mahindra Satyam has been servicing some 40 odd Tech Mahindra's customers since 2009, of which it won 20 during last 15 months' period. Most are global customers spread across geographies — Europe, UK, Middle East, Africa, Australia, North America and few are Indian.

Going forward, what strategies will Mahindra Satyam adopt in the post merger scenario?

“Firstly, how can we explore or leverage Tech Mahindra's channel strength and convert into revenue stream. Our second strategy is to go back to our old existing customers to expand our valid share, expand our strength and mining those accounts,” Papani points out.   

Further, “Given the current economic conditions, it does not give you a great opportunity in terms of mining; however, we are able to see, at least build traction and prepare the ground. So eventually when IT spending starts going up, I think we will be ready in terms of establishing confidence in wining those accounts,” Papani adds.

Mahindra Satyam's map to re-growth with Tech Mahindra under the merger

Mahindra Satyam has around 300 customers, who can be offered telecom solutions such as enterprise mobility and cloud services. This is where Tech Mahindra's strength and competency in telecom domain can be leveraged by Mahindra Satyam's customers.    

However, stressing on the enterprise business solutions' significance, Papani informs that Mahindra's Satyam added 62 new logos during FY12, large proportion of them are on  the enterprise business. “Of the large number of new logos the company won,  if we are able convert even 20 per cent of logos into accounts, it gives a huge opportunity for us,” Papani says. 

For Mahindra Satyam manufacturing, technology infrastructure, media and BFSI are core business verticals, while telecom remains key vertical for Tech Mahindra. But post the merger, telecom will become the top focussed sector followed by manufacturing, BFSI, retail and healthcare.  

Mahindra Satyam and Tech Mahindra to be a giant tech firm

The merger will create 75,000 plus workforce, over 350 active clients and approximate revenues of $2.4 billion via new offshore services. The management expects a balanced revenue with a diversified global footprint and contributions -- 42 per cent share from Americas, 35 per cent from Europe and 23 per cent from the Emerging markets.

According to Papani, company was successful in bringing back 20 old customers during the past four quarters, who had moved out after the scam surfaced.

“Also employees' confidence is very positive and good now after the merger. There are questions but I think once those questions are answered everything will be good. We will be hiring more people with different competency and capabilities to drive a balance growth. And we are running internally a  campaign 'the power of one' to boost the morale of staff and motivate them,” Papani concludes.