Satyam banks on 25% growth in ANZ

Partnership with Kiwi provider Optimation remains strong

Satyam Australia and New Zealand is banking on at least a 25% growth spurt to take the subsidiary's local revenue to about A$200 million (NZ$256 million) this year despite softer spending in both the Australian consumer goods and transport and logistics sectors.

The weakness should be offset by strong investment in the financial services industry where a raft of big bank information technology projects is providing succour for computing companies that might feel the squeeze elsewhere.

Satyam signed a partnership with New Zealand firm Optimation in 2006. CEO Neil Butler says that relationship remains strong. While it is not an exclusive arrangement, he says, Optimation provides most of Satyam's service in New Zealand.

Satyam Australia and New Zealand country manager Deepak Nangia provided the insight following the announcement of the Indian outsourcers global first-quarter results this month.

Worldwide, the business reported a nearly 41% surge in revenue to US$637.3 million (NZ$837 million) and a 36% rise in net income to US$126.6 million. Nangia says that locally, the company turned over A$50 million, about 8% of the parent group's total sales.

The revenue contribution from Australia and New Zealand is high compared to US multinational technology companies that typically draw a little more than 2% of their sales from the country.

It highlights the importance of Australia to Indian services players such as Satyam and its chief rivals Infosys, Tata Consultancy Services and Wipro, which have had strong presences here for a long time.

Growth in Australia would be likely to match growth globally in the remaining nine months of the company's current financial year, he says, and it would deliver revenue of more than A$200 million, up from A$160 million in the previous corresponding period.

Sectors that remained strong included financial services, which Nangia says is continuing to spend on computing, and communications despite continuing fallout from the credit crunch.

"From a technology perspective, we haven't seen a change to the original plans that the financial services industry had."

However, he says spending is slowing in the consumer goods sector as shoppers battle mortgage stress and rising fuel prices. The transport and logistics sector was also taking at least a pause in investment while it assessed the impact of the cost of oil on its operations.

Nangia says he expects that pause will not last much longer than three months and notes that the need to run more efficient trucking fleets and rail networks will create additional technology spending that will offset cuts to IT operating costs.

More broadly for Satyam, wage pressures in India and skills shortages in Australia, the US and Europe meant the company will be expanding the number of development centres it operates in countries outside of India, Nangia says.

Satyam now has four development centres in China and one each in Egypt, Hungary, Malaysia and Singapore.

The company also plans a 2000 employee campus in Geelong and Nangia says it is on track to break ground on the facility towards the end of this year or early in 2009.

— Australian Financial Review, additional reporting by Rob O'Neill

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