Outsourcer Satyam reveals European plans

The Indian outsourcer aims to build higher-value consultancy business

Satyam Computer Services is the latest Indian IT service provider to unveil ambitious expansion plans to offer high-value business consultancy services and protect itself against the expected erosion of India's advantages as a low-cost location for offshore outsourcing.

Speaking at the company's headquarters in Hyderabad, India, senior vice-president of corporate strategy Shailesh Shah said the company wants to build four new development centres in India, another in China, and may add to its presence in Hungary by establishing new centres in Eastern Europe. It may also add new centres South Africa, and expects to open a new office in London this summer to serve banking customers.

"With this [global] footprint we are protecting ourselves against the cost problems that could affect India seven years hence as the industry matures and rival sites emerge," added Shah. "If India becomes cost-agnostic to the rest of the world, we will be in the position to capitalise in other locations like China."

Acquisitions are also on the agenda, according to Satyam's head of Europe, Keshab Panda, who said the company was looking for small IT services firms with up to 200 staff that can add presence in certain regions or expertise around specific industries.

Panda said the ability to serve customers on-site or from nearshore locations, or India would allow firms such as Satyam to offer higher-value business consultancy and systems integration services as well as simple application maintenance. Currently, half of Satyam's business comes from application development and maintenance and its more sophisticated Enterprise Business Solutions arm accounts for 39 percent. It said this sector is the fastest growing part of its business.

Traditionally, UK firms have been reluctant to trust Indian outsourcers to handle complex business trnasformation and IT integration projects, citing the difficulties of frequent travel to India required by such projects and a lack of cultural and industry-specific understanding.

However, Satyam chairman B Ramalinga Raju insisted this view is increasingly outdated. He argued that investment in Satyam's own Business School to develop consultancy skills and a shift in recruitment policy to attract more experienced international executives with specific industry skills make the company a viable alternative to established systems integrators such as Accenture and IBM Global Services.