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Adith Charlie

Recently in Wiesbaden (Germany) and London, Nov 9 Satyam Computer Services expects to double revenues from Europe to $1 billion by 2010-11, according to a senior company official.

The country’s fourth largest software firm is confident of achieving these numbers as the economic slowdown is causing client companies in Europe to squeeze more out of their trimmed IT budgets by offshoring, Mr Peter Heij, Head-Continental Europe, told a group of visiting news persons from India.

(This correspondent’s trip was sponsored by Satyam)

“European companies, especially those in Continental Europe, are in a state of transition due to the credit crisis. Though customers have less money to spend, business activity will neither reduce nor come to a complete standstill. Hence, they are open to the idea of IT offshoring than ever before,” said Mr Heij.

By 2010-11, Europe would contribute around 30 per cent to the company’s overall revenues, according to a presentation from Satyam. For the fiscal ended March 2007, Satyam generated $480 million in revenues from Europe.

The company is hopeful of bagging two $100-million-plus contracts besides 30 contracts worth $10 million each by 2010-11 from Europe, said Mr Heij.

Traditionally, European countries — barring those in the UK and Ireland — have been shy to the concept of sending IT jobs overseas largely because of cultural issues. Also, there are stringent labour laws in these countries that secure employee rights. Moreover, every country in the continent is culturally different and follows different practices of doing business.

Hence, Satyam has articulated that 25 per cent of its workforce in each country will comprise natives. Another strategy in this geography is to start with small engagements and scale up as the relationship matures.

In Germany, for instance, only 20 per cent an IT engagement could be potentially offshored to start with, according to some analysts.

Dr Keshab Panda, Head-Europe Operations, said that globally Satyam has identified 23 customers who could give the company a yearly billing of more than $100 million. “Eight of them are in Europe,” he said.

England and Ireland contribute around 52 per cent of the company’s revenues from Europe. “We expect the contribution of Continental Europe (as a percentage of European revenues) to increase to 60 per cent from 48 per cent now in the next two years,” said Dr Panda.

Having said that, it is not going to be all hunky-dory for Indian companies (in Europe), at least in the short term.

“Companies that have been impacted, especially those in the financial services space, will take about 6-9 months to recover,” said Mr Biju Potty, Head-Financial Services, Continental Europe.

Currently, Satyam services more than 150 clients in Europe.

More Stories on : Outlook | Software | Satyam Computer Services Ltd

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