September 16, 2009, 8:01 AM — Satyam Computer Services has added 32 new clients since May, indicating that a turnaround in the scandal hit company has started, a company spokesman claimed on Wednesday.
Satyam now has about 430 clients, said Sridhar Maturi, a Satyam spokesman. However, the company will not reveal how much the new business is worth, though it said that most of the deals are of a duration of between three to five years. The new clients are from the U.S., the Asia Pacific region and Europe, Maturi said.
"We are well on the path to recovery, and though we are not at the same level as in January, we are getting there," Maturi said.
But adding new clients may not add up to much for Satyam's overall business, said Sudin Apte, senior analyst at Forrester Research. Most often the new clients start with contracts of about US$200,000 and scale up much later, he added. There is also a high churn rate in new clients, he added.
"I have seen a lot of energy from Satyam recently, but they are pitching for new accounts largely on low prices," Apte said.
Besides signing up new clients, Satyam is also receiving new business from existing clients who had cut off new business to the company during the crisis. Some clients that had dropped Satyam as a supplier during the crisis are also considering using Satyam again, Maturi said.
The Indian outsourcer was plunged into a crisis in January after its founder B. Ramalinga Raju said that the company's revenue and profits had been falsely reported for several years. A number of customers stopped doing business with the company, while some others cut down on giving new business to the company.
In a bid to revive the company, a board that was appointed by the Indian government in January decided to induct a strategic investor in the company through an auction.
Indian outsourcer Tech Mahindra, through an investment subsidiary Venturbay Consultants, was selected in April. It now holds a 43 percent equity stake in Satyam. The company has also adopted Mahindra Satyam as its go-to-market brand to reflect the new owners.
Starting next month, the company will pay performance-based components of their employees' salaries, which had been suspended in April. This variable pay, which is largely based on the performance of the company, was between 10 to 30 percent of an employee's overall salary.
One of the first decisions of the government-appointed board in January was to order a restatement of the company's accounts. The company has asked the government for an extension until next March for the completion of the restatement, which covers five years, Maturi said.
