Satyam plans to hire 3,500

CIRCUIT EC / Hyderabad

SATYAM, the NYSE-listed IT services company, is looking for strategic acquisitions in core areas like technology, consulting, geography and domain competency. As part of its expansion plans, the company is ramping up its headcount by 3,500-4,000 people this fiscal. To accommodate new recruits, it has also decided to invest about Rs 150 crore for creating infrastructure facilities and other technology support. Satyam added about 30 customers during Q4, including eight from the Fortune 500 list. The total number of customers added during the year was 108, including 20 Fortune 500 customers. The company recruited 1,695 associates, including 1,145 freshers during the fourth quarter.

The company is exploring the inorganic growth model and has appointed consultants to look into the acquisition process. “This is the right time for acquisitions, and we are evaluating various proposals. We have paid off our debts and the company is almost debt-free now. We have enough funds for completing a good acquisition,” said B Ramalinga Raju, chairman, Satyam.

200 percent dividend

The company registered a growth of 20.85 percent in profit for the year ended March 2004 as the profit increased to Rs 555.79 crore from Rs 459.88 crore in the previous fiscal. During the fourth quarter, profit recorded an increase of 21.63 percent at Rs 140.84 crore against Rs 115.79 crore last year. During the just-concluded fiscal, total income went up by 27.87 percent to Rs 2,623.27 crore from Rs 2,051.51 crore in the previous year. The board of directors has recommended a final dividend of 140 percent (Rs 2.80 per share). With this, the total dividend stands at 200 percent (including the 60 percent interim dividend) as against 150 percent last year. The EPS (earnings per share) of the company during Q4 came down to Rs 4.46 from Rs 4.63 in Q3. This is because of the strong appreciation of the rupee.

Says Raju, “The rupee appreciation continues to be a major uncertain variable for the sector right now. The advantage of a de-risked and diversified portfolio of verticals, services and geographies played out very well during the year and was the main factor in our continued sequential growth. In Q4, telecom and BFS contributed substantially to growth. Performance in telecom has been particularly heartening with traction in both the technology infrastructure and service provider segments on the back of improved domain competency.”

Satyam has announced a guidance of 28-30 percent growth in income from software services in the US in dollar terms for fiscal 2005. This would be a revenue of Rs 3,097 crore to Rs 3,146 crore, and the EPS for the fiscal is expected to be in the range of Rs 20.28-20.62. The forecast for the revenues in Q1 of this fiscal indicates a growth of 4.5-5 percent, and is expected to be in the range of Rs 728 crore-732 crore. The EPS for the quarter is expected to be in the range of Rs 4.76-Rs 4.78.

Focus on onsite

While outsourcing has become a buzzword in the Indian IT industry, Satyam is relying on onsite consultancy. Of the total export revenues of Rs 2,472.01 crore, 57.3 percent comes from onsite services (53.11 percent in 2002-03) and the remaining 42.7 percent from offshore business (46.89 percent). “We are working on enhancing offshore revenues, but at this point we don’t have any time-frame fixed for this,” Raju explained. The break-up of revenue figures show that income from North America came down to 73.34 percent in 2003-04 from 76.89 percent in 2002-03; revenue from Japan also dropped to 1.97 percent from 2.42 percent during the same period. Income from Europe showed an increase—13.71 percent from 12.41 percent, while revenues from the rest of the world went up to 10.98 percent from 8.28 percent. The banking and finance segment contributed about 22.33 percent of total revenue as against 18.45 percent in the corresponding year.

Nipuna

Nipuna, the BPO subsidiary of Satyam, recorded revenues of $2.38 million during the 2003-04 fiscal. With the customer base increasing (13 now), it expects revenues to increase to $12 million in the 2004-05 fiscal.