Dubai: Mahindra Satyam, the successor of Indian IT company Satyam that shocked the industry with a massive accounting scandal in 2009, has left the worst behind and is close to finalising its restructuring, Manojeet Chowdhury, vice-president of the company's Middle East and Africa operations, told Gulf News in an interview at the firm's regional headquarters in Dubai.
"We are in a clean state, corporate transparency has been restored, the cash flow is stable and we are awaiting good results when the half-year report of our fiscal year 2010 is released next Monday," Chowdhury said.
He added that "two significant things have happened" after Mahindra took over scandal-ridden Satyam. "First of all the Mahindra Group invested $500 million [Dh1.83 billion] into Satyam and took a controlling stake of around 40 per cent." People in key positions in the management have been replaced, and the board has been restructured as well to establish a basis for corporate governance. "Now we can focus on growth again and focus on our markets," Chowdhury said.
Mahindra had to undertake a "forensic audit" together with auditing firm KPMG to examine all expenses, losses and frauds that happened. "They had to look at literally every expense form." The results of the fiscal year will include provisions for extraordinary expenses that might still occur as a result of the accounting scandal, Chowdhury said.
The next steps for Mahindra Satyam will be the integration of its African presence into the Middle East operations, with the headquarters for the entire region located in Dubai's Internet City, he added. Overall, the regional operations will have some 1,000 staff on site, of them 200 in the UAE, plus offshore offices at other locations, mostly in India.
Global merger
Another move will include the global merger of Mahindra Satyam with another entity of the Mahindra Group, Tech Mahindra, as recently announced by the group's chariman Vineet Nayyar. The companies complement each other, says Chowdhury, as the one focuses on IT and the other on telecom. Together, the merged firm will reach an overall turnover of $2 billion and employ 5,500 people. The process will start after the announcement of the half-year results and will take about seven to nine months. "There will be a major brand building process after the merger," Chowdhury said.
What's now on the radar for Mahindra Satyam is the focus on its largest business sector, Enterprise Resource Planning together with SAP and Oracle. Furthermore, the company looks to gain a stronger foothold in Business Intelligence, Cloud Computing, IT engineering and design for industries such as aviation or oil and gas, and — in a very specialised sector— IT for sport events. Mahindra has been the sole supplier for the IT system of the FIFA World Cup and is looking for more sport-related business. "We see growing interest in the UAE and the Middle East in this specific sector," Chowdhury said.
In the UAE, Mahindra Satyam is serving customers like Emirates NBD, First Gulf Bank, RAKbank and Etihad. In the entire Middle East, one of the biggest projects recently was an IT project with BMI Bank of Bahrain. Other projects included telecom operator Zain's Africa roll-out.
Chowdhury said that the IT business in the region is recovering "gradually" after the global financial meltdown, and projects that have been put on hold are restarting. "Some companies are more cautious, as in Dubai, where investments still take a longer time. Abu Dhabi is better at the moment, there is more spending from the government sectors. A lot of action is coming from Qatar, Kuwait and Oman."
On a regional scale, much of the business comes from medium-sized enterprises, Chowdhury said. "Big companies invest more in maintenance, medium firms more in innovation." Another focus is on Libya as well as some African tiger states such as Nigeria and Kenya.
However, Mahindra Satyam is currently not planning to invest in facilities in the region, after having established an outsourcing centre in Cairo.
Chowdhury also mentioned that many old customers who turned away from Satyam after the accounting scandal, have come back. "They see that our quality is very high. We also have added 56 new customers to our list." Globally, Mahindra Satyam's business originates by 60 per cent from America, 20 per cent from Europe, 15 per cent from Asia and 5 per cent from the Middle East and Africa.
The discussion with the US about the avoidance of IT outsourcing to India is still ongoing. President Barack Obama — in a move to protect the US-based IT industry — originally had asked US IT firms not to outsource business to other countries, particularly India. However, "the recession has changed the game," said Chowdury.
"First they [US] promoted outsourcing, then they wanted to prohibit it. It was a nationalistic promise. Business is very global today, and its all about cost efficiency. Even though there has been some impact on India's IT industry, outsourcing is continuing."
BPO behind bars
Satyam founder and former CEO Ramalinga Raju, who now spends his time in jail, might return into his old business very soon. The IT tycoon could deliver his expertise to India's first prison BPO (Business Process Outsourcing) centre, according to the Economic Times. The new IT unit of the state prison department has already started on November 1, the paper wrote..
Officials hope that the BPO project would benefit from Raju's experience and reach profitability. "We will use his ideas to improve the existing infrastructure and also seek his opinion on how best to utilise manpower available at our unit," C.N. Gopinatha Reddy, director-general of prisons, told the paper.
The prison department is in talks with some banking firms in Canada to grab its first international project in the banking sector. The BPO workers for this project will be required to examine scanned documents in various categories. The workers are all convicted prison inmates.
"Seems like a interesting concept," Mahindra Satyam's Middle East chief Manojeet Chowdhury commented.
