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Posted by Christopher Andrews on September 3, 2009
I had an interesting briefing with L. Ravichandran, the Executive Vice President and COO of Tech Mahindra this week. This was quite a nice briefing to have from the company, given the dramatic changes that have taken place over the last year. In January, Forrester analyst Sudin Apte and I wrote about the drastic consequences of the accounting fraud at Satyam (“What the Events at Satyam Mean For Service Providers”). Sudin has continued to write about the subject with great research that would interest virtually anyone in the IT services industry (clients and tech professionals) on Forrester.com.
Mr. Ravichandran stressed a few key points to me:
1) They remain committed to their telcom heritage. Mr. Ravichandran noted that they have some exciting new opportunities that build on the company’s traditional strengths in the telecom market
2) They are focusing on slowing the rate of customer attrition from Satyam. They stress that this is an ongoing process, and things are certainly looking more positive for them than they were earlier this year.
3) The acquisition will remain a key focus this year. A year that is marked by a global recession, a slowing IT services marketplace is a difficult year to make a big acquisition. But if the company feels prepared for this challenge and believes that if it can manage the changes effectively, there is substantial upside.
4) They see opportunity. If companies were in a multi-sourcing arrangement the last few years, and shifted away from Satyam after the collapse, there is good reason to believe that Tech Mahindra has some opportunities for re-gaining many of these customers as things stabilize. Particularly if the company can retain the best Satyam employees – those with strong business relationships – they will be in a position to use these capabilities as a platform for rapid recovery.
So the question is, do we buy it? Many have criticized the acquisition of Satyam as too big, too complex (due to the fraud issues) and during too difficult of a year to be successful. I tend to see the long-term outlook more positively. The events at Satyam are slowly receding into the past, stability is returning to markets, and the company should be able to win back some of the sourcing professionals that (rightly or wrongly) were in a state of panic earlier this year. Much will depend on how effective the execution is this year and its ability to slow attrition. What do you see for the company in 3-5 years?
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