The rebirth of Mahindra Satyam

Zafar Anjum | April 20, 2012
Mahindra Satyam CEO C.P. Gurnani and Hari T., the company’s chief people’s officer and chief marketing officer, explain the future course of Mahindra Satyam after being merged with Tech Mahindra.

"To see a company grow from 5000 (people) to 75,000 (people) in about seven years is an exciting, energising, exhilarating and entertaining journey," said Mahindra Satyam CEO C.P. Gurnani on his experience of leading the beleaguered IT services company after it was acquired by Tech Mahindra in 2009.

Gurnani was talking to members of the press in Singapore yesterday (19 April).

Satyam was plunged into a crisis in January, 2009 after its founder, B. Ramalinga Raju, admitted that the company's profits had been overstated for several years. Consequently, it lost a number of clients, and had to settle litigation and fraud charges including from the U.S. Securities and Exchange Commission.

Gurnani and Hari T., Mahindra Satyam's chief people's officer and chief marketing officer, were in the country to take part in a meet-the-customers and analysts briefing event, Futurescapes 2012.

"The reason I use all of these words is, in terms of the way we build the structure of this company, the style of this company, the style is always built around informality," he added. "To keep that informality and style at 75,000 people, I think is one of our biggest achievements."

The company has been on the mend for the last several quarters. In the quarter ended 31 December last year, it reported that revenue grew 34 percent year-on-year to US$315 million, while net profit was up 424 percent. This had impressed the market.

In March this year, the company announced that it is being merged with Tech Mahindra, a key investor in the company after the crisis.

"Yes, we have done a turnaround of Satyam," he said. "In those three years, we took one battle at a time, sometimes it was legal, sometimes it was finance, sometimes it was taxation, sometimes it was business challenges, but one thing we made sure that the kernel never gets disturbed. The kernel of this company was always technology and customers and this kernel did not have any other products but employees, our people. And we stayed with that focus, and I think that has worked very well because ultimately in our business the differentiator is people. If they are engaged, and if they are aligned to a common goal, things happen."

"I'm not trying to say it was not tough," he recalls the three-year journey of Satyam's resurgence. "The best part of this journey now is we think that it is the rebirth of a new company. We don't feel that two old companies have got together, though one company was 43,000 people, other was 32,000 people. But we still believe that it is a start up and we still believe that it will be able to create a new identity (for itself) in the market and the new identity will be built around (that fact that it is) one of the few companies in the world that is network centric, mobility centric, BI and analytics centric."

Merger of the two companies

Hari T. shared with the media that even though it is only now that the merger of the two companies has been announced (awaiting government approval), the actual integration has been going on for sometime now.

"While we have announced the merger now, we have (had) three years of working together on a daily basis," he said. "The external world did not see us as two different companies but saw us as one company." More importantly, internally, it might have taken the Satyam employees around one year to get integrated with Tech Mahindra, but that has finally happened, he added.

According to Hari, two important things have happened in this regard. "One, we have created task forces with members from both organisations and which look at how to improvise and take operational issues to the next level," he said. "Second, we have not looked for people (from outside) who have done it all. What we did was we looked for people within the company who have that energy and the fire to do it. So, we actually have been able to get the youngsters to take on all the critical leadership roles. Out of the top 60 positions of people today, there are only five who have come from outside."

Acquisitions are like Indian marriages

On the question of acquisitions in Europe (where the market is soft at the moment due to the Euro zone crisis), Gurnani said that Mahindra Satyam is looking at opportunities on the continent. But there is nothing where I could say that things have worked out, he said.

"Acquisitions are like Indian marriages," he quipped. "Takes a long time. If it clicks, then it clicks and things happen overnight."

In February this year, Mahindra Satyam announced setting up of a US$50 million joint investment fund in association with SBI Holdings, the Japanese venture capital firm. "The fund created with Softbank in Japan is more for venture funding," said Gurnani. "We are looking at late start ups and at any company which has reference-worthy customers, and a technology that we can leverage. It is all word of mouth right now but the deal flow is not a challenge. There is sufficient deal flow."

Future is mobile

Indicating the future course of Mahindra Satyam, Gurnani said that the focus will be on mobility which will be at the core of all verticals and industries. "There will be 34 billion conected devices over the next five to seven years," he said. "We in Mahindras, for example, are working on connected cars. End of the day, these are cars which also have SIM cards like regular display devices. The assumption is that those cars will be able to take over a lot of e-commerce functions."

Gurnani expressed great hope in Asia Pacific as a growth market for his company. "US is doing well," he said. "Europe will take time to get back the swagger... Asia will continue to do well.... Asia Pacific will be a strong player and we will have a fair share in this."

Mahindra Satyam will invest S$300 million (US$240 million) over three years in research and development and the majority of the investments will flow into the Asia Pacific region, he said.