The board of Mahindra Satyam is believed to have given its back-office unit in-principle approval to build platform-based BPO capabilities through acquisitions.
This marks a significant turnaround in the script of the former Satyam Computer Services which was on the verge of being consigned to the archives last year. Today, the strategy is clearly focused on making up for lost ground and time.
If it gets the ‘right fit’, Mahindra Satyam BPO, or the erstwhile Nipuna, may go for up to three acquisitions in the $50-100 million range, sources said.
Mr Vijay Rangineni, CEO of Mahindra Satyam BPO, told Business Line, “We are being choosy about how we want to establish the platform-based practice. The company is open to both organic and inorganic routes to establish a platform BPO practice which could be used to deliver services to customers using the cloud.”
If the IT outsourcer gets the right target, it may not wait for the company’s restated accounts to be made available, sources said.
BPOs generally use customers’ existing technology platforms to deliver process outsourcing services. However, in a platform-based BPO, both the technology platform and service is provided by the vendor.
In other words, the platform BPO is the bundling of IT, BPO and consulting which means client companies incur minimal upfront investment. It also allows them to deal with their vendor on a ‘pay-per-use’ basis.
In the last year or so, all the top six IT companies have been making significant strides in this direction even as Mahindra Satyam was reeling under the impact of Mr Ramalinga Raju’s accounting scam.
Mr Sudin Apte, Principal Analyst of research firm, Forrester, had articulated this issue in a recent report. “This preoccupation with survival issues coupled with limited cash on hand is preventing the firm from investing in next-gen IT services capabilities such as developing IP-based solutions, ramping up onshore and near-shore delivery centres, building platform-based managed services, and launching new SaaS or cloud-based offerings,” he had said.
“While Mahindra Satyam was fighting to survive for past year, its peers in the industry, especially top firms like Cognizant, HCL, Infosys, TCS, and Wipro were investing in building these new capabilities,” Mr Apte added.
Mahindra Satyam’s BPO was one of the biggest loss-making centres at the time and was dropping around Rs 4-5 crore every month, sources said. While its current financial health can only be known till the accounts restatement exercise is complete, Mr Rangineni says the profitability horizon ‘looks much more encouraging.’
Source:http://www.thehindubusinessline.com/2010/06/25/stories/2010062553100700.htm
