Satyam Computer Services Ltd. has received an 18-month technology consulting contract worth about $5 million from U.S.-based EMC Corp., two people familiar with the matter said, indicating improving customer confidence in the Indian company emerging from the effects of a 2009 accounting fraud.
The recently signed deal is one of the first consulting contracts since the information-technology company’s founder and former Chairman B. Ramalinga Raju confessed in January 2009 to overstating profits and cash balances.
Several clients had left the company following the fraud. A government-appointed board sold a controlling stake in Satyam to Tech Mahindra Ltd. in April 2009 through an auction and the company is on a recovery path since.
The EMC contract requires Satyam to offer ways for the cloud-computing and security-services provider to integrate different services running on multiple devices on a single software platform, one of the people said recently.
The consulting contract may pave the way for a wider technology services deal in future, the person added.
Both people spoke on the condition of anonymity. Spokespeople at Satyam and EMC declined to comment.
India’s IT companies earn higher margins on technology consulting deals compared with usual outsourcing contracts which rely more on cost-cutting measures by clients. In certain cases, a consulting assignment allows an IT company to offer outsourcing services as one of the solutions to improve efficiency.
Since the 2009 developments, Satyam has received the highest number of big contracts, worth at least $50 million each, in the current quarter, a senior executive said on Monday.
The executive had also said that though decisions on giving large contracts were taking more time following the U.S. credit downgrade, it doesn’t foresee any impact on its business.
Source:http://online.wsj.com/article/SB10001424053111904787404576527891520715076.html?mod=googlenews_wsj
