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Troubles of Satyam Could Benefit Rivals and 2 U.S. Companies
One company’s scandal is another’s opportunity.
The financial fraud at Satyam is rippling through the technology services industry, as customers scramble to line up other suppliers and rivals look to pick up business.
Already, competitors are angling for a share of Satyam’s nearly $2 billion in annual revenue. The big winners from the fallout are likely to be two American companies, Accenture and I.B.M., Rod Bourgeois, a technology services specialist at Sanford C. Bernstein & Company, said Thursday.
Accenture and I.B.M., Mr. Bourgeois said, have three advantages over other competitors. Each company already supplies most of the blue-chip corporate clients of Satyam. I.B.M. and Accenture have built up their Indian operations in recent years, so they offer Satyam customers the same skills at competitive prices. And they are not Indian companies.
The $50 billion-a-year offshore outsourcing business was growing at a 29 percent annual rate until the credit crisis hit last fall, Mr. Bourgeois said. But he now forecasts growth in 2009 to be about 10 percent.
The impact on other Indian outsourcing companies is unclear, but analysts say that, long term, the fraud could have wide implications. The scandal at Satyam — a company listed on the New York Stock Exchange and audited by an American accounting firm, PricewaterhouseCoopers — raises doubts about other Indian companies.
“This is a crisis of trust,” said Frances Karamouzis, an analyst at Gartner. “It’s not really Satyam at stake; it’s the India Inc. brand.”
Read the entire article here
The financial fraud at Satyam is rippling through the technology services industry, as customers scramble to line up other suppliers and rivals look to pick up business.
Already, competitors are angling for a share of Satyam’s nearly $2 billion in annual revenue. The big winners from the fallout are likely to be two American companies, Accenture and I.B.M., Rod Bourgeois, a technology services specialist at Sanford C. Bernstein & Company, said Thursday.
Accenture and I.B.M., Mr. Bourgeois said, have three advantages over other competitors. Each company already supplies most of the blue-chip corporate clients of Satyam. I.B.M. and Accenture have built up their Indian operations in recent years, so they offer Satyam customers the same skills at competitive prices. And they are not Indian companies.
The $50 billion-a-year offshore outsourcing business was growing at a 29 percent annual rate until the credit crisis hit last fall, Mr. Bourgeois said. But he now forecasts growth in 2009 to be about 10 percent.
The impact on other Indian outsourcing companies is unclear, but analysts say that, long term, the fraud could have wide implications. The scandal at Satyam — a company listed on the New York Stock Exchange and audited by an American accounting firm, PricewaterhouseCoopers — raises doubts about other Indian companies.
“This is a crisis of trust,” said Frances Karamouzis, an analyst at Gartner. “It’s not really Satyam at stake; it’s the India Inc. brand.”
Read the entire article here
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