Monday, Feb 07, 2011
(Adds stock price)
By Kenan Machado
Of DOW JONES NEWSWIRES
MUMBAI (Dow Jones)--India's Satyam Computer Services Ltd. (500376.BY) has received a technology outsourcing contract worth as much as $15 million from a government agency in Qatar as part of the middle eastern country's preparations for the world cup soccer games in 2022, people familiar with the matter said.
While the contract value from ASPIRE is small, it is still a vote of confidence for the Indian software services company which is recovering from one of India's biggest corporate scandals. In January 2009, Satyam plunged into turmoil after its founder and then chairman B. Ramalinga Raju confessed to overstating the company's profits for years using a fictitious cash balance of more than $1 billion. In the fallout of the scandal of 2009, many of Satyam's clients departed, leaving the Hyderabad-based company struggling to generate revenue. Satyam's client base dropped to 350 at the end of last fiscal year which ended March 31, from 500 a year earlier.
"Satyam received a contract to operate overseas development (software) centers and other technology services," one of the people told Dow Jones Newswires.
ASPIRE has been tasked with preparations of the FIFA World Cup in 2022. The contract requires Satyam to operate at least two software development centers in India and involves setting up a data recovery center, the first person said. The technology work is being done in phases and Satyam has been awarded the first phase, said this person.
Hassan Mubarak Esbaiss, a spokesperson for ASPIRE, declined to comment.
Satyam's shares touched their intraday high of INR61.40 on the news, but pared its gains to close down 0.4% at INR60.25 on the Bombay Stock Exchange. The benchmark Sensex ended 0.2% higher.
Once India's fourth-largest software exporter by sales, Satyam hadn't been able to take advantage of the strong rebound in demand for outsourcing services which its rivals have been able to cash in on because of the scandal that tarnished its reputation. Late last year however, the Hyderabad-based company became eligible to bid for several deals that required the firm to declare financial details after it reported quarterly results last November for the first time since reporting July-September 2008 earnings.
For the quarter ended Sept. 30, Satyam's consolidated net profit plunged 76% compared with the April-June quarter to INR233 million (US$5.1 million) on revenue of INR12.42 billion.
With a skilled, English-speaking work force, India remains one of the preferred technology outsourcing destinations for clients in developed markets still recovering from the economic slowdown. Research firm Gartner Inc. recently raised its expectations of global spending on information technology to $3.6 trillion in 2011, up 5.1% from 2010 from 3.5% growth it forecast earlier.
ASPIRE, once a Satyam client, had moved away from the company after news of the 2009 scandal broke out, the second person said.
-By Kenan Machado, Dow Jones Newswires; +91 22 6145 6107; kenan.machado@dowjones.com
(END) Dow Jones Newswires
07-02-11 1046GMT
