Information technology major Satyam Computer Services has decided to reduce its dependence on the north American market, which accounts for 76.8 per cent of its revenues, and expand to other geographical areas, essentially Europe and Japan, company officials said at an analysts' meet on Friday.
The new initiative is expected to improve the terms and conditions of the company's contracts. According to officials, the new market penetration will improve margins, as the US market has matured to a great degree to the extent of being saturated.
Addressing analysts, officials said the company, which has been concentrating on the US market, "would initiate steps to correct this".
Company officials said Satyam is planning to expand its development centres in the UK, China and Tokyo. In Europe, Satyam is also planning to expand its presence in countries such as France and Germany.
The company may also increase manpower in these centres, depending on business requirements, the officials said. The company foresees a near-term pressure on margins.
Analysts tracking the company said the slowdown in the US was bound to bring about a dispersal of markets. There was increased marketing activity on garnering revenue from Europe, Japan, Asia Pacific and other smaller regions.
"Bigger Indian IT firms have already drawn up a strategy for increasing global reach even prior to the setting in of recession in major markets," they said.
At the analysts meet, Satyam officials further added that the company will evaluate the current macro trends being followed in the infotech sector. One such trend was built, operate, transfer.
However, officials clarified that the company would evaluate such BOT schemes which would make strategic sense to Satyam. The BOT scheme primarily entails setting up shop and operating it for a short-term and then transferring the entire venture including resources generated to the vendor.
But the company is not interested in a plain vanilla BOT scheme. Rather, Satyam would evaluate such schemes which also included professional services.
The prime focus of the company would be to concentrate on brand recognition and to increase the mindshare of Satyam among decision makers. To achieve this, Satyam would look beyond service opportunities and focus much more on offshore activities while moving up the value chain.
