Satyam predicts revenue slowdown due to uncertain US market

Services provider Satyam aims to diversify business to protect against economic downturn in US

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By  Mark Sutton Published  April 22, 2008

Indian IT services giant Satyam is predicting a slowdown in revenue growth as the US economic situation worsens.

The company, which is the fourth largest software services outsourcer in India, reported annual and Q1 results yesterday, including the prediction that revenue growth for financial year 2009 would be between 23.9-25.9%, slower than the 30.7% growth shown in 2008.

Under Indian accounting regulations, the company posted annual net revenue after tax of Rs. 1,687.89 crore ($422.7m), up 20.2% on FY07.

The company also missed quarterly market estimates for profit, which rose 18.5% to Rs 466.85 crore ($116.9m) against forecasts of Rs 484 crore, although company chairman and founder B. Ramalinga Raju said that the company was positioning itself to minimize the impact of a US recession. Satyam made around 61% revenues from the US in the first quarter.

"Because of economic challenges in major markets, we are increasing our focus on ways the organization can sustain continued growth. Diversification, with regard to industry, region, and service is one way to maintain success. However, we will also establish deeper and more valuable partnerships with our customers in FY09. This approach enables new kinds of business transformation," Raju said.

Satyam will also increase wages by 12-14% for most of its staff in the coming year, which will also effect profit margins.

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