According to news reports in a leading business daily, Satyam Computer Services, has picked up 9% equity stake in a US firm, 'In Touch Technologies Ltd.' (ITTL). The latter develops software for telecom applications.
Since its inception in 1987, Satyam Computers has focussed on software development and IT services on mainframes (legacy system). Close to 60% of revenues come from mainframe-related jobs. Its strength in legacy systems enabled it to secure large Y2K-related contracts, which accounted for 28% of FY99 revenues.
Satyam's US$ 2.5 m investment in the US firm is in line with its strategy to target companies with engaged in providing state-of-the-art solutions to niche markets. By accessing ITTL's client database, Satyam will get a chance to break into the lucrative US telecom software market.
Satyam's investment in ITTL will mark the beginning of a series of investments in US and European markets, for which it has earmarked close to US$ 100 m. This will enable the company to gain a foothold in global markets. It is graduating from Y2K-related projects to product development. By making strategic investments in western markets, it plans to enhance its global database of clients, which will enable it to market its products more effectively. Moreover, having achieved a certain degree of expertise in the domestic banking, finance, insurance and telecom markets, it will find it easier to break into foreign markets.
Satyam's successful foray into products (Vision Compass), combined with the strong performance of its ISP arm (Satyam Infoway) and spurt in onsite revenues have prompted analysts to flag the stock as a 'BUY'.
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