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6/24/2011
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Satyam Post-Scandal Wins Saab Aerospace Contract

Mahindra Satyam deal to do aerospace engineering for Saab points out Indian outsourcers' drive to move beyond routine software development.

In the latest sign that India's tech sector has ambitions beyond everyday software maintenance and development work, Swedish aerospace giant Saab said it plans to open a technology center on the subcontinent where engineers will focus on new product development and critical systems design for military and civilian aircraft.

The Saab India Technology Center will be operated by outsourcer Mahindra Satyam, which also handles some systems design work for European aircraft manufacturer Airbus. Satyam will locate the tech center at one of its existing facilities in Hyderabad later this year.

Engineers at the 300-seat center will work on new product development and product sustenance engineering, which focuses on keeping existing systems up to date. "India presents a huge opportunity for Saab across their business areas in aeronautics, dynamics, electronic defense systems, and security and defense solutions," Saab officials said in a statement.

India's abundant supply of young IT and engineering talent could offer a solution for aerospace and other hi-tech companies faced with a graying workforce. The average age of aerospace engineers in the West is about 57, according to Satyam.

Beyond its significance as a sign that India's outsourcing market is diversifying, the deal represents the latest step in Satyam's revival following an accounting scandal that nearly brought the company down. An Indian court earlier this year temporarily froze Satyam's bank accounts following a claim by India's revenue department that the company owed more than $137 million in unpaid taxes.

Satyam's tax troubles are part of the fallout from a 2009 scandal that's been dubbed India's Enron. Former Satyam chairman Ramalinga Raju was arrested and jailed after admitting he falsified the company's cash position by as much as $1 billion through the creation of phony invoices and other scams.

In a deal to save the company, Satyam was bought out by Tech Mahindra for $550 million in 2009.

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