Indian Outsourcers Feeling Impact Of SARS And War - InformationWeek

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Indian Outsourcers Feeling Impact Of SARS And War

Satyam and Infosys say their quarterly earnings are less satisfying because of U.S. execs' reaction to global events.

With the offer of cheap labor and quality work, IT services companies in India have enjoyed fast growth in recent years. Now those companies are starting to feel the impact of a lackluster U.S. economy, a global health crisis, and geopolitical unrest.

Satyam Computer Services Ltd. last week reported that net income for its fiscal year ended March 31 tripled to $79.8 million. But revenue grew just 10.8%, to $459.2 million, compared with growth between 2001 and 2002 of 34%, according to its income statement prepared using U.S. accounting rules. Besides cutbacks in IT spending, U.S. customers have canceled visits because the SARS virus--even though India isn't a SARS hot spot--and the Iraq war. Satyam execs say the disease, at least, could further hurt business.

Still, the company says the number of customers spending more than $1 million jumped from 58 to 66 in its fourth quarter, and those spending more than $5 million increased from 16 to 20, which indicates broader and more mature customer relationships.

"What is more gratifying is the fact that during the year, we've emerged as a full-service provider, including competing and winning against large global companies," chairman B. Ramalinga Raju says.

Another Indian company, Infosys Technologies Ltd., also cited canceled visits because of SARS and the war. Hard to see the hurt on revenue, though. It grew 55% for the quarter and 38% for its year ended March 31, to $753.8 million.

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