'The Satyam spending freeze is over'

UK customers are ending their spending freeze with Satyam, the outsourcer has claimed.

Satyam UK and Ireland head Som Sarma told silicon.com that the company's existing UK customers initially put new spending with the company on hold following revelations in January that its revenues had been inflated.

"Our existing portfolio of [UK and Ireland] customers decided 'Let's put Satyam in parenthesis for the time being', 'Let's wait and see how things pan out'," he said.

In the US however, some customers chose instead to walk away from the company, prompted by what Sarma described as the "double whammy" of an IT spending slowdown caused by the recession, coupled with the revelations of financial irregularities.

"A combination of market forces and what took place at Satyam has put us back about a year in terms of revenue at the top line. We have lost about six to nine months of quarterly growth rates," he said.

But Sarma said that UK and Ireland customer attitudes are now softening in the light of Indian telecoms company Tech Mahindra winning the first stage of an auction of a majority stake in the company.

Satyam has signed $2.5m worth of deals with its existing UK customers in the first quarter of the 2009 financial year, according to Sarma.

"Now many customers have taken out all the stops, in the last four to five weeks we have experienced significant positive energy from customers in new business," he said.

Sarma likened the company to a bruised prize-fighter: "By December we will come out with a tight belt around our waist ready to fight again," he said.

Phil Morris, chief operating officer for Europe and Asia at outsourcing advisors EquaTerra, told silicon.com that the fallout from January's revelations has largely dissolved.

"The furore has blown over. Customers had been waiting to see what would happen to Satyam but people believe that Satyam are stable again," he said.

However, while existing customers may be thawing towards the outsourcer, new business is harder to come by: the company has taken on five new clients worldwide since April.

According to Sarma, the entire outsourcing sector is struggling to land deals with new clients in the current depressed financial climate.

"The business we have signed is in line with our competitors," he said.