The Australian division of Indian IT outsourcer Satyam has slowed the rate at which it is hiring new staff and reported flat growth over the past three months.
Satyam's local chief
As recently as January the group, which has high-profile local customers including Qantas and the National Australia Bank, was talking up its sales volumes, reportedly adding 140 workers in the final quarter of 2007 and flagging plans for more.
But today Satyam's Australia and New Zealand managing director Deepak Nangia admitted the Indian giant had had a "flat quarter" of growth for the three months to 30 September, compared to the previous quarter, booking revenues of about $50 million and hiring 22 local workers in the period.
Satyam currently has about 1,800 workers allocated to its Australian division, with 1,000 based in-country and about 800 working from offshore centres. Despite the slower rate of hiring, Nangia said his company would continue to recruit and was definitely not looking to put a freeze on new jobs or let any staff go. "It might be slower than we had originally planned," he said.
Overall for the company's first half of the year it still pulled revenues up 5 per cent compared with the previous half. Nangia said the result was still strong given the local division had grown 15 per cent from the fourth quarter of 2007 to the first quarter of 2008, and lower IT budgets in the oil-prices-hit transport and logistics sector.
The news comes as the chaos in worldwide financial markets has cast a pallor of gloom over prospects for the Australian IT industry, despite looming major projects in the financial services and telecommunications industry that have the potential to soak up IT jobs.
"The reduced business demand for IT goods, exacerbated by a lower Australian dollar, will impact heavily on the revenue of the IT industry," wrote IDC research manager Jean-Marc Annonier in a statement last week.
[Hiring] might be slower than we had originally planned
Nangia said 16-17 per cent of Satyam Australia's business came from the transport and logistics sector, which had been hit hard by rising oil prices. However, he remained optimistic in general about the Australian IT market.
"So far we believe we're on track for what we had promised [to Satyam globally] for the end of the year," he said. "We're pleased with our Q2 results," he said
Nangia noted Satyam had added four local customers in the quarter. He pointed out all of Australia's major banks were "busy" upgrading their core banking platforms, or spending on IT to consolidate merger and acquisition activity.
"There's continued spend on technology by the financial services sector," the executive said. "The other sectors are picking up steam, cautiously. The operational efficiency engagements are picking up steam, whereas the projects or the transformation programs, they are beginning to slow down."
"Engagements might be spread over a longer period of time, is what we're sensing, rather than being canned."
Nangia said Satyam was primarily competing with large global firms such as EDS, IBM, Accenture and CSC on large IT outsourcing engagements, which made up about 70 per cent of its business, but saw smaller Australian rivals such as Oakton and ASG on niche projects involving technologies like analytics and business intelligence.