Four big clients likely to desert Satyam

Troubles keep mounting for Satyam Computer Services. Four of its large clients, Citigroup, Merrill Lynch, Novartis and GlaxoSmithKline(GSK), are in talks to move their business from the Hyderabad-based company to other Indian IT firms. These clients contribute over $200 million to Satyam’s topline.

In response to queries about the contribution of Citi, Merrill, Novartis, and GSK’s contracts to Satyam’s revenues and the impact on the company if they were to move out, a Satyam spokesperson said: “We don’t comment on individual contracts. However, we believe that none of these are material.”

It is learnt that Citigroup, the second-largest client of Satyam contributing to over $60 million in revenue, is in the process of moving away part of its contract to other IT vendors like Wipro and TCS. A senior Citi official confirmed this, on condition of anonymity.
It is understood that small parts of the application, maintenance and development (AMD
) work is being moved away. However, when contacted by ET, a Citigroup spokesperson said: “Satyam is among several vendors providing IT Services to Citi. We are unable to share any more details regarding the nature of this relationship due to reasons of confidentiality.” TCS and Wipro too declined to comment on individual clients.

Wipro is likely to benefit the most from this as it had recently acquired Citi Technology Services (CTS), Citi’s captive providing critical technology infrastructure support, development and deployment of strategic software applications.

It is also learnt that Merrill Lynch, which contributes close to $50 million in revenues to Satyam, is sending in its own team of experts to the company’s headquarters. This team will meet senior officials next week to assess the situation. A Merrill spokesperson declined to comment.

State Farm Insurance, Satyam’s oldest and among its top 10 clients contributing around $50 million per year, had announced in January 2009 that it had terminated its contract with Satyam. A person familiar with the deal said TCS and Patni were the front-runners to acquire this contract.

Satyam provided AMD services as well package implementation to the US-based insurance company. When contacted, Patni declined to comment on the development.

Novartis and GSK are also believed to be shifting some of their business away from Satyam. Industry sources told ET that Novartis was likely to move its business to its back office in Hyderabad.

GSK contributes around $30-40 million per year to Satyam and is one of the top 25 clients of the company. A Satyam employee, on conditions of anonymity, said that should Novartis and GSK shift their business, it would deal a big blow to the company.