‘Marriage made in Heaven’- Merger of Satyam and TechMahindra

This week saw a major deal is Indian IT industry where TechMahindra took over management control of Satyam. It will be a good relief for Satyam employees; they are in to more stable hands now; there was good amount of instability over last 3 months.

Also, appreciable point is how new board of Satyam and the Indian Government acted quickly to safeguard the Satyam employees, customers and shareholders. We saw a real quick decision making in this entire process; which is really commendable.

However, this deal is more strategic for TechMahindra; let’s see how;

Geography Expansion: TechMahindra is very strong in Europe and Satyam is strong in APAC and US. This merger will help TechMahindra to easily expand in to US and APAC, that too with strong customer base including GE, Cisco. This also helps to go beyond British Telecom in terms of new business and try cross selling in other existing customers. This is huge advantage. You can’t imagine the pain in building US operations from the scratch.

Business Expansion: TechMahindra is known for its telecom domain. Satyam is strong in SAP [About 45% of business] and Engineering Services business and BIFS. Thus TechMahindra will get built up practices of SAP and Engineering services. This is much required diversification.

Employee Base: Satyam has pretty strong sales force and outstanding techies, it is said, and some of the key business managers have already left though.

Thus, this deal seems to be a great fit and appears to be more strategic for TechMahindra. It leaped ahead as 4th largest IT company in India. Off course any deal comes with the challenge of managing the merger and management has to work towards aligning both the companies. Also, we should not forget the risk of liabilities Satyam might carry, no body knows about these liabilities as of now.

However, on paper it looks like; as what TechMahindra CEO put it ‘Marriage made in Heaven’.