Despite recessionary trends, Syntel has managed to post 4 percent increase in revenue for the second quarter in 2009. What approach has worked in your favor?
Syntel has maintained a laser focus on partnering with our customers to help them survive, and thrive, in the recessionary trends in the market. This includes offering cost-savings solutions like technology consumption management, testing automation, and portfolio rationalization as well as targeted business solutions in alignment with the indicators of success in their vertical industry.
We also launched a LEAN program at the start of 2009 focused on driving LEAN solutions to our customers. One LEAN project focused on improving global trade processing efficiency was recently named as the “Best Innovative Lean Project” in the 10th Annual Asian Six Sigma & Lean Summit.
Syntel Chairman and Co-founder Bharat Desai stated during a recent conference call, “softness in the demand environment has actually created opportunities in both currency and the supply side of our business”. What strategies will you be focusing on to prevent fall in operating margins when demand picks up?
Many of the drivers for margin improvement have been directly related to the softness in demand for offshore services. These include reduced wage pressure, improved sourcing flexibility and a lower cost structure driven by depreciation in the Indian rupee. When demand improves, we would expect that margins would come under pressure as many of these variables will begin to move in the opposite direction.
That being said, part of our margin improvement has come from fundamental changes in operations, which include LEAN cost initiatives, improved utilization and employee productivity, higher offshore delivery components and increased fixed price contracts. These items are all now structurally systemic and the benefits should continue regardless of the demand environment.
KPO has contributed 19 percent to the revenues in the second quarter. Is KPO emerging in a big way worldwide and do you still perceive the worldwide KPO market to grow to $16.7 billion in revenues by 2010-2011, despite current economic slowdown?
We believe KPO will continue to emerge. Interest is very strong. We are in discussions with most of our clients about how they can leverage Syntel’s ITO/KPO integration approach to optimize processes and improve efficiencies, ultimately yielding impact on key business metrics like customer satisfaction in retail, regulatory compliance in banking, and patient satisfaction in healthcare.
Which markets are being tapped by Syntel currently and where do you see the company heading, vis-à-vis market expansion and product diversification?
Europe is a key investment area for Syntel in 2009 as we are trying to bring the same attention that we have brought traditionally to our North American clients to clients in Europe. We have hired a number of sales leaders and operationalized a brand-new office out of London. We are also enhancing our team in Germany to expand our reach in that country.
Our services diversification is strong and we are continually launching new offerings. Our primary focus of new offerings is in targeted domain solutions leveraging reusable software assets as well as horizontal services that deliver LEAN operations for our clients.
Syntel has been named one of the best managed global outsourcers by the ‘Black Book of Outsourcing’ and was also ranked among the top outsourcing providers by ‘The International Association of Outsourcing Professionals’ (IAOP). What made the company accomplish these achievements?
Syntel is honored to be recognized annually by various organizations like IAOP. The driving force behind these accomplishments is the hard work of our Syntellers worldwide in delivering on our mission to create new opportunities for our clients through passion, talent, and innovation. These achievements are validation from third parties on Syntel’s value and ability to deliver.
The Black Book ranking is derived strictly from end-customer feedback on Syntel’s performance, rating us on 31 management criteria and 18 key performance indicators. The IAOP list is compiled based on an independent panel of experts from the business’ and academic communities’ review of ability to create value for customers, depth and breadth of competencies and top management talent, as well as company size and growth rates.
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