On Friday, I had an opportunity to talk to Bharat Desai the Chairman,CEO of Syntel Inc. It was a very interesting and candid discussion, with some interesting insights into the IT Services market.

First let me start by explaining the title of the post, This was something that came up during the chat. And it resonated very well with my thoughts on Syntel as well. It stems from the fact that Syntel wasn't well known in the IT Services cycle, infact its probably still remains that way for a large part. But what is strange it that its a company with nearly 9000 employees, with a turn over of around 300 Million$ but the key highlight for Syntel is it customer base. It has a strong & loyal customer base from the Global 2000 companies which it has been servicing for some time now. Currently 28% revenue from the top two clients, American Express and State Street Bank each accounting for 18% and 10% of its revenues respectively. They probably need to reduce their dependence here.Also Syntel was in the Top 50 in the Black book of Outsourcing announced recently.

Little history, Syntel was launched in 1980. To start with the company was an US based organization with most of it man power being hired and located from within the US.

Year 2002
Onshore Billable headcount 1,111
India Billable headcount 943

Year 2006
Onshore Billable headcount 1,405
India Billable headcount 4,006

So while most of Indian Outsourcers were growing their market share exponentially in the market, Syntel first had to get to being a global company before they could set the path for growth. And as Bharat candidly accepted they did miss that growth wave, because their executive focus was more on getting the right model in place first. And as he rightly pointed out Syntel is one of the few companies that have been able to successfully make this transformation.

The initial discussion focused on a topic discussion that is planned by Venture Intelligence next week in Bangalore which is "Is there a play for SME sized play in the IT Services market". Bharat very succinctly covered that he feels Syntel is in an ideal position in the IT Services market, as he put it customers perceive Sytel as

"Small enough to listen and understand the problem faced by them & big enough to "execute" the solution the problem "

And referred to a report by Aberdeen group report on the outsourcing industry indicating a bright future for the mid their outsourcing firms. Some highlights from the report are that it predicts up to a 40 percent shift to emerging  Mid-Tier outsourcing providers and away from India's market leaders like Infosys, Cognizant and Satyam.  Infosys, for example, is projected to see a 22 percent drop in companies planning to use its services in the next 24 months.

Another point of discussion was the future growth engines for Syntel, According to Bharat - They are currently focused on 4 verticals from which they get 90% of their business which are :

Financial Services
HealthCare & Life Sciences
Automotive
Insurance

They are working hard to create expertise in these domains.

Another set of focus areas are emerging technology practice areas like testing centers, PLM etc

Finally strategic offerings around Business Intelligence, Application Integration, Webservices etc.

Tags: syntel - offshore - it+services - outsource - syntel+inc - bharat+desai

Prashanth Rai