Outsourcing Firm Reborn As Mahindra Satyam

In April, Tech Mahindra agreed to purchase 31 percent of Satyam's shares, resulting in an infusion of $351 million (U.S.) into the beleaguered Indian outsourcing firm. At the beginning of the year, the former chairman of Satyam confessed to $1 billion in fraud. B. Ramalinga Raju, his brother Rama Raju, Chief Financial Officer Srinivas Vadlamani, and two Price Waterhouse auditors have been charged with forgery and falsification of Satyam accounts and for causing disappearance of evidence.

This week, the firm unveiled its new brand identity, "Mahindra Satyam." The logo takes a cue from Mahindra's current design.

"This rebranding exercise symbolizes an amalgamation of the Mahindra Group's values with Satyam's renowned expertise, even as it retains that part of Satyam's identity which signifies commitment, purpose and proficiency of the organization and its people," said Anand Mahindra, vice chairman and managing director of Mahindra Group, in a statement.

Mahindra Satyam and Tech Mahindra will run as distinct businesses, at least initially. Of course, similarities between the companies will likely give way to some "cross-pollination." For example, there is likely to be some combination of the infrastructure managed services capabilities in Tech Mahindra and the application services from Mahindra Satyam, noted David Mitchell, senior vice president of IT research at advisory and consulting firm Ovum.

In addition, Mitchell said that Mahindra Satyam is likely to go through an extensive cost-cutting phase, which should not be driven out of integration synergies in IT, marketing and other back-office functions.

"Instead, it needs to be the service delivery functions that bear the brunt of any cost reduction, since they are where the biggest cost-line items can be found," Mitchell said in a report on the new marketing strategy. "Equally, the market needs to be careful about reacting adversely to any future Mahindra Satyam cuts. Significant cuts will be needed to realign delivery costs with real revenues."