The Hindu Business Line : Satyam plans foray into joint R&D in auto sector

Satyam Computer Services is considering entry into joint research and development with its customers in the automobile industry. Customers want Satyam to take up the full responsibility of innovation and are willing to the share revenue from the joint effort, according to Mr Subu D. Subramanian, Senior Vice-President and Director, Satyam Computer Services.

This is a new strategy that the Hyderabad-based company has undertaken in the automotive sector, and a few clients have shown interest in such collaborations. "We would like to innovate new solutions to address clients' problems. This could be in areas like product lifecycle management, engineering and supply chain management," he said.

Globally, such collaboration is not new. General Motors has partnered with Delphi on displacement on demand technology to regulate fuel according to driving conditions, he said.

According to Mr Subramanian, automotive products have become more IT-centric. Satyam would innovate new features into the vehicle, and work in areas such as global positioning system, smart cards, navigations systems, wireless and voice recognition.

Educational institutions and industry associations would also be involved in joint research and development. This concept is different from outsourcing product development where clients give only the design to a vendor to create a product. Joint research would help clients design and launch new products quickly, he said.

Uniform value contracts

The other initiative that Satyam has adopted is to provide a uniform value contract irrespective of the cost escalation during the contract period - a client is locked in with Satyam for 3-5 years. This also prevents clients switching over to other vendors on lower cost . Satyam also enters into various service level agreements with the clients during the period. Through the lock-in, revenue and business becomes predictive, he said.

On wage increases during the lock-in period, Mr Subramanian said Satyam would counter it through productivity improvement, reduced onsite employees and leverage offshore strengths.

Large deals

Satyam has been talking about this model in the last 3-4 years, but formalised the concept only this year. The company has also formed a strategic development group to go after large deals through this model, he said.

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