Jan 23, 2008

Satyam tries to buy consulting skills

The Talking Outsourcing blog feels the deal of buying Bridge Strategy Group was a knee jerk reaction from Satyam:

It seems like the team at Bridge has negotiated a great deal, but I’m not sure how this helps Satyam to start competing with the likes of Infosys and TCS – who are both well down the road of developing their consulting offering, but in a more organic fashion. If they can afford to throw a few million around here and there then why not go for some big name hires and develop the consulting service more organically? It takes guts to do it because there will be a long lead before the business rolls in, but in the long term surely that is where the real value lies, building your own brand to be a trusted source of advice.
I have to agree. Buying a 36 people firm for $35 million sounds extreme. I also don't see a fit between Satyam's strength of IT service delivery and Bridge's professed expertise. There are bits in their Operations design and Performance Improvement area, like Outsourcing and Global Sourcing/Offshoring and IT Planning and Management. There is mismatch even in Bridge's differentiated approach and the approach of a IT firm like Satyam. Things like partner involvement, not taking large projects, deploying small experienced teams are the exact opposites that outsourcers like Satyam offer. If there's a fundamental clash in the values of an acquiring firm and the firm getting acquired then I don't think there's a chance of that acquisition delivering too much value.

The acquisition by Satyam would also raise questions about how objective the advice offered by Bridge Strategy Group in the Outsourcing and Global Sourcing/Offshoring areas to their clients is. As the Talking Outsourcing blog says:

Satyam plans to continue using the Bridge brand in the US, but anyone who is an existing or potential customer will know that the company is really just a subsidiary of Satyam now. That can be seen as a positive - access to a large resource pool, proven expertise etc - or a negative - they can no longer give an impartial recommendation about the best place to get some IT work done.