Just a Bunch of People

As the Satyam saga unfolds, the Satyam stock price is tumbling by the day and is trading at less than 90% of what it was before the fateful decision on the Maytas acquisition was announced. Broking firms are advising investors to exit at any price. Many fund houses are offloading Satyam stocks at price much lower than the current market price. That brings us to the question - what is really the net worth of the company? This question is difficult to answer - it will take experts several weeks to come out with the real state of affairs and finances. But is it really possible that even we take out all liabilities - the net worth is still close to zero?

In all probability, Satyam - even at its peak - was Just of Bunch of People ( JBOP). The concept JBOP needs to be explained. JBOP is a IT service organization with a bunch of people with certain technical skills - skills like programming, knowledge of various packaged applications, tools, platforms, operating systems, hardware etc. JBOPs aslo have a sales and business development staff - who nurture relationships with customers and sell technical services - mostly by leveraging the labor cost arbitrage provided by India and other low cost geographies. JBOPs typically focus more on horizontal skill sets and less on vertical domain knowledge. Knowledge management is typically weak and execution capability is dependant on the availability and skill levels of the current set of people present in the JBOP. A JBOP is always at risk of losing out key people to competitors - but on the other hand it is equally capable of poaching others. A customer can replace a JBOP with a competitor - since the capabilities and offerings of the JBOP are undifferentiated and commoditized. Most importantly a JBOP has no focus on products, asset based offerings, technology platforms, proprietary tools etc. - capabilities that can possibly lock in a customer. The JBOP hardly has any Intellectual Property assets worth mentioning. The revived/ resurrected Satyam needs to do some serious introspection and ask itself it was a JBOP and what its vision for the future is.

An indicator of IP assets of a company is the number of patents granted. A Google Patent search of issued US Patents assigned to Satyam Computer today threw up only 3 results. The same search for global IT service companies like Accenture and Computer Science Corporation gave 201 and 193 respectively. This only shows the pathetic level of IP assets and gives credence to wisdom of the stock market. Other Indian IT service companies don't fare well either - most have less than 10 as per this search criteria. Key customers and partners of Satyam like Microsoft, SAP and Oracle have an impressive patent portfolio though. The search throws 571, 369 and 600 respectively for these companies.