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Mahindra-Satyam: Two-in-one advantage?

Last updated on: June 29, 2009 15:11 IST

Satyam is out, Mahindra Satyam is in. And T Hari, the marketing and communications head of the company, sees the new brand that was unveiled just a week ago as a game-changer.

"The new logo represents the literal joining of the two organisations, which together create something more than just the sum of the two," Hari says.

The new owner, Tech Mahindra, considered a couple of options -- keep the Satyam name or replace it entirely. But research said that Satyam still reflected critical strengths that were recognised and valued by customers.

"By combining it with the very well-known and highly-regarded Mahindra name, we are able to convey a stronger message more credibly: that Mahindra Satyam has the resources, talent and resolve to ensure a steady performance," Hari says.

Alok Shende, principal analyst of Ascentius Consulting, agrees. He believes the rebranding attempts to integrate the best of both worlds -- the delivery strengths of brand Satyam and the positive associations of brand Mahindra.

David Mitchell, senior vice president (IT research) at Ovum, says there is obviously a residual value in the Satyam brand, sufficient for Tech Mahindra and the Mahindra Group to retain it in the new name. On a day-to-day basis, Satyam continues to provide services to a large number of customers with stability.

That's more or less in line with what Vineet Nayyar, executive vice chairman of the Satyam board, says: "This is a significant milestone towards the recovery of Satyam. With this synergistic approach, Mahindra Satyam will learn from the best management practices of the Mahindra Group while focusing on nurturing Satyam's innate skills and capabilities."

But not everybody is so convinced.

Harish Bijoor, a brand-domain specialist and CEO of Consults Inc, says "One plus one does not necessarily add up to two. This is a transition phase and we need to wait and watch. A David has bought over a Goliath and it will take around two years before the negative equity of Satyam vanishes completely," Bijoor says.

Bijoor's suggestion: The name should have been "Mahindra Sat" which has a "snazzy feel" about it. In any case, the Satyam name should die or become shorter, he says.

There are many other takers for Bijoor's verdict.

Satyam is like a two-edged sword, says Sudin Apte, head of Forrester Research in India. "It surely has the required execution capabilities and engineering skills because of which at least half its clients have still stuck around. But then, its founder (Ramalinga Raju) has maligned the name. The new name (Mahindra Satyam) won't wash out bad memories overnight," he says.

Apte, however, feels the Mahindra name is a conscious effort to introduce the group's corporate values. Finally, whatever the name, the challenges remain the same.

M&M group insiders say senior executives at Satyam, TechM and Mahindra & Mahindra had been working on the re-branding exercise with select external advisors ever since Tech Mahindra acquired the company.

One thing was clear from the beginning: Tech Mahindra did not want to continue with the Satyam brand in its present form, though it wanted to leverage the strengths of the firm.

Finally, the consensus was that the new brand will convey the synergies of Satyam, well-known for its expertise in areas such as enterprise resource planning, M&M group's global brand and corporate governance and Tech Mahindra's strength in telecom.

The Mahindra group, meanwhile, can take heart from successful precedents.

Andersen Consulting, which split from Arthur Andersen in 1989 to become the largest consulting firm in the world, changed its name after an arbitration stricture in 2001. After the Enron debacle in which Arthur Andersen was implicated, Andersen Consulting successfully changed its name to Accenture.

And closer home, to avoid the Enron stigma totally, the Dabhol Power Project was rechristened as Ratnagiri Gas & Power.

The only caveat is that in Accenture's case, it spent around $175 million (around Rs 8.5 billion) to market the new name. Mahindra Satyam, which is still reeling under the impact of the fraud, and awaiting the damages it may have to pay for the lawsuits, may not have as much marketing liberty -- for now, at least.

Leslie D'Monte in New Delhi
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