Friday November 6, 03:47 AM

Source: Indian Express Finance

Demand up but Genpact net falls 2%

By fe Bureau
The country s largest business process outsourcing (BPO) company, Genpact, on Thursday reported a 1.7% drop in its net profit at $33.1 million for the quarter ended September, compared to the same period last year. However, on back of a slightly better demand situation, the company s revenues were up 5% to $284.4 million against the same period last year and up 4% sequentially. In line with the other top IT companies, Genpact said it is seeing less of volume contraction and more ramp-ups. The company has maintained its revenue guidance of a growth of 6-9% in the current financial year over 2008. However, in anticipation of higher cost efficiencies and higher value work to be reflected in its margins, the company has raised its adjusted operating margin guidance to 17.5-18% for the full year. We see encouraging signs in the market.Client demand is coming back, decision making is improving and our pipeline is strong, said Pramod Bhasin, president and CEO of Genpact. He added that the company is encouraged by the strength and expansion of the deal pipeline (which is up 38% from the quarter ended March),faster deal conversion times, higher win rates and the scope of recent client wins. Pricing is still competitive but appears to be stabilising. Our forward view is now more optimistic than earlier this year though the pace and timing of economic recovery remains somewhat uncertain, he said. The company s net income margin for the third quarter of 2009 was 11.6%, down from 12.4% in the third quarter of 2008. While revenues from clients other than GE grew by 17.4% year-on-year, GE revenues decreased by 4.2%, adjusted for dispositions by GE. Global clients now represent around 60.8% of Genpact s total revenue, with the remaining 39.2% coming from GE. Bhasin said the percentage of revenue contribution from GE is expected to decline in the future as its other client revenue grows at a faster rate. He added that the growth this quarter has come on back of the recovery in the banking, financial services and insurance vertical and from pharma, healthcare and the domestic market to a certain extent. The contribution of BPO offerings has also increased from the earlier 80.9% in the same quarter last year to 84.9% in the last quarter. Revenues from IT services were down to 15.1% of total revenues for the third quarter of 2009 compared to 19.1% for the third quarter of 2008 as clients reduced their discretionary spending. The company has $399.1 million in cash and cash equivalents, short-term investments and short-term deposits at the end of the September quarter.