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| WNS net income up 53% year-on-year |
| BS Reporter / Mumbai Aug 06, 2009, 01:47 IST |
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WNS, India’s second largest business process outsourcing (BPO) firm, has maintained its revenue target, unlike its competitor, Genpact, which slashed its revenue guidance by half for the year 2009.
NYSE-listed WNS stated the company has seen stability in the financial services segment and sale cycles in the US were now moving up from the laggard pace of last year.
The company posted a net income of $12.6 million for the first quarter ended June 30, an increase of 53 per cent from $8.2 million in the corresponding quarter of the earlier financial year.
Revenue for the quarter, at $136.7 million, rose 11.2 per cent over the corresponding quarter last year. Sequentially, the net income dipped 7.3 per cent from $13.6 million, but revenue was up 3.2 per cent, from $132.5 million.
The primary drivers of this increase were revenue growth from new and existing clients, tighter cost management, improved scale benefits and increased income from WNS’ acquisitions. This increase was partially offset by higher foreign exchange losses. The company won eight new deals and had four expanded deals from existing clients.
“The sale cycle in the US is speeding up, the cycle time is now coming to the previous sessions. But the UK and Europe are slow, they are where the US was last year. Even within the financial services, we had one large win and one ramp-up. Even in terms of pricing, the situation is much better,” said Neeraj Bhargava, Group Chief Executive Officer.
The management also stated that more companies from other sectors they operate in are approaching for outsourcing their operations. They won two deals from the consumer-centric segment.
But India’s largest BPO, Genpact (also listed on NYSE), due to the uncertain economic environment, has almost halved its revenue target, to now aim at growing by 6-9 per cent from the earlier 10-15 per cent for 2009.
Pramod Bhasin, President and CEO of Genpact, said: “Decision-making is still slow, there were cancellations and existing clients were cutting volume.” This, although the company’s net income increased 20 per cent and revenues were up 8 per cent on a y-o-y basis.
The quarter ended June 30 has been a mixed bag for both IT and BPO firms. While Cognizant increased its revenue expectation guidance from 10 per cent to 11.6 per cent, India’s largest IT firm, Tata Consultancy Services, beat street estimates by posting a net profit higher by 18.8 per cent, but continued to be cautious about the US markets.
Nasdaq listed EXL Services is yet to announce its results.
Meanwhile, BPOs Firstsource and Hinduja Global Solutions also managed to give a good performance for the June-ended quarter.
For Firstsource, a catch up in payment delays and larger approval of high dollar claims in the healthcare segment, higher contribution from telecom and media and BFSI verticals helped with improvement in productivity and efficiencies. Firstsource posted a net profit of Rs 38 crore for the first quarter ended June 30, from a net loss of Rs 50 crore in the corresponding quarter of last year.
Revenue grew 18.8 per cent, at Rs 484.5 crore from the Rs 472.3 crore in the same quarter last year. The company managed to sign 30 clients in the provider side of the healthcare industry.
Similarly, in case of Hinduja Global Solutions, it saw its net profit grow 80 per cent to Rs 36.15 crore and revenue rose 30 per cent from Rs 221.6 crore.
The management attributed this strong performance to “a build-up of momentum in our operations, margin improvements have been sustained, demonstrating a shift to a higher level of efficiency and the addition of two customers during the quarter from the ‘still challenging’ US market is an endorsement of the value offering that we provide”.
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