Clients more stable now in biz terms: Genpact

India’s largest business process outsourcing (BPO) company Genpact said that its clients are in a better position to take decisions compared with six months ago, as they feel that the economy has already bottomed out.

“Though decision making is not accelerating, our clients are stable now in terms of doing business,” said V N Tyagarajan, COO, Genpact.

According to the results for March 2009, each of the 36 client relationships had accounted for about $5 million (around Rs 24 crore) of Genpact’s revenues in the previous twelve months, up from 29 such relationships at the end of 2008. Besides, around 80-85 per cent of the BPO’s revenue comes from existing clients.

About 83 per cent of Genpact’s revenues come from business process services, while revenues from IT services were about 17 per cent of total revenues for the first quarter of 2009.

This mix was 76:24 a few years ago and not likely to change much as, according to Genpact, processes are the basis of all transactions and technology is only an enabler. Moreover, for Genpact, around 85 per cent of the BPO work (which accounts for 80 per cent of its revenue) is non-discretionary.

“The BPO business, by nature, is more resilient compared with the IT business. The nature of work, with respect to the functions, are close to the client and non-discretionary, like customer services, payroll processes and finance and accounting and can’t be done away with,” explained Vinu B Kartha, Partner at IT advisory firm Tholons.

“We see growth coming from three areas - verticals, horizontals and geographies. We are constantly evaluating these three areas for both organic and inorganic growth,” said Tyagarajan.

The company has around $348 million (Rs 1,670 crore) in cash and cash equivalents, short-term investments and short-term deposits that it may spend on acquisitions if the valuations and fit are right. “Acquisitions should add to our capabilities. Though the option is between building and buying, we would prefer buying that capability,” he added.

To expand organically, by setting up facilities, Genpact said the prerequisites are a competitive cost structure, good talent and universities.