Genpact Q2 net income dips 6% to $27.8 mn

BPO major Genpact today posted a 6.2 per cent dip in net income at $27.8 million for the quarter to June due to higher operational costs.

The company had net income of $29.7 million in the April-June quarter of 2009.

"We are going through a number of transitional deals, which require investments in technology, infrastructure and hiring. The revenues from these projects start kicking in after a point in time. This has impacted our income, along with currency fluctuation," Genpact COO NV Tyagarajan told reporters on a conference call here.

The impact of currency volatility has been about $3.5 million for April-June quarter 2010, he added.

"Our outlook remains positive. We continue to expect revenue growth in 2010 of 14 per cent to 17 per cent and adjusted income from operations margin of 17 per cent to 18 per cent," Genpact President and CEO Pramod Bhasin said.

Its revenues rose 12.7 per cent to $307.6 million, up from $272.9 million during the second quarter of 2009.

Genpact had about 42,500 employees globally as on June 30, 2010 up from 37,400 people as of June 30, 2009.

"Our attrition rate was 26 per cent, up from 22 per cent for the same period last year. It is under control and we have always had similar rates of attrition. This is indicative of the growth in economy," Tyagarajan said.

Talking about expansion, Tyagarajan said the company plans to open a delivery centre in Brazil to tap the market there.

"It has been in the works for some time and in the next 6-9 months, we will open a centre in Brazil. Clients have indicated to us that we need to have a presence in Brazil and the centre would help us cater to that market," he said adding that Genpact has still not decided on the location.

The company generated $30 million cash from operations in the second quarter of 2010, down from $49 million in the second quarter of 2009, primarily due to increased working capital requirements.

About 86 per cent of Genpact's revenues for the quarter came from BPO services, up from 83.3 per cent for the second quarter of 2009, while revenues from IT services contributed 14 per cent to total revenues for the second quarter of 2010.

Revenues from clients other than GE (Global Clients) grew 16.9 per cent in Q2, 2010, over the second quarter of 2009.

Income from global clients now represents about 61.7 per cent of the total revenues, while the rest 38.3 per cent is generated from GE.

The company had cash and cash equivalents at $30.8 million during the second quarter, up nearly 7 per cent from $28.8 million Q2, 2009.