Genpact's net up 4.5% in June quarter

Largest BPO firm sees demand environment improve but says challenges remain; Revenues from GE decline

Even as the country's largest business process outsourcing firm Genpact Ltd has shared the commentary given by its IT peers of an improving demand for technology, the company has dashed hopes of any increase in its revenue outlook for the full year and instead hopes to only meet the lower half of its earlier projections now.

The NASDAQ listed firm said there is an uptick in the large, transformational engagements however, these complex deals have longer decision cycles.

"As a result of these longer cycle times, together with more subdued GE revenues, we now expect revenues for the full year 2013 to be in the lower half of our range of $2.15 – $2.20 billion," the company said in a statement announcing its results for the quarter ended June.

Revenues from General Electric (GE), the erstwhile parent of Genpact,  decreased 0.9% from the second quarter of 2012, the company said. GE is still Genpact's largest customer contributing 22.7% of its revenues even though the company's share in the over pie has been declining.

For the quarter ended June, Genpact reported a 4.5% jump in its net profit to $63.9 million compared to the June quarter of 2012. Its revenues stood at $534.8 million, up 14.4% from $467.6 million against the corresponding period last year.

The company's net income margin declined during the quarter to 11.9% from 13.1% due to reasons unspecified by the company in its press statement. Genpact's president and chief executive N V Tyagarajan said, “Continuing our momentum in 2013, in the second quarter Genpact delivered strong growth in revenues and adjusted operating income, as well as solid cash flows from operations." The company's diluted earnings per common share were $0.27, unchanged from the second quarter of 2012.

Business process management revenues from global clients other than GE grew by 18.1%, the company said led by growth in verticals such as banking and financial services, consumer packaged goods, life sciences and healthcare and business services.

The company generated $76.1 million of cash from operations in the quarter, compared to $127.2 million which included around $45 million from an up-front client payment in the June quarter of 2012. Genpact had approximately $535.9 million in cash and cash equivalents and short term deposits as of June 30, 2013.

 At the end of June, Genpact had around 60,200 employees worldwide, and its employee attrition rate for the quarter increased to 27%, from 25% for the same period in 2012. However, annualized revenue per employee for the quarter was $36,700, up from $33,900 for the three months ended June 30, 2012.