Genpact, India’s largest business process outsourcing services company, on Wednesday revised its annual revenue guidance upward, signalling sound growth in turbulent times. Its president and chief executive officer, N V Tyagarajan, tells Piyali Mandal the company will keep investing in new businesses, despite the uncertain times. Edited excerpts:
Your annual growth was impressive, but net profit was down by almost 37 per cent on a quarter-on-quarter basis. What went wrong?
Historically, the first quarter is always lower than the fourth quarter for us. This is because most clients finish their engineering and technology projects in the fourth quarter. So, when we enter the fourth quarter, revenues normally come down. Moreover, we carry a bigger bench (employees not deployed in any project) in the first quarter. We don’t look at business only for a quarter. Ours is a long-cycle business.
You talked about maintaining a bigger bench in the first quarter. Is that the reason why your revenue per employee fell?
It’s a part of the reason. Typically, when your revenues come down, you don’t take your employees out. We make them ready for the next assignment, which is why we see the largest bench in the first quarter.
You raised your annual revenue outlook. How does the demand environment look like?
The demand outlook looks steady. Clearly, the world is passing through uncertainty and it’ll continue like this for sometime. It is the new normal. There is going to be uncertainty and volatility in different geographies, verticals and different types of works. But at the same time, there are lots of new regulations which are coming in and creating more demand for players like us.
Are you considering taking a relook at your business model or investments because of this uncertainty?
The times are uncertain. But we are having a steady deal pipeline, and sizes are also steady. We have not seen much impact on the decision making cycle of the clients. So, across the board, the growth has been steady. We will continue to invest in sales, relationships, domains and product innovations.
What are the geographies and verticals from where you are seeing most demand coming from?
Demand seems to be good in few industry verticals such as consumer products, life sciences and pharma, healthcare and insurance. From a geography perspective, Europe has been really doing good for us, so also Asia Pacific, including Japan, China and Australia. From a service line perspective, our smart decision services, which include re-engineering, risk and analytics, has been the fastest growth engine for us. We are seeing steady demand for offerings such as finance and accounting, procurement and back office management.
But your peers and some large information technology companies have indicated the banking, financial services and insurance sector and the US market still remain areas of concern?
We think about the overall financial services world in three different buckets. First is insurance. It has been doing quite well for us for the past many quarters. There is still a lot of transformation that insurance companies have to drive, as they go forward. In the banking side, the demand from retail banking has been slow for many quarters, especially in the US. The third area is the capital market, which is undergoing a major change. Discretionary projects are under very tight watch.
You recently acquired Accounting Plaza. What kind of revenue you are expecting from it?
We acquired the company on April 25, 2012. We expect Accounting Plaza to contribute at least $24 million in revenue this calendar year. Annual revenue from Accounting Plaza would obviously be higher.
How are the government and Indian businesses shaping up?
We don’t do much government-related works. We are planning to put together a team for this. The India business is doing really well. We recently closed some interesting and completely transformational deals with large corporations in India, which we will announce soon.