Genpact net income up in June quarter

Strong growth in Europe as well as Asia Pacific, especially China, helped India's largest business process outsourcing (BPO), Delhi-based Genpact, to report a marginal one per cent rise in net income for its second quarter ended June 30, 2007 "" a rise from $7 million in the same period last year to $7.1 million. However, it reported a 284 per cent increase over the previous quarter's net income figure.

The company's revenues for the second quarter stood at $200.5 million "" an increase of 42 per cent from the corresponding quarter in the previous year, and a 14 per cent increase over the trailing quarter's figure. The net income margin of the NYSE-listed company declined to 4 per cent this quarter (from 5 per cent in the second quarter 2006). The company said the decline was due to global taxes which were now being eliminated as a result of changes in the holding structure post-IPO.

The subprime crisis had earlier hit another leading Indian BPO WNS hard, after one of its clients, First Magnus, shut operations. Addressing the subprime concerns during a conference call today, the management said: "For the full year 2006-07, the total revenue from mortgage clients amounts to $15 million. Out of this $7 million has been booked which is less than 1 per cent of our total revenue." The company added that the number of funded loans booked (exposed to the subprime category) were only around $1.5 million.

Genpact's President and CEO Pramod Bhasin said, "We saw particularly strong growth in our operations in Europe as well as Asia Pacific, especially China, showing the strength of our global delivery network. In Europe, we have announced a second operations site in Romania."

We are also expanding our Asia-Pacific presence with our operations in the Philippines and a second operations site in China." Around 25 per cent of Genpact's delivery takes place from centres other than India. And this percentage is set to increase in the coming years.

On the market buzz of Genpact being a strong contender for the Citigroup's business process outsourcing (BPO) arm, the Delhi-based firm reiterated it was "actively considering a number of acquisitions".

The company added five new clients in the second quarter. Global revenues, which represent 35 per cent of the total revenues, grew at 144 per cent in the second quarter compared with the second quarter of 2006. The company also witnessed a 13 per cent growth in its revenues from GE in comparison to the second quarter of 2006. Its employees now number over 29,000.