Firstsource Q3 net down 32%

Volume fluctuations, forex impact, a loan taken for acquisitions and difficult credit environment in the US -- which affected the collections business -- impacted the net profit of pure-play business process outsourcing (BPO) firm Firstsource.

The BPO firm's consolidated net profit dropped 31.7% to Rs 20.63 crore for the third quarter ended December 31, 2007 from Rs 30.21 crore in Q3FY07.

Revenue for the quarter at Rs 382.51 crore was up 71.6% from Rs 222.89 crore was registered in the corresponding quarter last year.

Sequentially (compared to the trailing quarter), the net profit was down 54.8% from Rs 45.6 crore while its revenue increased 29% from Rs 296.5 crore.

Ananda Mukerji, MD & CEO, said: "The quarter saw emerging challenges in the collections business due to a deteriorating credit environment in the US. While this presents short-term pressures on profitability, the company believes collections continues to be an attractive business segment, and the current environment presents opportunities to expand its customer base and grow market share."

The collections business, a part of the BFSI segment, contributes 14% to the revenue of the firm. While the downturn is expected to be around 9% the company sees this segment as a business opportunity in the mid-term period.

The company stated that while one part of the business had been undergoing challenges the growth in other segments is continuos. US and UK contributes 59.4% and 30% respectively to the revenue and 10.5% comes from the Indian market.

Firstsource employee strength at the end of this quarter was 17, 090. The third quarter annualised attrition (post 90 days) was 48.8%. Annualised attrition (post 180 days) was 34.4%.

Going forward the company expects that the profitability will improve in the fourth quarter. While the company sees challenges it expects to continue to maintain net income margins in the targeted 11-13% range.