Progeon net at $21 mn

CORPORATE SCORECARD

Progeon, Infosys' BPO subsidiary, has posted net profit of $21.1 million for the financial year ended March 2006. Sales increased almost 100 per cent to $85.4 million compared with $42.9 million last year. Net margin was 25 per cent over sales, making it the most profitable BPO in the country.

For the fourth quarter, its topline stood at $24.4 million, up 69 per cent compared with $14.5 million in the corresponding quarter last year. Sales increased by 8.4 per cent to $24.4 million from $22.5 million recorded during Q3FY06.

However, the company also faced an attrition rate of over 40 per cent.

S Gopalakrishnan, chief operating officer, Infosys, said, "We have built a portfolio of integrated services that has enabled us to meet the increasingly complex demands of our clients. They have responded enthusiastically to our 'One Infy' service offering."

Progeon currently employs 7,000 persons, up from 3,000 during FY05 and is hoping to add another 6,000 during the current year.

Said Mohandas Pai, chief financial officer, "We are seeing more complex work at Progeon and the trend is that standalone BPO companies are finding it difficult to get contracts. Infosys and Progeon are tightly integrated as a seamless organisation."

Pai added that the company was in talks with Citigroup over its exit from Progeon. Citigroup had invested around $23 million in Progeon.

Various options were being discussed and the details would be announced as and when a decision was reached. It was likely that Infosys would buy out Citi's stake for close to $140 million to present a single face to its customers as an integrated service provider.

The company also announced that it along with Progeon has begun a large, long-term business process outsourcing engagement in master data management, customer data integration and product information management for a global consumer electronics brand.

Added Amitabh Chaudhry, COO, Progeon, "Increasingly, we are taking up knowledge process outsourcing work in addition to the other processes for a host of global institutions and we intend to grow at 40 per cent plus during the current year." He added that the 40 per cent attrition rate is a matter of concern which is being addressed.