Salary hike, stronger rupee hit iGate profits

iGATE Global Solutions, the Bangalore-based IT services exporter saw its June quarter bottomline hit by a pay hike and a stronger rupee, chief executive officer Phaneesh Murthy told reporters here on Thursday. The company reported lower profits than a quarter ago, though year-on-year numbers were better.

During the June quarter, the rupee strengthened some 4.74 per cent against the euro, 3.17 per cent against the pound and 0.14 per cent against the dollar, compared with the March 2005 quarter. Some 70 per cent of iGATE's revenues come from the US, a company official said.

In April, iGATE effected a 13 per cent pay increase for the 80 per cent staff who work at its Whitefield centre here, and a 3 per cent increase for its US staff. Net profits were down 37 per cent quarter-on-quarter. The company added 331 staff during the quarter, taking the total close to 4,300. Another 1,000 will be added in the next few quarters, Murthy said.

The June quarter revenues from iGATE's top five customers increased 10.8 per cent, sequentially. General Electric, the largest customer, contributed 36 per cent of the IT services firm's revenues during the quarter, Phaneesh Murthy, iGATE's chief executive officer told reporters here on Thursday.

During the quarter, iGATE added 11 new clients during the first quarter, "including nine in the Global 1000 space", a company release said.

Among these was a North American financial services group, which had signed "a multi-year preferred supplier agreement" with iGATE. The US financial services firm provides a wide range of services to millions of customers through its global operations. iGATE will build and run a project management office for the firm, the release said.

iGATE's board of directors has inducted Karl Heinz Achinger. He has been a former member of the boards of management of German car maker DaimlerChrysler Services AG and Cap Gemini, a French IT outsourcing firm. iGATE hopes, Archinger, who built T-systems into a Eur 3 billion IT services firm, will help it win significant European contracts, Murthy said.

"Achinger will provide iGATE with the strategic direction and frameworks to scale its global services business", the iGATE release said.