Genpact says worst is over

New Delhi: Genpact Ltd, a business process outsourcing firm, said it expects the IT budget decisions that were delayed in the previous quarters to pick up speed in the coming months as several of its clients have a clearer picture of their businesses.
Pramod Bhasin, the chief executive of Genpact, told DNA, "I think people know that they have hit bottom. I don't know when recovery will happen. However, we are seeing many of our customers hit bottom and bottom out, which allows decision-making to take place."
The company said banking, financial services and insurance (BFSI), healthcare and horizontals such as supply chain, finance and accounting are helping it tide over the slowdown. "We are starting to see traction in our end-to-end projects with five new projects commencing this quarter and over 70 projects at various stages of discussions," Bhasin said in an analyst call.
Meanwhile, the Gurgaon based company said it still expects some decline in discretionary spend by clients, higher deletions in some business processes due to client volume contractions, price drops and slower ramp-ups.
Clients continue to delay decision-making on projects as they focus on redefining their business and operating models, the company added. "What is happening is that companies are going through a tough time and this has pressure on pricing. The automobile vertical is still growing. (But) It is not a big enough vertical for us. It contributes about 5% to our topline," Bhasin said.
Genpact said it is also helping clients on transition costs and is billing them over the period of the contract and not upfront.
On Tuesday, the company reported a sales growth of 13% at $266 million in the first quarter ended March 31. Its adjusted income from operations stood at $42 million, growing 48% due to cost cutting measures that helped improve margins.
Genpact's capital expenditure in the quarter was $14 million or 5% of quarterly revenues, which it is expected to sustain in the coming quarters of 2009.