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Friday, Apr 30, 2004

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iGate to borrow $9 m this fiscal to fund expansion

Our Bureau

Bangalore , April 29

SOFTWARE services and business process outsourcing firm iGate Global Solutions plans to borrow $9 million - $10 million in the current fiscal to fund its expansion, its CEO, Mr Phaneesh Murthy, said over earnings conference call.

The company plans to spend close to $10 million - $11 million in the second phase of infrastructure development of its Bangalore campus.

"We are talking about another million dollars or so in the Phase I bills which have to be paid out. Then another couple of million dollars in technology infrastructure that we will be doing across all the centres," Mr Murthy said.

The company, which reported a net loss of Rs 6.77 crore on a consolidated basis, for last financial year, expects to vault back to the black in the September quarter of the current fiscal. iGate Global said its top client GE contributed 44 per cent to the software vendor's top line. GE has signed up a pricing contract with iGate valid till 2006 and the company "is reasonably comfortable".

However, Mr Murthy said that there was a trend towards spending more on offshoring of projects and he did not see run away pricing growth or a huge price decline because of the "capacity in the system". Though the company sees business volumes swelling in the software services segment, there was some uncertainty in the market on the BPO side.

The company has managed to cut its onsite engagements to 48 per cent from 60 per cent over the last two quarters.

Offshore utilisation went up to 66 per cent from 63 per cent and offshore efforts inched up by 1 percentage point to 52 per cent.

The company also hopes that as it enters into more client relationships through consulting, billing rates are likely to improve.

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