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New Delhi, Nov. 5 NYSE-listed BPO major Genpact Ltd on Thursday posted a 1.7 per cent dip in net income (attributable to common shareholders) at $33.1 million for the third quarter ended September 2009, even as the company stuck to its revenue guidance while raising adjusted operating margin guidance, for the full year.

The company said it was seeing encouraging signs in the market and faster decision-making. Genpact also made it clear that it is eyeing potential acquisition opportunities, including takeover of captives.

“We see encouraging signs in the market. Client demand is coming back, decision-making is improving and our pipeline is strong,” Mr Pramod Bhasin, President and CEO, said.

Genpact said its Q3 net income had dipped year-on-year due to higher tax rates (one of its delivery centres in India came out of the STPI tax holiday scheme), and also on account of relatively lower interest income in the just-concluded quarter. The company has shifted cash to US treasury investments that are low yielding compared with the previous instruments.

For the third quarter, the revenue at $284.4 million was up 5 per cent over the $270.8 million clocked in the year ago period. The net income margin for the third quarter of 2009 was 11.6 per cent, down from 12.4 per cent in Q3 of 2008.

The adjusted income from operations increased 8.8 per cent to $53.8 million, compared with $49.5 million in the third quarter of 2008, while the adjusted income from operations margin was 18.9 per cent, up from 18.3 per cent in the corresponding previous period.

“We are encouraged by the strength and expansion of our pipeline, some faster deal conversion times, higher win rates and the calibre and scope of recent client wins,” Mr Bhasin said. The company said that although pricing remained competitive, it appeared to be stabilising. “Our forward view is now more optimistic than earlier this year though the pace and timing of economic recovery remains somewhat uncertain,” he said.

Revenues from clients other than GE (which Genpact refers to as global client revenues), grew 17.4 per cent on a year-on-year basis. It now represents about 60.8 per cent of Genpact’s total revenues, with the remaining coming from GE. GE revenues fell 4.2 per cent from the third quarter of 2008, adjusted for dispositions by GE, Genpact said.

Close to 85 per cent of Genpact’s revenues for the quarter came from business process services, up from 81 per cent in the same period last year. The revenues from IT services were about 15.1 per cent (19.1 per cent).

Genpact generated $55.7 million of cash from operations in the third quarter of 2009, down from $58.6 million in the third quarter of 2008. It has close to $399.1 million in cash and cash equivalents, short-term investments and short-term deposits.

The company will go after acquisitions and appeared to be also keen on captives. “There are captives, some we believe have the potential for becoming part of acquisition for us or others,” Mr V.N. Tyagarajan, COO of Genpact, said, when asked if the company would chase buyout opportunities. On September 30, 2009, the company had about 37,700 employees worldwide, an increase from 36,400 a year ago.

Meanwhile, Genpact has confirmed its revenue guidance of 6-9 per cent growth over 2008 but raised the adjusted operating margin guidance to 17.5-18 per cent. In the last quarter the company had raised the adjusted operating margin guidance to 17-17.5 per cent range from the initial 16-17 per cent, saying it hoped to manage costs aggressively.

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