Headstrong Genpact posts 40% profit growth

Genpact, the business process outsourcing (BPO) firm, reported a 40% rise in its profits for the three months to June 30, aided by its three-month old acquisition of information technology services firm Headstrong, which it acquired in April for $550 million.

The company generated profits of $39 million in the June quarter, up from $28 million a year ago while revenue touched $396 million, up 29% from $307.6 million last year. Standalone revenues excluding contribution from Headstrong, grew 15% over the previous year.

“Integration of the Headstrong acquisition, which closed on May 3, is going well,” said N V Tiger Tyagarajan, Genpact’s president and chief executive.

“This quarter we increased the number of clients, contributing $1-5 million in annual revenues, to 103, from 52 in the same quarter last year, giving us a great runway for future growth.”

Twenty five new additions to Genpact’s $1-5million client bucket came from Headstrong. It also contributed 10 clients to Genpact’s  $5 million-plus client bucket and another two clients to its $25million-plus client bucket. At the end of June, Genpact had 56 clients contributing $5 million or more during the last 12 months, up from 40 last year and 8 clients contributing at least $25 million, up from 4 such clients last year.

Genpact has guided for a revenue growth of 23-25% during the year to December 31, “despite ongoing concerns in the global economy” according to Tyagarajan.

Headstrong also helped Genpact significantly diversify its service portfolio besides BPO offerings. Post the acquisition, revenues from IT services has gone up to 22% of the firm’s total revenues, up from 14.1% in the same period last year.

Once a back office of US multi-national General Electric, Genpact continues to count the former parent as its largest client, contributing about 31% of its total revenues. Revenue from non-GE clients grew 44.1% from last year while revenue from GE increased 4.9% to $5.8 million.

Genpact, which has around $336 million in cash and cash equivalents, employs 51,300 engineers, up from 42,500 a year ago. Employee attrition rate increased to 29% from 26% last year.