Genpact 4th Q FY09 earnings – Facts, Metrics & Learning
FACTS
- 4TH Quarter GE revenue grew to $119 million a 5% increase QoQ but a 5% decrease YoY. GE accounted for 40% of the total revenues for the quarter and the full fiscal year. Decline in GE revenues due to tight cost management in discretionary project spending
- Signed an extension with GE for the contract till 2016
- Strategic clients added in Fiscal 2009 include Walgreens, AstraZeneca, Max New York Life
- Genpact acquired Symphony Marketing Services firm a market analytical firm
- Genpact made a one time investment of $ 9 million on hiring business development staff for non-India regions, investing in their new methodology SEP and internal process improvement initiatives
- 60% of growth in 2009 from banking and financial services
- Wage inflation to be between 6 and 7%
- 70% of growth to come from mining existing clients and 30% from new deals
METRICS
- Gross Revenues - $297 million YoY – (+5%), QoQ – (+4%)
- Fiscal 2009 Full Year Revenue – $1.12 billion an YoY growth of 7.6%
- 4th quarter Operating income – $55 million
- Fiscal 2009 Full Year Operating Income – $199 million – YoY growth of 12%
- Net Income – $144 million YoY – (+28%)
- Number of clients with annual revenue > $ 2 million – 62
- Attrition rate – 23%
- 38,600 employees. Net addition of 2400 employees in 2009
- Revenue per employee – $31,200
- Cash on Hand – $847 million
LEARNINGS
- Genpact continues to depend on GE as their primary largest client and have to give in price discounts for the current contract extensions they have had.
- Pure Play BPO layers like Genpact are looking at aggressive ways to scale non-linear growth and are introducing methodologies like SEP (Smart Enterprise Processes) and spending on high end business development talent to grow.
- North America continues to be the largest driver for growth. Despite firms continuing to look at growth opportunities outside North America, they are smaller percentage of the total revenue mix.
- Pushing Gain sharing contracts. This is different than what a number of the other industry players are seeing in the marketplace . The peer group to Genpact continues to see standard Time and Material and Fixed Price contracts vs gain sharing and other new contract structures.
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