Global-O&O

SOURCE: EconomicTimes
DATE: March 10th, 2010

A recent report by EconomicTimes mentions that brokerage firm CLSA suggest that close to 4,000 people may have left Infosys in the month of Februrary. 

Video Link
Infosys Attrition Going Higher

Though the Infosys head of HR, Nandita Gurjar seems to have denied the high number of people indicated in the report , but confirms the fact that  attrition is rising in the firm. She confirmed that the attrition is rising but not even close to the half way mark. Typically in these larger firms the number of people leaving are close to 1500 a month.

In an earlier post I had talked about attrition rates going up in Indian firms and the potential impact of that and how if your organization is  with offshore vendors you need to re visit your planning and risk management plans to try to mitigate the risks. There is a serious time and cost impact if this issue is not managed correctly.

The number does appear to be on the higher side and folks we have spoken with have seen a spike in the attrition rate but not as high as the 4,000 number. Quarterly earning for this quarter by Infosys will be closely watched to get the real details around attrition in larger firms.

Firms like Infosys, TCS which have good training programs and spent the lean time last year taking people through more training courses, specially the ones who were not on projects are good hunting grounds for firms looking for qualified employees. Some of these people who have been on bench also have been there too long and are looking at opportunities where they feel more secure if they are working on actual client engagements vs internal projects. 

Is bench strength the answer

Picture: NY Times

Bench strength , which some of the larger firms have more of than the smaller and mid size firms may be a tool , the vendors use to manage attrition but for their clients it is still a challenge. Resources , specially trained resources are harder to replace. One of our clients which is working with a large offshore vendor continues to see challenges in staffing and replacing  outgoing team member in the vendor staff despite a large bench strength available.  You just cannot replace a vendor staff by pulling someone from the bench, specially if the process, technology you are offshoring is complex. For lower end process it is a positive, not for complex, long ramp up learning time processes, technologies.  There could be a fairly high cost impact if not managed correctly.  One of the issues we try to address with our clients as they plan their transition projects is around knowledge transfer – during transitions and on going.

Here are some attrition numbers for some of the vendors as per their last quarterly report ( End of Dec 2009).

1) Infosys:
Attrition at 11.6%,
Total Employee Strength 109,882,
Net Addition this quarter 44,29 (Additional Details)
2) TCS:
Attrition Rate – 11.5% ( IT Services – 10.8%, BPO – 18.3%)
Total Employee Strength  143,761
Net Addition 7,692  (Additional Details)
3) Wipro:
Attrition Rate – IT services – 14.3%, BPO – 15%)
Total Employee Strength 102,746
Net Addition 4,855
4) Cognizant:
Attrition Rate: 11.2%
Total Employee Strength: 73,400
Net Addition : 10,300 ( includes UBS acquisition) (Additional Details)
5) Genpact:
Attrition Rate: 23% ( Pure play BPO firms have higher attrition)
Total Employee Strength: 38,600
Net Addition : 2,400 (Additional Details)
6) WNS:
Attrition Rate: 31% ( Pure play BPO firms have higher attrition)
Total Employee Strength: 21,392
Net Addition : 149 (Additional Details)
7) Syntel:
Attrition Rate: 11.2%
Total Employee Strength: 12,567
Net Addition : 1,080
iGate:
Attrition Rate:
Total Employee Strength: 6,910
Net Addition : 530
9) HCL Technologies:
Attrition Rate: IT Services – 12.8%, BPO Services – 21%
Total Employee Strength: 55,688
Net Addition : 1,691
10) EXL Services:
Attrition Rate: 22.6% ( billable)
Total Employee Strength: 10,736
Net Addition : 243

Mohit Sharma is the CEO of Corrystone Global Partners. Corrystone is a specialized globalization  firm providing advisory, education and staffing services to firms in  US and India. We work with  firms in the US  which are exploring low cost options for IT, Business Process work and  looking at ways to further optimize cost and manage operational risk. For firms based in India  we help with marketing presence , M&A & client management services in the US. Contact us at info@corrystone.com  to learn more about how we could help you.

DATE: March 8th, 2010
(EconomicTimes: LINK)

For the last 18 months attrition rates in IT/BPO firms out of  India and captives has been a non issue. A number of firms in their quarterly earning reports have also continued to show improvement in their ability to hold on to employees. (Q4,-2009 attrition: Cognizant Attrition, WNS attrition, Genpact Attrition, TCS Attrition, Infosys Attrition) . Compare this to the attrition rates for Q4-2008 which was around the time the financial crisis started, and the attrition rates showed signs of getting better ( Attrition Rates 2008 ) . This improvement in attrition rates was less   about the ability of the outsourcing firms to manage their employees  and more around the market crisis where the jobs and projects  disappeared.

 In some of my earlier posts, I had commented that if you look at glass half full, this was a relief  for companies offshoring their work as attrition was no more on their top list of risks.  This may be about to change with the markets opening up in India and  employees who  have felt they got the short end of the stick looking to switch jobs and bolt out of the door as offers and opportunities start coming back. With a number of firms now opening up their hiring process, going back to campuses for new recruits, if you have been working with offshoring vendors in India,  it may be time to plan for a spike in attrition rates.

The improved attrition rate

The market slowdown which took everyone by surprise and despite the brave face put  by outsourcing vendors that the financial crisis is good for the offshoring business, the impact of the economic crisis was global. It impacted the offshoring growth engine hard like the rest of the world . Employers who were jostling each other to offer better employee perks to retain and hold on to employees who had never seen an economy down cycle, realized that they dont need to do the pampering any more. With the slow down on the revenue side, vendors with operations in India had to continue to look at cost side to manage their growth expectations.  Employee perks started to go away, and salary increases became more performance driven and market driven if any. Given that the number of opportunities also suddenly disappeared overnight, the employees had no choice but to stay.

With the markets on the path to recovery ( in India)  and more projects going to vendors, attrition is bound to rise in the next coming months as employees who have been forced to stay will start looking for change. A number of folks I speak to in India have confided tha they have lost their employer loyalty and will switch to a stable, well paying job as soon as they get an opportunity.

The attrition rate may never reach the highs they were  before the crash , but have the potential to get back on the top of the risk lists for companies offshoring. The reason the attrition rates will not climb to their pre crisis days is that the employees while looking for change are more cautious to where they are going. Earlier it was less about the firm the employees were joining and more about the as employees even when looking for a change are not going to see a big jump in their pay checks or perks. Though a number of them will look for more ’stable’ firms. Smaller and mid size firms which suffered the most during this downturn may be the ones which will get affected the most in terms of rise in attrition rates. Larger firms can offer more stability to the employees which they will want now.

Overall in the marketplace though the salary structures will continue to be more rational and people looking for a change will have to understand the new market dynamics

For companies who are working with vendors in India it is though time to dust of your contracts and revisit the attrition, training and retention plans with your vendors.

Mohit Sharma is the CEO of Corrystone Global Partners. Corrystone is a specialized globalization  firm providing advisory, education and staffing services to firms in  US and India. We work with  firms in the US  which are exploring low cost options for IT, Business Process work and  looking at ways to further optimize cost and manage operational risk. For firms based in India  we help with marketing presence , M&A & client management services in the US. Contact us at info@corrystone.com  to learn more about how we could help you.

SOURCE: Barrons
DATE: March 8th, 2010

The Indian based outsourcing vendor stocks have done fairly well in the last few years. Shares of Infosys, Wipro are up by 300% since their lows in 2008. Some of the other shares like Genpact which has been stuck have seen upward momentum and have had a nice jump in the last year.  Currently Wipro trades at 34 times the earning, TCS at 22 times and Infosys at 26 times. 

The mid size firms like iGate, Mastek have seen the recovery coming back although at a slower pace. Their is the concern expressed about protectionism, weakeness in European economies and lack of job growth in the West as possible concerns why the outsourcing market may be in for a slower growth in the near future.

We think that the outsourcing marketplace is going to continue to grow but the growth rate for larger firms and others is going to be divergent. Where larger firms  are going to see a continued growth at a steady pace  ( although not the pre crash days) as they leverage their economies of scale and companies are comfortable with the name brands. These are firms like Infosys, TCS, Wipro. Wipro e.g. is diversifying into other non conventional area likes energy, consumer goods, defence.

Smaller or Mid size firms growth rate may be less than the larger firms as these firms figure out how to either build a niche to grow, survive. These firms are  going to be benefit  more by the tail end of the recovery than the larger firms whose clients typically larger organizations start loosening their purses earlier.   Where these smaller and mid size firms might see a growth opportunity is if the adoption of cloud computing expands the outsourcing/offshoring marketplace to participants which could not leverage this earlier. Namely the smaller and mid size firms in the US or the west.  Cloud computing though may not be all beneficial to the outsourcing firms as moving to cloud might be a more viable option to save costs vs leveraging offshoring.

Good news is that for companies looking to leverage outsourcing it is a buyers market. The bad news is that making the right decision with the changing pace of marketplace, new technologies and outsourcing vendors changing their models is a tough call. That is where we can leverage our experience to help you create the right roadmap and help you navigate the path.

Mohit Sharma is the CEO of Corrystone Global Partners. Corrystone is a specialized globalization  firm providing advisory, education and staffing services to firms in  US and India. We work with  firms in the US  which are exploring low cost options for IT, Business Process work and  looking at ways to further optimize cost and manage operational risk. For firms based in India  we help with marketing presence , M&A & client management services in the US. Contact us at info@corrystone.com  to learn more about how we could help you.

Indian Outsourcing: Labor’s Cheap, Shares Aren’t

DATE: Feb 22nd, 2010

1. The economy is gone solo & global and it is no where more evident than the freelance work which people perform all over the world sitting in their homes, coffee shops and even regular full time job locations!  Working on their mobiles, laptops, computers connected to the never asleep internet world. It is truly a 24X7X365 economy. Some have willingly moved to the freelance workforce, and others have been forced to go freelance to manage and survive in the economic crisis. Some others have chosen to sell and market their unique skill set to a marketplace which was never available for them earlier before the internet. Elance, a website which connects freelance workers with projects recently posted a summary of how the global marketplace works and it shows how geographically vast and diverse it is. Compared to the overall organized outsourcing marketplace , the freelance marketplace is still miniscule ($245 million) but amazing to see how incredibly diverse and global it is.
   For buyers of freelance work, maybe an individual setting up his own personal website, or a small business looking to get things done in a budget, freelance individuals offers an opportunity to get things done virtually at price points which did not exist earlier.

   Some interesting facts from the elance report ( LINK):
    

1. Around 310K project posted in the last 12 months
2. Total of around 100K providers on the website
3. Earnings from these projects on Elance – $245 million
4. Mobile application growth by 180%
5. India the leading provider for IT related work (Programming, Website)
6. US leading for Creative work ( article writing, Graphic Design)
7. US based freelancers leading for marketing related work (Internet marketing, SEO, lead generation)
8. If you can write well you can make a living as a freelancer. One of the highest sought after skills
9. In IT development – PHP, HTML, MySQL lead the skills desired.
10. California, New York and Texas have the largest number of states doing freelance work

The reality of this also reflects the signs of time. The growth of the Permanent Temporary worker ( Business Week Jan 25th, 2010).  Freelancing offers an opportunity for people to sell their services, competitively to people across the globe.

One thing which the facts don’t mention and will be interesting to see will be the origin of the projects. That is are the project mostly from the companies in the west ( Which I bet will be true).  So technically this is still outsourcing and like any structured outsourcing initiatives, things which are closer to clients – creative, marketing, sales are kept closer to home ( More US based providers). The technical aspect of development are easier to outsource to location independent , but cheapest providers ( Programming, Website development etc.)

The study  also showcases trends in technology changes ( Mobile growth of 180% is evidence of this, Growth of Android as a development platform).

For the right firms and individuals  this virtual workforce presents an incredible lab to startup ventures cost effectively. Managing and defining remote work is though not without it’s challenges and small or large, global teams will have similar challenges on communications, expectations. IP based work, copyright infringement and structure to go after a provider if something goes wrong is incredibily hard in smaller projects.

Never the less this freelance outsourcing economy presents an incredible in sight into the globalization at grass roots in the service industry. Plus if you have the skills which you can package and offer, an opportunity to get additional source of income. 

Would like to hear from firms and primarily individuals, who can leverage this as the sole source of income though.

Mohit Sharma is the CEO of Corrystone Global Partners. Corrystone is a specialized globalization  firm providing advisory, education and staffing services to firms in  US and India. We work with  firms in the US  which are exploring low cost options for IT, Business Process work and  looking at ways to further optimize cost and manage operational risk. For firms based in India  we help with marketing presence , M&A & client management services in the US. Contact us at info@corrystone.com  to learn more about how we could help you.

DATE: Feb 10th, 2010

A recent ruling in the UK courts highlights the outcome of a lengthy expensive  legal tussle between  BSkyB ( the client) and EDS (the supplier)  on making false promises and over committing. This is one of the most visible cases where what the sales teams promised, what was in the contract and what was eventually delivered ( or not ) showcases the gaps in what potentially vendors may be willing to promise and deliver.  For a £48 million contract, BSkyB was seeking damages to the tune of £700 million, but in a statement said on tuesday this week that it expects to receive about £200 million.

The contract in dispute is a 2000 contract signed between EDS and BSkyB to provide customer service technology for BSkyB call centers.  BSkyB terminated the contract two years later and moved the work in house.

In 2004 BSkyB filed a suite against EDS that is misled the company on project timing and cost ( Hmmm – I wonder what percentage of projects really get done on time and within cost!).  Typically there is a liability cap in all vendor contracts. This one had a cap of £30 million. The challenge for EDS is that the ruling claims deceit which make the cap invalid according to the ruling.

In a 468-page document that detailed the judgement, EDS was found to be at fault . It also appears that the the individual in question , who was an EDS employee and was later fired , Joe Gallway, was responsible for mis representing himself and for communicating to BSkyB that proper due diligence and analysis was done for the time needed to complete the delivery.

This is not the first time that there have been any issues with any outsourcing contract. Typically such arbitration processes are very expensive and lengthy and companies try hard to avoid these.  This still remains the challenge and although this ruling is a showcase precedent and a warning for suppliers to re look at their hiring policies for sales , it does not point to a system wide failure on supplier governance. I will do little to cause any wide spread panic or goverance triggers .  The ruling also primarily focused on the misconduct and lies of an individual  which makes it more of a personnel issue vs a total supplier side governance failure. Given the prohibitive cost and time of these lengthy legal battles, now though with a client friendly precedent, this ruling may have a limited impact on the supplier community long term. The impact of this would also be localised to how the firms sell within the UK markets and may have effect on larger deals and how they are structured and priced. It does question though the disconnect between the sales team of vendors which are trying harder in a growing competitive world to differentiate themselves and willing to go the ‘extra step’ and the delivery teams  which come to the table once the deal is done.

Mohit Sharma is the CEO of Corrystone Global Partners. Corrystone is a specialized outsourcing advisory firm providing consulting, staffing and training services to mid size firms and government agencies. We work with mid size firms and government agencies which are exploring low cost options for IT, Business Process work and  looking at ways to further optimize cost and manage operational risk. Contact us at info@corrystone.com  to learn more about how we could help you with your outsourcing intiatives.

DATE: Feb 9th, 2010

FACTS

• Broad based growth in all verticals 
•  North America continues to be the leader in percentage of revenues for the year and quarter
• Added 57 new clients and strategic clients increased by 5 to total of 144. Total number of active clients 589.
• Incremental and smaller discretionary projects coming back but clients not willing to commit to large discretionary projects
• Inorganic focused growth strategy and alliances continues to strengthen service offerings , vertical expertise and new geographies
• Does not plan to do large scale asset transfers for IT infrastructure services.

METRICS

• Gross Revenues – $902.7 million  YoY – (+20%), QoQ – (+6%)
• Net Income – $144 million YoY – (+28%)
• Fiscal Year 2009 revenues – $3.279 billion YoY (+16%)
• Fiscal Year 2009 income – - $535 million YoY(+24.2%)
• First Quarter 2010 revenue guidance – $935 million
• Fiscal 2010 revenue guidance – $ 3.935 billion
• $1.55 billion cash , no debt
• Revenue breakup by quarter
  • Banking and Financial Services – 41.9%
  • Healthcare and Life Sciences – 26.6%
  • Communications, High tech and Media – 13.4%
• Revenue breakup by geographies
  • North America -  78.8%
  • Europe – 18.6%
  • Others – 2.6%
• Revenue breakup by services
  • Application Management – 56%
  • Application Development – 44%
• People added this quarter – 10,300 (including UBS acquisition)
• Total employee strength – 73,400
• Offshore/Onshore employee ratio – 77/23
• Attrition 4^th quarter – 11.2%
• Salary increase in June quarter – market rate

LEARNINGS

• Cognizant is building a strong talent base and investing in client facing talent and integrated services offering which will continue to benefit Cognizant and maintain leadership position.
• Market business environment is stable and outsourcing could be a larger spend of the IT budgets.
• IT infrastructure Services, BPO will show growth and positive contribution to Cognizant as they tap into their existing clients to offer these services.
• Changing Industry trends will drive how companies use outsourcing. The trends could be digitization, disintermediation and other industry secular industry trends which are driven across different verticals.
• Cloud computing is still in discussion but has not affected and will not affect short term how outsourcing relationship are currently being drawn out.  

Release DATE: Jan 21st, 2010

FACTS

• Net decline in revenues due to
        – Seasonal decline in travel service
        – Decline in Insurance business and Aviva second year deal pricing
•  Net decline in income due to
        – Unwinding charges for interest rate swaps
        – Decline in travel, insurance business
        - Cost of adding new clients
• Decline in Insurance business
• Added 12 new clients and expanded existing 4 relationships (including Sabre)
• 2,100 non India employees including 1,100 in Philippines
• CEO Neeraj Bhargav stepping down, Ex Syntel CEO Keshav the new CEO
• Growth in F&A space
• Same level of profitability between India and Philippines

METRICS

• Gross Revenues – $149.114 million YoY – (+11.3%), QoQ – (-2.6%)
• Net Revenues – $96.8 million (YoY) – (-3.4%), QoQ – (-2.8%)
• Net Income – $11.1 million YoY – (-3.5%), QoQ – (-18.7%)
• Fiscal Year 2010 ( ending March 2010) Guidance –Revenue $390 million,Net Income $52 million
• Headcount – 21,392 ( Net addition of 149 from last quarter)
• Attrition – 31%
• Total Foreign Exchange losses for quarter – $2.3 million
• Cash Balance – $60 million

LEARNINGS

• Flat pricing trends in the markets. No downward movement but no increases.
• Pure play BPO players will continue to struggle for growth and have to find ways to leverage non linear growth models, diversifying in IT, IT packaged implementation or other space
• Pure play BPO players have to develop niche deep expertise to generate client wins and foster growth.
•  Higher snow fall in UK reduces auto claims and thus revenues for Indian vendors!

DATE: Feb 8th, 2010
SOURCE: Wipro Press Release

Wipro seem to be moving ahead of the IT vendor pack and setting up a presence in Washington DC to lobby the government and build a bridge with the US government policy makers.  Wipro has appointed Melanie Carter-Maguire as Vice President, Government Relations.

According to the press release “A seasoned Government Relations professional, Ms. Carter-Maguire will establish Wipro’s first Government Relations office in Washington, DC and oversee outreach and government affairs efforts with US officials and the Washington diplomatic community.”

In the long run this is a smart move by Wipro to have a platform to influence the decision makers when it comes to policies around outsourcing, offshoring which will continue to be in the fore front of decision making as the job market in the US continues to falter. The challenge Wipro may face is that as a single entity how effective it will be to do any meaningful or impactful work in the complex policy making corridors in DC.   This should be something which you would think a NASSCOM or any other industry body would work on vs individual firms setting up a presence in DC. None the less this is a smart move by Wipro to ensure it has a way to reach out policy makers in the US.

Infosys has set up a unit in Dallas, to go after state and federal government contracts based out of US but will be interesting to see how  effective they are in the long run without any effective lobbying or presence in DC working with policy makers.

Mohit Sharma is the CEO of Corrystone Global Partners. Corrystone is a specialized outsourcing advisory firm providing consulting, staffing and training services to mid size firms and government agencies. We work with mid size firms and government agencies which are exploring low cost options for IT, Business Process work and  looking at ways to further optimize cost and manage operational risk. Contact us at info@corrystone.com  to learn more about how we could help you with your outsourcing intiatives.

SOURCE: Business Outlook India
DATE: Dec 2009

LINK

It is the country’s largest pure-play BPO. It earned revenues in excess of $1 billion in 2008. It has 37,000 employees spread across 13 countries. With a CV like that, you’d think Genpact would be considered the perfect match by lesser BPO companies looking to be acquired. Yet, that’s not been the case. In deal after deal, it has failed to breast the tape first. It has, quite simply, been the perpetual bridesmaid.

Consider the facts: in the last two years, Genpact has been among the frontrunners in at least half a dozen small- and big-ticket M&A (merger & acquisition) deals. However, it has fallen short on almost every occasion. The last time it really tasted success was when it bought out its erstwhile parent GE Money’s captive 700-seater centre in Guatemala City, in August 2008. It had also made a couple of similar buyouts in the financial services and risk-management space earlier. But all these deals were worth less than $50 million.

In 2008, TCS beat Genpact, buying Citigroup’s BPO for $512 million. In October ’09, Cognizant pipped it, buying a UBS unit for $75 million.

Genpact’s M&A record has otherwise been rather disappointing, at least with regard to big-ticket deals. In 2008, TCS pipped it to the post, picking up Citigroup’s captive BPO for $512 million; in October this year, Cognizant outsmarted it to gobble UBS’s Hyderabad unit for $75 million. A month earlier, Genpact had come close to picking up something; it was on the verge of buying private equity firm Warburg Pincus’ 50% stake in WNS Global Services. But the latter decided to postpone the sale. Genpact seems to be jinxed.

“Jinx? I did not know one existed,” says Pramod Bhasin, Genpact’s President & CEO, trying to sound nonchalant. “Actually we haven’t tried that hard.” To be fair, he’s been hobbled by some bad luck, and sometimes, a smaller pocket. For instance, with the Citi BPO bid, it wasn’t even a close finish. “You can’t say that Genpact lost to TCS,” says a senior executive in a rival company that was also part of the bid. “The price that TCS paid was far higher than what any of the other bidders offered. And there were many bidders in the race.”

Again, the WNS deal may not have gone through but it isn’t a write-off yet. When Warburg indicated a willingness to sell, Bhasin had made an aggressive bid in excess of $500 million. Investment banking circles suggest that the WNS management was even in favour of closing the deal. But Warburg Pincus didn’t bite, and sought more up-front cash.

The deal could still happen sometime in early 2010. If it goes through, the wait could well be worth it for Genpact—WNS, the second largest pure-play BPO in the country, is almost half its size in terms of top line.

Still, the fact remains, that Genpact hasn’t been able to swing things when it matters. “There were one or two deals that we would have liked to go our way,” admits Bhasin.

Pricing Problems

So, why has it come a cropper when it comes to big-ticket deals? With $400 million in cash and cash-equivalents in hand, it certainly can’t be a shortage of funding. It couldn’t be the prospects either—Genpact performed consistently well even during the global recession. In the three quarters of 2009 to date (January-September), it maintained healthy top-line growth of 8.4%. Non-GE (General Electric) business is also picking up, rising 17.4% in Q3. While other players were laying off hundreds, the company added over 7,000 people to its headcount in 2009.

The deal-breaker, apparently, has always been the pricing. “We need to buy at the right price,” claims Bhasin. “It is always easy to pay more and hard to pay less.”

In 2009 alone, Genpact’s six-member M&A team—split between India and the US—looked into 40-50 prospective deals. They barely found seven to ten worthy of full-fledged due diligence. “Of these we took just 50% to the Board of Directors for consideration,” says Bhasin. Even after getting Board approval, another 50% fell through because of pricing issues.

The Iron Is Hot

But Genpact needs to make these deals work now, when many companies are ripe for the picking. According to TJ Singh, Research Director, Gartner India, the financial crisis has hastened the shakeout in the captive BPO space and this could well provide an opportunity for pure-play BPO companies like Genpact. Moreover, with IT companies such as TCS, Infosys and Wipro becoming more aggressive in the BPO space, M&As will become even more competitive, going forward.

For the company, it almost seems like an imperative. The GE business, which accounts for almost 40% of its top line, has been contracting. It dropped 4% in the third quarter, and is expected to remain depressed in the coming months. Analysts cite this—the need to de-risk itself of the diminishing GE business—as another reason for Genpact to look at acquisitions. They believe it should look at potential targets that would add to its domain knowledge in analytics, finance and accounting. “Genpact has to figure out ways to get into a non-linear growth model, into higher-margin businesses. It needs to broaden its offerings to existing clients and attract new ones,” says Mohit Sharma, CEO, Corrystone Global Partners, a consultancy. But, thus far, he’s quick to add, its captive acquisition strategy has not panned out.

On his part, Bhasin says the tough economic environment is also responsible for the lull in deal street. “If you can’t predict the future, how do you know what is the right price to pay today,” he says.

He expects to perform better in 2010, claiming that Genpact will sign at least three deals ranging anywhere between $50 million and $500 million in size. “We have a lot on the table,” he says, exuding confidence. After all, one big deal is all it will take to break the jinx.

By Sudipto Dey With inputs from Anurag Prasad

FACTS

• 4^TH       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%
• 4^th 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.