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US slowdown to hit new deals: Genpact
BS Reporter in Mumbai | May 05, 2008 18:42 IST
With fears of economic uncertainty in the US gaining ground, Genpact, India's largest business process outsourcing firm, says it is witnessing delay in getting new contracts.
"We continue to watch the business environment carefully. We are witnessing some postponement of contracts in the IT as well as BPO business. The cycle-time for deals has certainly increased from three to six months to nine to twelve months, especially for firms outsourcing for the first time," Pramod Bhasin, president and CEO, Genpact, told analysts during a conference call.
However, he said the company has witnessed increased and faster ramp-ups from existing clients.
"There is a greater demand for re-engineering, faster hiring impact and demand for transition work. In fact, we have seen faster ramp ups from some of the key BFSI clients," said Bhasin.
The company posted robust numbers for the first quarter ended March 31, 2007 with net income nearly 11 times up and revenues up 33 per cent.
GE, one of Genpact's largest clients, might also spend less going forward due to the hit that it has taken because of the recent market turmoil.
"GE will cut costs. I think we may see less spending from GE. However, there are other areas within the company that give us enough scope to generate business, such as infrastructure and healthcare."
The company is also planning to increase business from India and China. It already has two clients in India and won a BFSI client in China.
Unlike several Indian IT firms, Genpact posted forex gains of $22.4 million. Of this, nearly $15.7 million were linked to the company's long term hedging strategy. The company will utilise 10 per cent of its revenue for capital expenditure.