Genpact Reports 2008 Fourth Quarter and Full Year Results

Genpact Limited (NYSE: G), a leader in the globalization of services and technology and a pioneer in managing business processes for companies around the world, today announced financial results for the fourth quarter and full year ended December 31, 2008.

Key Financial Results – Full Year 2008

– Revenues were $1.04 billion, up 26% from $823.2 million in 2007.
– Net income was $125.1 million, up 122% from $56.4 million in 2007; net income margin was 12.0%, up from 6.9% in 2007.
– Diluted earnings per common share were $0.57, up from $0.12 per share in 2007.
– Adjusted income from operations increased 33% to $178.4 million, compared to $134.4 million in 2007.
– Adjusted income from operations margin was 17.1%, up from 16.3% in 2007.
– Adjusted diluted earnings per share were $0.76, up from $0.50 in 2007.

Key Financial Results – Fourth Quarter 2008

– Revenues were $281.8 million, up 22% from $231.6 million in the fourth quarter of 2007.
– Net income was $47 million, up 51% from $31.2 million in the fourth quarter of 2007; net income margin for the fourth quarter of 2008 was 16.7%, up from 13.5% in the fourth quarter of 2007.
– Diluted earnings per common share were $0.22, up from $0.14 per share in the fourth quarter of 2007.
– Adjusted income from operations increased 24% to $58.7 million compared to $47.3 million in the fourth quarter of 2007.
– Adjusted income from operations margin was 20.8%, up from 20.4% in the fourth quarter of 2007.
– Adjusted diluted earnings per share were $0.23, up from $0.20 in the fourth quarter of 2007.

Pramod Bhasin, Genpact’s President and CEO said, “Genpact completed 2008 with solid growth in revenue, margins and earnings despite the continuing challenges in the global economy. Revenues were up 26% for the year, driven by balanced growth with existing Global Clients as well as growth with GE. We continue to diversify and drive growth across key geographic markets with new delivery centers in Guatemala, Poland and Morocco.”

Revenues from clients other than GE, which we refer to as Global Clients revenues, grew 62% over 2007 driven by our ability to grow with our existing clients across the broad spectrum of our services and solutions.

During the fourth quarter of 2008 we added a number of clients from a wide range of industries and geographies, with whom we believe we can grow substantially in the longer term. Among these new additions are:

• A leading provider of retail-based financial services in the BSFI space
• A global chemicals manufacturing and marketing company
• A major building materials supplier
• A major Indian financial services company
• A European biopharmaceuticals company

GE revenues for 2008 grew 1.8% over 2007, prior to adjustments for dispositions by GE of businesses that we continue to serve. Adjusted for such dispositions by GE, the growth rate was 7%.

Revenue per employee in 2008 increased to $30,800 from $28,200 in 2007, reflecting a combination of higher value work we are doing for clients and geographic mix.

As of December 31, 2008, Genpact had approximately 36,200 employees worldwide, an increase from 32,700 at the end of 2007. Our attrition rate for the entire year, measured from day one of employment, was 26% compared to 30% in 2007. Genpact’s attrition rate would be 20% if measured after six months of employment, as many of Genpact’s competitors do.

Diversified Business Model

Genpact’s clients are in a diverse range of industries. In 2008, 42% of our revenues were from banking, financial services and insurance clients and 42% were from manufacturing clients that included aircraft, infrastructure, automotive, and pharmaceuticals businesses. The remaining 16% of revenues for 2008 came from clients providing healthcare, retail, transportation and logistics, media and entertainment and hospitality services.

In 2008, approximately 80% of Genpact’s revenues came from business process services, up from 76% in 2007, while revenues from IT services were 20%, reflecting the continuing industry softness in IT spending.

Bhasin added, “Our balanced revenue growth in 2008 – by client, vertical market and geographic region – reflects Genpact’s ability to expand its relationships with clients by providing services that address their needs, as well as add new clients to drive sustainable revenue growth. Existing clients represented approximately 85% of our growth in 2008, with the balance coming from new clients added during the year. Our results demonstrate the trust our clients have in Genpact and our ability to deliver value to them, especially in these turbulent times.”

In 2008, 29 client relationships each accounted for $5 million or more of our annual revenues, up from 18 in 2007. Of those, four client relationships each accounted for $25 million or more of our annual 2008 revenues. We believe that several of the remaining 25 clients accounting for $5 million of more of 2008 revenues, as well as some of our newer clients, can each eventually grow to $25 million or more in annual revenues.

Improved Profitability and Cash Flows

For 2008 we improved our adjusted operating income margin by 80 basis points to 17.1% from 16.3% in 2007, primarily resulting from our ability to control our costs relative to revenue growth.

Genpact generated $211 million of cash from operations in 2008, up from $150 million in 2007, primarily due to higher profits and better working capital management. Genpact has a strong balance sheet, with approximately $385 million in Cash and Cash Equivalents, Short Term Investments and Short Term Deposits with GE.

2009 Outlook

Bhasin continued, “We are today providing our first look at guidance for 2009. We saw changes in the environment over the course of the year, which accelerated dramatically in the fourth quarter due to the liquidity crisis, and resulted in a recession. While this makes for challenges and uncertainty, it also produces opportunities. We see new opportunities in specific areas such as collections, supply chain, India and China and intend to put renewed focus on these areas to drive growth. Our clients are increasingly focused on cash flow and cost containment.”

“Genpact is well-positioned with solutions to address these needs. We are staying close to our clients to ensure that our execution is flawless and drives business outcomes that are of relevance to them, with a focus on cash improvement and cost management. We believe this is the right time to invest in our clients and our capabilities and that businesses that invest during difficult times emerge stronger in recovery. We are also preparing for what we expect will be an increasingly competitive pricing environment.”

“Based on our current view of our markets and feedback from our clients, we expect revenue growth of 10% to 15%, from a base of $1.04 billion in 2008, and adjusted operating income margin of 16% to 17%, compared to 17.1% in 2008. We are still very optimistic about the opportunities for Genpact, both with existing clients and potential new ones, but we are taking a cautious approach to the current and anticipated environment."

Conference Call

Genpact management will host a conference call at 8 a.m. (Eastern Standard Time) on February 18, 2009 to discuss the Company’s performance for the periods ended December 31, 2008. To participate, callers can dial 1 (866) 383-8003 from within the U.S. or 1 (617) 597-5330 from any other country. Thereafter, callers need to enter the participant passcode, which is 72051182.

For those who cannot participate in the call, a replay and podcast will be available on our website, www.genpact.com, after the end of the call. A transcript of the call will also be made available on our website.

About Genpact
Genpact is a leader in the globalization of services and technology and a pioneer in managing business processes for companies around the world. The Company combines process expertise, information technology and analytical capabilities with operational insight and experience in diverse industries to provide a wide range of services using its global delivery platform. Genpact helps companies improve the ways in which they do business by applying Six Sigma and Lean principles plus technology to continuously improve their business processes. Genpact operates service delivery centers in India, China, Hungary, Mexico, Morocco, the Philippines, Poland, the Netherlands, Romania, Spain, Guatemala and the United States. For more information, see our website at: www.genpact.com.