Genpact's 3Q 09 results were in line with street estimates and the company reiterated its FY 2009 revenue guidance compared to a downward revision in 2Q 09, reflecting a stabilized business environment. Although on the face of it economic conditions are improving, companies across sectors are still adopting a cautious approach in terms of spending until stability sets into operations. We therefore expect customers to continue to rationalize budgets as part of wider cost cutting measures, which will mitigate revenue growth for IT-BPO services over the near term. We see the IT-BPO sector making a definite turnaround towards the latter half of FY 2010, with the full impact to be felt in FY 2011. Specific to Genpact, the FY 2009 guidance of between 6% – 9% y-o-y growth is expected to be led by non-GE client revenues driven by the company's focused efforts to retain client relationships. GE revenues are expected to decline in FY 2009 to low-single digits and remain subdued in the near-term owing to the impact on GE's business from global economic conditions. However, the company expects to expand its relationship with GE and grow revenues from it in the medium-to-long term. In the case of Global clients, Genpact's pipeline and deal conversions have strengthened with YTD client wins totaling 48, including 19 in 3Q 09 and 38% growth in the number of deals in the company's pipeline since 1Q 09, which offers a stable outlook for FY 2010. On the operating performance front, the company expects to effectively manage costs in order to boost margin and earnings expansion and has guided for higher adjusted operating income margin. Overall we expect business conditions for Indian offshore BPO service providers to improve gradually in FY 2010 as companies seek to explore low cost opportunities to reduce operational costs as they move out of the economic downturn. Hence at current levels we view the Genpact NYSE common stock as a decent investment opportunity.

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