Genpact is setting the pace as the first tier one India-HQ’d BPS player to report its FY12 results. With growth of 14.7% in Q4 ($507.7m) and 18.8% in the full year ($1.9bn) things are moving along very well. The adjusted operating margin however dropped to 16.5% in Q4 from 17.4% last time, although in the full year it remained steady at 16.5%.
Genpact has made a number of acquisitions over the past year, which will have helped boost the top line. The most recent of JAWOOD announced yesterday (see Genpact acquires US healthcare payer business) won’t have contributed, but previous deals of Accounting Plaza, EmPower Research, and its $550m purchase of IT services provider Headstrong in April 2011 (see here) will all have added revenue. We suspect Genpact is still seeing double-digit organic growth however.
We learnt a little more about the financials of JAWOOD. This will have a slightly negative impact on earnings in FY13, knocking Genpact’s adjusted operating margin expectations by 0.2% to between 15.8% and 16.3%. Nonetheless, FY13 revenue is expected to be up between 13.2% and 15.8% ($2.15bn to $2.2bn) – slower than FY12, but still pretty healthy.
Genpact is seeing strong growth in its core business process management business (up 21.3% FY and 21.1% Q4), and its business process analytics services division Smart Decision Services – this was up 31.3% in the full year, and up 21% in Q4. IT services is also growing at a strong rate, thanks in part to the Headstrong acquisition, Genpact now makes $445m from ITS, up from $339m in FY11 (23.4% of FY12 revenue vs. 21.2% last time). Clearly Genpact is seeing plenty of opportunities for joint ITS/BPS propositions in the market, and we suspect the added benefit of new vertical capability in areas like financial services and healthcare is driving cross-sell into the core BPM business.
SDS meanwhile hits a sweet spot in the BPS market, using people and technology to perform predictive analysis on structured, semi-structured and unstructured data across internal transaction systems, syndicated research sources and social media. The focus of SDS is on driving its clients’ business outcomes such as increasing revenue, improving return on investment, reducing costs, and managing risk and compliance. It is a key trend we point to in our UK Business Process Services Predictions 2013, and will explore further this year.