iGATE profit jumps on year, but down on quarter

BANGALORE: Mid-sized software and service exporter iGATE Global reported on Thursday its quarterly profit jumped from a year ago, but fell from the preceding three months due to higher salaries and a weaker euro.

The Bangalore-based company, a unit of Nasdaq-listed iGATE Global Solutions Ltd., reported a net profit of 14.2 million rupees ($0.3 million) for its fiscal first-quarter ended June 30, soaring from 1.1 million in the year-earlier period.

But the earnings were lower than the 22.4 million rupees in the January-March quarter, as rising salary costs effected in April and a fall in the euro eroded profits in rupee terms, Chief Executive Officer Phaneesh Murthy said.

Its shares fell as much as 4.3 percent to 219 rupees after the results in a slightly weaker Bombay market.

Revenue rose to 1.47 billion rupees from 1.41 billion in the year-earlier quarter.

The rates for work done in India for overseas clients were 3 to 5 percent higher than in the preceding three months, while the billing for jobs done at client sites abroad were stagnant, Murthy.

"New deals are coming in at significantly higher prices than in the previous quarter," he said. Some 65-67 percent of the work done is executed in India.

iGATE said it won 11 new clients in the June quarter, of which nine were in the Fortune 1000 list of leading global companies. It also added 331 staff, taking its total headcount to nearly 4,300. In the full year, it plans to add more than 1,000.

Murthy, a former sales head at Infosys Technologies Ltd., India's second-biggest software exporter, said the company was also incurring costs in building facilities and expanding staff to catch up with industry leaders.

The company said it signed a leading North American financial service group as a client in the past quarter in a multi-year agreement. Murthy said the deal was worth millions of dollars.

He said the company was focusing on relatively smaller clients as it competed with bigger players in India's booming industry driven by outsourcing.

Murthy said the company inducted on its board Karl Heinz Achinger, a former board member of the services unit of auto-maker DaimlerChrysler and consultancy firm Cap Gemini in an effort to win more European deals.