Firstsource sees 40% drop in net profit

[dwarakesh]

Firstsource Solutions, one of India's leading pure-play BPO companies, recorded a 40 per cent drop in net profit to Rs 12 crore for the third quarter ended December 2008, from Rs 20 crore in the corresponding previous quarter.

The revenue of the group grew 19 per cent to touch Rs 447 crore, compared to Rs 359 crore for the same quarter a year ago. On a sequential basis, the company's net profit dropped 59 per cent from Rs 28 crore.

This was mainly due to a significant increase in its delivery capacity including setting up new delivery centers and net addition of around 3,000 employees, one of the highest in the history of the company. The returns on these investments would be visible only in this quarter.

Also a decrease in volume in collection business, problems in healthcare business and increased employee expenses are some of the factors which put pressure on the margins.

Revenues from North America declined by 4-5% whereas it grew by around 4% in the UK region. Firstsource Solutions gets around 60-65% of its revenue from North America and 25% from UK. But the rupee depreciation helped the company and its rupee-denominated revenue grew at around 4.5% sequentially.

The company expects to maintain its annual revenue growth guidance of 32% for FY '09 but might not maintain the operating margin at 10-10.5% as projected earlier.

Source: Bpowatchindia