Debt raised to acquire Patni Computers has hit net income of IT services company iGATE which fell 64.3 per cent to $4 million ($11.2 million) for the second quarter of the calendar year, 2011.
Net revenues went up over 155 per cent, to $170.4 million ($66.8 million) while gross margin decreased 3.4 per cent to 34.7 per cent.
iGATE acquired Patni in May 2011 and the revenue figures for this quarter include Patni's results since May 16.
Commenting on the results, Mr Phaneesh Murthy, CEO, iGATE Patni, said that margins were hit by debt. “The integration with Patni is going smoothly and I'm pleased that a lot of our customers have been so overwhelmingly positive about the acquisition. But the $770-million debt will impact earnings for a little while.”
Attrition down
Mr Murthy said that for this quarter, the combined attrition came down to less than 20 per cent. “We added 21 new clients, of which nine are Fortune 1000.”
Discussing the integration with Patni, he said, “The first phase of the integration is complete. The second and third phases are under way.”
Discussing the outlook of the company in 2012, Mr Murthy said that a lot depended upon the environment when companies start working on their budgets. “The markets are very turbulent and if the environment at the time of budgeting is bad, clients budget conservatively. I hope the markets recover before companies start budgeting,” he said
US market
He also warned about a double dip in the US and said, "In January, I had spoken of a potential double dip in the third or fourth quarter of this year. I think that is pretty much possible. Housing is already in a double dip in the US.