Nasdaq-listed iGATE has reported better-than-expected profits on the back of multi-million outsourcing orders.
The company recorded a 136 per cent rise in net profit or $30 million for the second quarter ended June 30, 2013 against a net profit of $12.7 million in the April-June quarter last year.
Revenues increased to $283.3 million, a 3 per cent increase over the previous quarter and 6 per cent increase when compared to the same period last year.
In a call, new CEO Gerhard Watzinger, who took over from Phaneesh Murthy, said that the deal pipeline for the company looks strong in the next two quarters (the company follows the January-December accounting year). In the second quarter, iGATE booked orders worth $600 million, including three significant multi-year contracts each valued at $100 million from clients such as MetLife.
iGATE officials feel that after talking to their clients, the outsourcing business is starting to see some stability with clients indicating a willingness to spend.
Pressure on margins
This also shored up the margins of the company and gross margins rose to 37.9 per cent in the quarter from 37.4 per cent in the last quarter. However, the company continues to see pressures on its margins going forward, a trend which is playing out amongst some of the other IT biggies like Infosys.
“While we have seen stability in billing rates, we see pressures in areas of commoditised business like software application development,” said Watzinger.
iGATE added 11 new customers during the quarter, of which two were Fortune 1000 companies and the company ended the second quarter of 2013 with 28,300 employees. Further, its Board, which had set up a committee to search for a CEO in the place of Murthy, is still in the process of finalising a candidate.
On the US Immigration Bill reforms, Watzinger said the company is assessing the situation.