Patni Computer profit doubles

MUMBAI: Mid-size software exporter Patni Computer Systems reported a 100% rise in net profit to Rs 157 crore for the first quarter ended March 31, 2010, on improved demand for outsourcing services as well as foreign currency gains. The company, which recently won a $250 million outsourcing contract from US health insurer Universal American, saw revenues move up marginally to Rs 781.6 crore from Rs 776 crore a year ago.

The company forecast a drop in revenues at the lower end and flat growth at the higher end for its second quarter guidance at $171 million-$172 million. It has also given a lower guidance for net income at $27 million-$28 million, despite demand for IT and back-office services for Patni and for the industry picking up. Patni shares fell 2.4% to Rs 534.8 on BSE on Thursday.

Patni CFO Surjeet Singh attributed the muted revenue growth in Q1 and the lower Q2 guidance to ‘supply abrasion’ rather than demand issues. He said the improved demand scenario had resulted in high employee turnover for the company affecting performance. Attrition spiked to 17.7% compared to 13.2% in the December 2009 quarter, even when calculated on a trailing twelve months basis and excluding BPO operations. The total number of employees were under 14,000. The company intends to hire 2,000-3,000 people in Q2 and Q3 to meet demand and consequently, expects performance in the second half of its fiscal to pick up.

The new recruits will mostly be freshers in line with the company’s policy of maintaining a 70:30 ratio of freshers to experienced people, Mr Singh said.