India's top BPO firm Genpact today reported a 1.7% dip in its net profit for the third quarter ended September 2009. The company has however upheld its full-year revenue guidance on the back of positive global cues.

In an interview with CNBC-TV18, Pramod Bhasin, President and CEO of Genpact, spoke about the results and his outlook for the company.

Here is a verbatim transcript of the exclusive interview with Pramod Bhasin on CNBC-TV18. Also watch the accompanying video.

Q: A cursory look at your numbers also reveals that there is a contraction in your margin. Could you tell us what kind of pressures you felt on the operating margin front and what is your outlook on that picture?

A: It is actually not a contraction. Our adjusted operating income has just gone up by 10%. The net income number you just talked about went down mainly because of change in interest rates and in interest income which has nothing really to do with our core business. So our margins are actually very good and have done very well this quarter in line with previous quarters.

So while there is pricing pressure, I think we continue to be able to drive good efficiencies, we continue to be able to drive productivity for our customers and ourselves. I think we will continue to expect to see our margins improve over time. If you look at our adjusted operating income margins, they have been terrific this quarter versus last year’s quarters.

Q: What is your own assessment of the operating environment? When you talk to clients do you get a sense that there are more deals out there in the pipeline, you get the feeling that the worst is over?

A: Absolutely. The outlook is much more positive. If you look at our numbers, our pipeline is at record highs, our win rates are at record highs. The conversion time tables for customers have improved. We are seeing more and more customers from a wide range of geographies and types of customers. So,I think what is encouraging to us is the diversity in our customer pipeline.

So it is very large customers, marquee names to small to medium sized companies which are thinking about outsourcing for the first time, to ramp up some existing customers. All of those are showing great strength. In fact as we mentioned on our earnings call, the number of deals in our pipeline has gone up by 38% versus Q1 of this year. We are on a calendar year and not on a fiscal year. Our year-end is December. So, the number of deals has gone up significantly. So the outlook for us and generally for the industry has improved considerably.

Q: What about your non GE clients? I believe your non GE business is grown by about 17% and that accounts for almost 60% of your revenues. Going forward what is the outlook as far as non GE clients are concerned?

A: They remain our real growth driver. They will remain the largest part of our business and in fact they will continue to grow much faster than GE will and consequently you are going to see concentration of GE in our revenues to keep going down. For the first time GE dipped below 40% of our revenues, it is 39% now this quarter.

Global client growth has been very robust and the bulk of our pipeline is around global clients. In fact the rate of growth slowed down this quarter versus say 20% earlier now to about 12% in overall IT and business process terms. That rate of growth will also start showing signs of increase because that really was driven by events that happened 10-12 months ago. We are in a long cycle business. So you see the impact of events that happened 12 months ago, you see the impact now. That impact will also be changing. So the rate of growth in itself should accelerate quite significantly as we look out into 2010 and beyond.

Q: A quick word in terms of pricing because the last time we spoke you were continuing to see pricing pressure. I now understand that the situation is somewhat stable. Are you back in the market in terms of hiring?

A: We always went back in the market. We have always been hiring. We have never stopped hiring because if you look at our numbers we have grown all the time unlike many others in the industry. Our volumes have never declined. There has never been a net decline in our volumes. So, we have always been in the hiring business.

Unfortunately, as you know, attrition means that you have to be in the hiring business anyway. So that will continue. Hiring will now increase and we expect it to accelerate both during the fourth quarter as well as into 2010.

Pricing has definitely stabilised. It stabilised probably at a new low. Clients have tasted blood, people have said we can get better pricing, I think they will demand greater productivity. But during the time of recession both the industry and people like us, I think we’ve become a lot more efficient. So I do not think it will necessarily impact our margins. But pricing has stabilised and pressure on pricing has really been reduced now quite significantly versus what it was perhaps nine months ago.