You should read the following discussion in conjunction with our Consolidated Financial Statements and related Notes included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2007 and with the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2007. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in or implied by any of the forward looking statements as a result of various factors, including but not limited to those listed below and under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2007.

We have made statements in this Quarterly Report on Form 10-Q (the "Quarterly Report") in, among other sections, this Part 1 Item 2-"Management's Discussion and Analysis of Financial Condition and Results of Operation", that are forward-looking statements. In some cases, you can identify these statements by forward-looking terms such as "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," "could," "may," "shall," "will," "would" and variations of such words and similar expressions, or the negative of such words or similar expressions. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, which in some cases may be based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks outlined in Part I, Item 1A-"Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2007. These forward looking statements include, but are not limited to, statements relating to:

† our ability to retain existing clients and contracts;

† our ability to win new clients and engagements;

† the expected value of the statements of work under our master service agreements;

† our beliefs about future trends in our market;

† expected spending on business process services by clients;

† foreign currency exchange rates;

† our rate of employee attrition;

† our effective tax rate;

† competition in our industry;

† our limited operating history and our ability to grow our business and effectively manage growth and international operations while maintaining effective internal controls;

† our relative dependence on GE;

† our ability to hire and retain enough qualified employees to support our operations;

† our dependence on favorable tax legislation and tax policies that may be amended in a manner adverse to us or be unavailable to us in future;

† increases in wages in locations in which we have operations;

† restrictions on visas for our employees traveling to North America and Europe;

† our ability to maintain pricing and asset utilization rates;

† fluctuations in exchange rates between U.S. dollars, euros, U.K. pounds sterling, Chinese renminbi, Hungarian forint, Japanese yen, Indian rupees, Australian dollars, Philippines Peso and Romanian leu;

† our ability to retain senior management;

† our dependence on revenues derived from clients in the United States;

† the selling cycle for our client relationships;

† our ability to attract and retain clients and our ability to develop and maintain client relationships based on attractive terms; †
† legislation in the United States or elsewhere that adversely affects the performance of business process services offshore;

† increasing competition in our industry;

† telecommunications or technology disruptions or breaches, or natural or other disasters;

† our ability to protect our intellectual property and the intellectual property of others;

† regulatory, legislative and judicial developments, including the withdrawal of governmental fiscal incentives;

† the international nature of our business;

† technological innovation;

† unionization of any of our employees;

† political or economic instability in countries where we have operations;

† worldwide political, economic or business conditions;

† political, economic or business conditions where our clients operate; and

† our ability to successfully consummate or integrate strategic acquisitions.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Achievement of future results is subject to risks, uncertainties, and potentially inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward looking statements. We are under no obligation to update any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-K, Form 10-Q and Form 8-K reports filed with the SEC.

Overview

We are a leader in the globalization of services and technology and a pioneer in managing business processes for companies around the world. We began in 1997 as the India-based captive business process services operation for GE Capital, GE's financial services business. As the value of offshore outsourcing was demonstrated to the management of GE, it became a widespread practice at GE and our business grew in size and scope. We took on a wide range of complex and critical processes and we became a significant provider to many of GE's businesses, including Consumer Finance (GE Money), Commercial Finance, Insurance, Healthcare, Industrial, NBC Universal and GE's corporate offices.

Prior to December 30, 2004, the business of the Company was conducted through various entities and divisions of GE. On December 30, 2004, in a series of transactions we refer to as the "2004 Reorganization," GE reorganized these operations by placing them all under Genpact Global Holdings, a newly formed Luxembourg entity, and subsequently an affiliate of GE sold an indirect

60% interest in that entity to General Atlantic and Oak Hill. Since the 2004 Reorganization, affiliates of GE have sold a portion of its equity in us pursuant to several separate transactions. As of June 30, 2008, GE (through its affiliates) owned approximately 18.7% of our outstanding equity.

Following the 2004 Reorganization, we began operating as an independent company. We separated ourselves operationally from GE and began building the capabilities necessary to be successful as an independent company. Among other things, we expanded our management infrastructure and business development capabilities so that we could secure business from clients other than GE, which we refer to as "Global Clients". We substantially expanded administrative functions for which we had previously relied primarily on GE, such as finance, legal, accounting and human resources. We created separate employee benefit and retirement plans, developed our own leadership training capability and enhanced our management information systems. We began actively pursuing business from Global Clients as of January 1, 2005.

On July 13, 2007, prior to the commencement of our initial public offering, we completed a series of transactions we refer to as the "2007 Reorganization." See "-the 2007 Reorganization" below. In August 2007, we completed an initial public offering of our common shares, pursuant to which the Company and our selling shareholders sold 22,941,177 and 17,647,059 common shares, respectively, at a price of $14 per share. The offering resulted in gross proceeds of $568.2 million and net proceeds to the Company and the selling shareholders of approximately $303.5 million and $233.5 million, respectively, after deducting underwriting discounts and commissions. Additionally, we incurred offering-related expenses of approximately $9.0 million.

The 2004 Reorganization

As noted above, the 2004 Reorganization was consummated on December 30, 2004, pursuant to which we became an independent company. The 2004 Reorganization has been accounted for under the purchase method under SFAS No. 141, "Business Combinations", which resulted in a new basis of accounting. The total purchase consideration was $780 million. The allocation of the total consideration to the fair values of the net assets acquired resulted in goodwill of $485.2 million and intangible assets of $223.5 million. The intangible assets are being amortized over periods ranging from 1 to 10 years. As a result, for periods after December 31, 2004, we have had, and will continue to have, significant non-cash charges related to the amortization of such intangible assets. See notes 1 and 8 to our unaudited interim consolidated financial statements.

Genpact Limited was incorporated in Bermuda on March 29, 2007 as a subsidiary of Genpact Global Holding S.à.r.l., or GGH, with the intent of making it the new holding company of our business. On July 13, 2007, Genpact Limited effectuated a transaction that resulted in the shareholders of GGH exchanging their common shares in GGH for common shares of Genpact Limited, and the shareholders of Genpact Global (Lux) S.à.r.l., or GGL, exchanging their preferred and common shares in GGL for common shares of Genpact Limited. As a result, Genpact Limited became the owner of all the capital stock of GGL and GGH.

Pursuant to the above transaction, the ownership interests of the shareholders of GGH, including the minority shareholders, were exchanged for shares of Genpact Limited irrespective of whether such shareholders owned equity directly in GGH or indirectly through GGL. Such shareholders acquired the same proportionate economic interest in Genpact Limited as they had in GGH immediately prior to the 2007 Reorganization.

The above legal reorganization of GGH and GGL into the Company has been accounted for as a transfer of net assets or exchange of equity interests between entities under common control. Accordingly, the assets and liabilities transferred are recorded at their carrying value in a manner similar to as-if pooling of interest accounting. Since the accounts of these entities were stated at their historical amounts for all periods presented, no adjustments were required for purposes of restating the financial statements on a consolidated basis for the current and the prior periods.

As part of the 2007 Reorganization, GGH became a Bermuda company and its name changed to Genpact Global Holdings (Bermuda) Limited. In addition, GGL also became a Bermuda company, in accordance with the laws of Bermuda and Luxembourg and its name changed to Genpact Global (Bermuda) Limited.

The effect of the exchange of common shares of the Company in the 2007 Reorganization with the common shares of GGH has been retrospectively applied to stockholders' equity and per share amounts in the consolidated financial statements. This retrospective application had no material effect on other amounts. The effect of the exchange of preferred shares in the 2007 Reorganization has been applied to stockholders' equity and per share amounts in the consolidated financial statements from the effective date of the 2007 Reorganization.

Critical Accounting Policies and Estimates

For a description of our critical accounting policies, see Note 2-"Summary of significant accounting policies" under Item 1-"Financial Statements" above and Part-II Item-7-"Management's Discussion and Analysis of Financial Condition and Results of Operation - Critical Accounting Policies and Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2007.

Reclassification

In order to more clearly reflect our costs, including the impact of our long-term foreign exchange hedging strategy, we have reclassified our foreign exchange gains or losses from a separate line item above income from operations to the underlying hedged items, namely, selling, general and administrative expenses, cost of revenue or net revenues, as applicable. The residual foreign exchange gains or losses, primarily relating to the re-measurement of foreign currency assets or liabilities, mainly accounts receivable, and the ineffective portion of foreign exchange gains or losses, if any, are now reclassified on the income statement below income from operations as foreign exchange (gains) losses, net. This reclassification does not affect net income or earnings per share. Our financial statements for the periods ended June 30, 2007 and 2008 reflect such reclassification.

Results of Operations



The following table sets forth certain data from our income statement in
absolute amounts and as a percentage of net revenues for the three months and
six months ended June 30, 2007 and 2008.



                          Three months ended June 30,           Six months Ended June 30,
                            2007               2008              2007              2008
                                               (dollars in millions)
Net revenues-GE       $   124.2    61.9 % $ 125.9    49.6 % $ 245.0    65.0 % $ 240.2    49.2 %
Net revenues-Global
Clients                    76.0    37.9 %   127.7    50.4 %   130.5    34.6 %   248.0    50.8 %
Other revenues              0.4     0.2       0.0     0.0 %     1.4     0.4       0.0     0.0 %

Total net revenues        200.7   100.0 %   253.6   100.0 %   376.8   100.0 %   488.2   100.0 %

Cost of revenue           120.7    60.2 %   147.1    58.0 %   229.6    60.9 %   293.2    60.1 %
Gross profit               79.9    39.8 %   106.5    42.0 %   147.2    39.1 %   195.0    39.9 %
Operating expenses
Selling, general
and administrative
expenses                   52.5    26.2 %    66.6    26.3 %   100.6    26.7 %   128.8    26.4 %
Amortization of
acquired intangible
assets                      9.4     4.7 %     9.6     3.8 %    18.6     4.9 %    19.8     4.1 %
Other operating
(income) expense           (1.2 )   0.6 %     1.1     0.4 %    (1.7 )   0.5 %    (0.1 )   0.0 %

Income from
operations                 19.2     9.5 %    29.2    11.5 %    29.7     7.9 %    46.5     9.5 %
Foreign exchange
(gains) losses, net        (0.4 )   0.2 %     0.9     0.3 %    (0.5 )   0.1 %    (5.8 )   1.2 %
Other income
(expense), net             (3.5 )   1.7 %     3.1     1.2 %    (7.1 )   1.9 %     5.0     1.0 %

Income before share
of equity in
earnings/loss of
affiliate, minority
interest and income
tax expense                16.1     8.0 %    31.4    12.4 %    23.1     6.1 %    57.4    11.7 %
Equity in loss of
affiliate                   0.0     0.0       0.1     0.0       0.1     0.0       0.3     0.1
Minority interest           2.8     1.4       3.1     1.2       3.7     1.0       6.0     1.2
Income tax expense          6.2     3.1 %     3.4     1.3 %    10.4     2.8 %     6.5     1.3 %

Net income            $     7.1     3.5 % $  24.8     9.8 % $   8.9     2.4 % $  44.5     9.1 %

Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007

Net revenues. Our net revenues increased by $52.9 million, or 26.4%, in the second quarter of 2008 compared to the second quarter of 2007. We continue to grow our net revenues primarily through relationships with existing clients. In addition, our 'net realization per employee' increased due to better mix and price.

Net revenues from GE increased by $1.6 million, or 1.3%. As described under "Management's Discussion and Analysis of Financial Condition and Results of Operation - Overview -Classification of Certain Net Revenues" in our Annual Report on Form 10-K for the year ended December 31, 2007, certain businesses in which GE ceased to be a 20% shareholder in 2007 were classified as GE net revenues for part of the year until the divesture by GE and as Global Clients net revenues after the divesture by GE. GE revenues for the second quarter of 2008 grew by 9.5% over the second quarter of 2007 after the adjustments for such dispositions by GE. GE net revenues declined as a percentage of our total net revenues from 61.9% in the second quarter of 2007 to 49.6% in the second quarter of 2008, due to growth in revenues from our Global Clients.

Net revenues from Global Clients increased by $51.7 million, or 68.0%. This increase resulted from revenues from several new clients with which we entered into master service agreements, or MSAs, in 2005, 2006 and 2007. In addition, a portion of the overall increase (approximately $1.0 million) was attributable to the inclusion of the results of Axis Risk Consulting Private Limited, or Axis, which we acquired in December 2007. A portion of the increase in net revenues from Global Clients was also related to GE ceasing to be a 20% shareholder in certain businesses and the reclassification of related net revenues as described above. As a percentage of total net revenues, net revenues from Global Clients increased from 37.9% in the second quarter of 2007 to 50.4% in the second quarter of 2008. Excluding revenues from businesses divested by GE in 2007, Global Client revenues increased organically by approximately 56.8%.

Cost of revenue. The following table sets forth the components of our cost of revenue in absolute amounts and as a percentage of net revenues:

                                    Three Months Ended June 30,
                                       2007               2008
                                       (dollars in millions)
Personnel expenses              $    69.6     34.7 % $  91.6   36.1 %
Operational expenses                 41.8     20.8      46.9   18.5
Depreciation and amortization         9.3      4.7       8.5    3.4
Cost of revenue                 $   120.7     60.2 % $ 147.1   58.0 %

Cost of revenue increased by $26.3 million, or 21.8%. This increase reflected the general growth of our business. However, as a percentage of net revenues, cost of revenue decreased by 2.2%, reflecting increased internal efficiencies.

The largest component of the increase in cost of revenue was personnel expenses, which increased by $22.0 million, or 31.7%. Such increase reflected the general growth of our business. Personnel expenses as a percentage of net revenues increased from 34.7% in the second quarter of 2007 to 36.1% in the second quarter of 2008, primarily due to the hiring of new resources to manage growth.

In addition, operational expenses increased by $5.1 million, or 12.3%. This increase is as a result of growth in our business. As a percentage of net revenues, operational expenses decreased from 20.8% in the second quarter of 2007 to 18.5% in the second quarter of 2008. Depreciation and amortization expenses as a component of cost of revenue decreased by $0.8 million to $8.5 million in the second quarter of 2008 primarily due to certain assets related to the 2004 Reorganization being fully depreciated in 2007 and sale of certain software licenses in the second quarter of 2008.

As a result of the foregoing, our gross profit increased by $26.5 million, or 33.2% and our gross margin increased from 39.8% in the second quarter of 2007 to 42.0% in the second quarter of 2008.

Selling, general and administrative expenses. The following table sets forth the components of our selling, general and administrative expenses in absolute amounts and as a percentage of net revenues:

                                                   Three Months Ended June 30,
                                                      2007               2008
                                                      (dollars in millions)
Personnel expenses                             $    37.5      18.7 % $ 43.7   17.2 %
Operational expenses                                13.3       6.6     20.0    7.9
Depreciation and amortization                        1.7       0.9      3.0    1.2
Selling, general and administrative expenses   $    52.5      26.2 % $ 66.6   26.3 %

Selling, general and administrative expenses, or SG&A expenses, increased by $14.1 million, or 26.9%. This was primarily due to an increase in operational expenses and depreciation and amortization. This increase reflects general growth in our business. As a percentage of net revenues, SG&A expenses increased from 26.2% in the second quarter of 2007 to 26.3% in the second quarter of 2008.

Personnel expenses increased by $6.2 million, or 16.4%, reflecting the general growth in our business. As a percentage of net revenues, personnel expenses decreased from 18.7% in the second quarter of 2007 to 17.2%, in the second quarter of 2008 primarily due to efficiencies achieved in our support headcount partially offset by a higher charge of $4.4 million in the second quarter of 2008 compared to $3.3 million in the second quarter of 2007 for share based compensation. In addition, there was a charge of $1.5 million in the second quarter of 2008 for Indian fringe benefit tax on share based compensation, all of which was recovered from employees.

The operational expenses component of SG&A expenses increased by $6.7 million, or 50.7%. As a percentage of net revenues, such costs increased from 6.6% in the second quarter of 2007 to 7.9% in the second quarter of 2008. In addition to the general growth in our business, this increase reflected increases in facilities maintenance expenses and communications expenses to support growth. These increases included certain professional fees and other fees and expenses related to being a public company.

Depreciation and amortization expenses as a component of SG&A expenses increased by $1.2 million to $3.0 million in the second quarter of 2008. As a percentage of net revenues, depreciation and amortization expenses increased from 0.9% in the second quarter of 2007 to 1.2% in the second quarter of 2008. This increase in depreciation and amortization expenses reflects the general growth of the business.

Amortization of acquired intangibles. In the second quarter of 2007 and 2008, we continued to incur significant non-cash charges of $9.3 million consisting of the amortization of acquired intangibles resulting from the 2004 Reorganization.

Other operating (income) expense, net. We recorded a net expense of $1.1 million in the second quarter of 2008 compared to an income of $1.2 million in the second quarter of 2007. Other operating income consisting of payments from GE for the use of our Delivery Centers and certain support functions for services that they manage and operate with their own employees, was constant at $1.2 million in the second quarter of 2008. We do not recognize these payments as net revenues because GE manages and operates these services; however, our costs are included in cost of revenue and SG&A. In addition, we incurred a loss of $2.3 million in connection with the sale of certain software licenses and the sale of a facility in Mexico in the second quarter of 2008.

Income from operations. As a result of the foregoing factors, income from operations increased by $10.0 million to $29.2 million. As a percentage of net revenues, income from operations increased from 9.5% in the second quarter of 2007 to 11.5% in the second quarter of 2008.

Foreign exchange (gains) losses, net. We recorded a foreign exchange loss of $0.9 million for the second quarter of 2008 compared to a gain of $0.4 million in the second quarter of 2007. This loss primarily relates to the re-measurement of our non-functional currency assets and liabilities due to adverse movement in the Indian rupee and US dollar exchange rates in the second quarter of 2008.

Other income (expense), net. We recorded other income, net of interest expense, of $3.1 million in the second quarter of 2008 compared to a net expense of $3.5 million in the second quarter of 2007. The change was driven by higher interest income of $4.2 million primarily relating to deposits made from the proceeds of our initial public offering and a decrease in interest expense by $2.4 million primarily due to repayment of a short-term loan in the third quarter of 2007 and repayment of a portion of a long-term loan during the second half of 2007 and first half of 2008. In addition, the weighted average rate of interest with respect to outstanding long-term loans was reduced from 6.2% in the second quarter of 2007 to 3.5% in the second quarter of 2008.

Income before share of equity in loss of affiliate, minority interest and income taxes. As a result of the foregoing factors, income before income taxes increased by $15.4 million or from 8.0% of net revenues in the second quarter of 2007 to 12.4% of net revenues in the second quarter of 2008.

Equity in loss of affiliate. This represents our share of loss from our non-consolidated affiliate, NGEN Media Services Private Limited, a joint venture with NDTV Networks Plc.

Minority interest. The minority interest is due to the acquisition of E-Transparent B.V. and certain related entities, or ICE, in 2007. It represents the apportionment of profits to the minority partners of ICE. The minority interest increased from $2.8 million in the second quarter of 2007 to $3.1 million in the second quarter of 2008.

Income taxes. Our income tax expense decreased from $6.2 million in the second quarter of 2007 to $3.4 million for the second quarter of 2008. Our income tax expense included $3.7 million resulting from the application of a Hungarian statutory minimum tax to the operations of our Hungarian branch in the second quarter of 2007, which was not applicable in the second quarter of 2008. In addition to the above, this decrease was attributable to a $2.2 million benefit related to the maturing of certain hedges for which we had recorded a deferred tax liability at U.S. Federal and state tax rates pursuant to the restructuring of our legal entities as of October 1, 2007. These are offset by higher taxes resulting from higher profits including the partial expiration of our tax holiday in India as of March 31, 2008 and taxes on interest income in India.

Net income. As a result of the foregoing factors, net income increased by $17.7 million from $7.1 million in the second quarter of 2007 to $24.8 million in the second quarter of 2008. As a percentage of net revenues, our net income was 3.5% in the second quarter of 2007 and 9.8% in the second quarter of 2008.

Six Months Ended June 30, 2008 Compared to Six Months Ended June, 2007

Net revenues. Our net revenues increased by $111.4 million, or 29.5%, in the first half of 2008 compared to the first half of 2007. We continue to grow our net revenues primarily through relationships with existing clients. Net revenues . . .