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, particularly clients in the financial services business;

† 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;

† 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, Guatemala quetzal 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; 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 September 30, 2008, GE (through its affiliates) owned approximately 18.6% 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.

The 2007 Reorganization

Genpact Limited was incorporated in Bermuda on March 29, 2007 as a subsidiary of Genpact Global Holdings Sicar 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 September 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
nine months ended September 30, 2007 and 2008.



                            Three months Ended September 30,           Nine months Ended September 30,
                                2007                  2008                 2007                 2008
                                                      (dollars in millions)
Net revenues-GE         $    122.9       57.2 %  $ 123.5    45.6 % $    367.9       62.2 % $ 363.7    47.9 %
Net revenues-Global
Clients                       91.8       42.7 %    147.3    54.4 %      222.3       37.6 %   395.3    52.1 %
Other revenues                 0.1        0.1 %      0.0     0.0 %        1.5        0.3 %     0.0     0.0 %

Total net revenues           214.8      100.0 %    270.8   100.0 %      591.6      100.0 %   759.0   100.0 %

Cost of revenue              122.7       57.1 %    155.8    57.5 %      352.2       59.5 %   448.9    59.1 %
Gross profit                  92.1       42.9 %    115.0    42.5 %      239.4       40.5 %   310.1    40.9 %
Operating expenses
Selling, general and
administrative
expenses                      59.0       27.5 %     71.2    26.3 %      159.7       27.0 %   199.9    26.3 %
Amortization of
acquired intangible
assets                         9.4        4.4 %      9.0     3.3 %       28.0        4.7 %    28.8     3.8 %
Other operating
income                        (0.8 )      0.4 %     (1.4 )   0.5 %       (2.5 )      0.4 %    (1.5 )   0.2 %

Income from
operations                    24.5       11.4 %     36.3    13.4 %       54.2        9.2 %    82.8    10.9 %
Foreign exchange
(gains) losses, net           (1.0 )      0.5 %     (1.6 )   0.6 %       (1.5 )      0.3 %    (7.4 )   1.0 %
Other income
(expense), net                (0.6 )      0.3 %      3.3     1.2 %       (7.7 )      1.3 %     8.3     1.1 %

Income before share
of equity in
earnings/loss of
affiliate, minority
interest and income
tax expense                   24.9       11.6 %     41.1    15.2 %       48.0        8.1 %    98.5    13.0 %
Equity in loss of
affiliate                      0.1        0.0 %     (0.0 )   0.0 %        0.1        0.0 %     0.3     0.0 %
Minority interest              2.1        1.0 %      1.9     0.7 %        5.8        1.0 %     7.8     1.0 %
Income tax expense             6.5        3.0 %      5.7     2.1 %       16.8        2.8 %    12.2     1.6 %

Net income              $     16.3        7.6 %  $  33.6    12.4 % $     25.3        4.3 % $  78.1    10.3 %

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

Net revenues. Our net revenues increased by $56.0 million, or 26.1%, in the third quarter of 2008 compared to the third quarter of 2007. We continue to grow our net revenues primarily through relationships with existing clients. In addition, our net revenue per employee increased due to a higher volume of more expensive service offerings including re-engineering and increased price. Our revenue per employee increased from $28.1 thousand per employee in the third quarter of 2007 to $31.3 thousand in the third quarter of 2008.

We delivered 7% of our net revenues from our European Delivery Centers (other than ICE) in the third quarter of 2008 up from 6% in the third quarter of 2007. This represented an increase of 47% compared to the third quarter of 2007. Our revenue per employee is significantly higher from services delivered out of our European Delivery Centers.

Net revenues from GE increased by $0.5 million, or 0.4%. 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 third quarter of 2008 grew by 5.8% over the third quarter of 2007 after the adjustments for such dispositions by GE. GE net revenues declined as a percentage of our total net revenues from 57.3% in the third quarter of 2007 to 45.6% in the third quarter of 2008, due to growth in revenues from our Global Clients.

Net revenues from Global Clients increased by $55.6 million, or 60.6%. This increase resulted from revenues from several clients with which we entered into master service agreements, or MSAs, in 2005, 2006 and 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 42.7% in the third quarter of 2007 to 54.4% in the third quarter of 2008. Excluding revenues from businesses divested by GE in 2007, Global Client revenues increased organically by approximately 61.1%.

Revenues from business process services increased to 81% of total net revenues in the third quarter of 2008 from 74% in the third quarter of 2007. Our business process services business grew 37% to $219 million in the third quarter of 2008 primarily due to high growth with several existing clients. Revenues from our information technology business declined to 19% of total net revenues in the third quarter of 2008 from 26% in the third quarter of 2007 due to a general slowdown in the information technology sector.

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 September 30,
                                        2007                  2008
                                          (dollars in millions)
Personnel expenses              $     78.2      36.4 %  $     97.4   36.0 %
Operational expenses                  35.3      16.5          48.5   17.9
Depreciation and amortization          9.1       4.2           9.8    3.6
Cost of revenue                 $    122.7      57.1 %  $    155.8   57.5 %

Cost of revenue increased by $33.1 million, or 27.0%. This increase reflected the general growth of our business. As a percentage of net revenues, cost of revenue increased from 57.1% in the third quarter of 2007 to 57.5% in the third quarter of 2008. This increase was primarily due to the increase of the operational expenses partially off-set by internal efficiencies.

The largest component of the increase in cost of revenue was personnel expenses, which increased by $19.2 million, or 24.5%. This increase in absolute amount was primarily due to the hiring of new resources to manage growth. We added approximately 4,800 employees during the twelve months ended September 30, 2008, the majority of whom are directly working for our clients and generating revenue. The increase also reflects overall wage inflation. Personnel expenses as a percentage of net revenues marginally decreased from 36.4% in the third quarter of 2007 to 36.0% in the third quarter of 2008.

Operational expenses increased by $13.2 million, or 37.3%. The increase was largely due to the addition of new Delivery Centers and the expansion of existing Delivery Centers over the last twelve months in India (Kolkata, Gurgaon, Hyderabad and Mumbai), Poland, Romania, China and the Philippines to support the growth in the business including acquisition of a Delivery Center in Guatemala from GE in the third quarter of 2008. GE uses a portion of the Guatemala Delivery Center for certain of its support functions it manages and operates with its own employees. The income from such services is recorded in other operating income. In addition, we

received a subsidy from the Hungarian government in the third quarter of 2007 which reduced operational expenses. As a percentage of net revenues, operational expenses increased from 16.5% in the third quarter of 2007 to 17.9% in the third quarter of 2008. Depreciation and amortization expenses as a component of cost of revenue increased by $0.7 million to $9.8 million in the third quarter of 2008 primarily due to the opening of new Delivery Centers in the fourth quarter of 2007 and the first nine months of 2008.

As a result of the foregoing, our gross profit increased by $22.9 million, or 24.9% and our gross margin slightly decreased from 42.9% in the third quarter of 2007 to 42.5% in the third 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 September 30,
                                        2007                            2008
                                               (dollars in millions)
Personnel expenses          $        35.8           16.7 %  $        46.8           17.3 %
Operational expenses                 21.0            9.8             21.6            8.0
Depreciation and
amortization                          2.3            1.0              2.7            1.0
Selling, general and
administrative expenses     $        59.0           27.5 %  $        71.2           26.3 %

Selling, general and administrative expenses, or SG&A expenses, increased by $12.1 million, or 20.6%. This increase reflects general growth in our business. As a percentage of net revenues, SG&A expenses decreased from 27.5% in the third quarter of 2007 to 26.3% in the third quarter of 2008. This was primarily due to a decrease in operational expenses.

Personnel expenses increased by $11.1 million, or 30.9%, reflecting the general growth in our business. As a percentage of net revenues, personnel expenses increased from 16.7% in the third quarter of 2007 to 17.3% in the third quarter of 2008 due to a higher charge of $4.3 million in the third quarter of 2008 compared to $3.7 million in the third quarter of 2007 for share based compensation. In addition, there was a charge of $1.1 million in the third quarter of 2008 for Indian fringe benefit tax on share based compensation, which has generally been recovered from employees and accounted for under shareholders' equity. The increase in personnel expenses reflects an increase in the number of higher cost senior employees in certain of our internal functions as well as general wage inflation.

The operational expenses component of SG&A expenses increased by $0.6 million, or 2.9%. This increase is attributable primarily to general growth in our business partially off-set by a one-time increase in operational expenses in the third quarter of 2007 due to a $1.6 million reserve that was established for loans subject to repurchase in Genpact Mortgage Services. As a percentage of net revenues, such costs decreased from 9.8% in the third quarter of 2007 to 8.0% in the third quarter of 2008 primarily due to more efficient use of employees in internal support functions such as finance, legal and human resources.

Depreciation and amortization expenses as a component of SG&A expenses increased by $0.5 million to $2.7 million in the third quarter of 2008. This increase in depreciation and amortization expenses reflects the general growth of the business.

Amortization of acquired intangibles. In the third quarter of 2007 and 2008, we continued to incur significant non-cash charges of $9.4 million and $9.0 million, respectively, consisting primarily of the amortization of acquired intangibles resulting from the 2004 Reorganization.

Other operating (income) expense, net. Other operating income, consisting primarily of income from shared services from GE for the use of our Delivery Centers and certain support functions that they manage and operate with their own employees, increased to $1.4 million in the third quarter of 2008 compared to $0.8 million in the third quarter of 2007 primarily due to addition of a new Delivery Center in Guatemala and expansion in the Philippines. We do not recognize this income as net revenues because it is not currently one of the primary service offerings; however, our costs are included in cost of revenue and SG&A.

Income from operations. Primarily due to the decrease in SG&A expenses and amortization of acquired intangibles as a percentage of net revenue, income from operations increased by $11.8 million to $36.3 million. As a percentage of net revenues, income from operations increased from 11.4% in the third quarter of 2007 to 13.4% in the third quarter of 2008.

Foreign exchange (gains) losses, net. We recorded a foreign exchange gain of $1.6 million for the third quarter of 2008 compared to a gain of $1.0 million in the third quarter of 2007. This gain primarily relates to the re-measurement of our non-functional currency assets and liabilities resulting from movements in the Indian rupee and US dollar exchange rates in the third quarter of 2008.

Other income (expense), net. We recorded other income, net of interest expense, of $3.3 million in the third quarter of 2008 compared to a net expense of $0.6 million in the third quarter of 2007. The change was driven by higher interest income of $2.8 million primarily relating to deposits made from the proceeds of our initial public offering and a decrease in interest expense by $0.7 million primarily due to repayment of a short-term loan in the third . . .