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, 2008 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, 2008. 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, 2008.

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, 2008. 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;



†          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;

† expected spending on business process services by clients, particularly clients in the financial services business;

† foreign currency exchange rates;

† our rate of employee attrition;

† our effective tax rate; and

† competition in our industry.

Factors that may cause actual results to differ from expected results include, among others:

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

† our relative dependence on GE;

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

† 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 the 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, Mexican peso, Moroccan dirham (DH), Polish zloty and Romanian leu;

† our ability to retain senior management;

† 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;

† further deterioration in the global economic environment and its impact on our clients;

† our ability to collect the customer receivables;

† 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 combine our process expertise, information technology expertise and analytical capabilities, together with operational insight derived from our experience in diverse industries, to provide a wide range of services using our global delivery platform. Our goal is to help our clients improve the ways in which they do business by continuously improving their business processes, including through the application of Six Sigma and Lean principles and leveraging technology. We strive to be a seamless extension of our clients' operations.

We have a unique heritage. We built our business by meeting the demands of the leaders of the General Electric Company, or GE, to increase the productivity of their businesses. We began in 1997 as the India-based captive business process services operation for General Electric Capital Corporation, or GE Capital, GE's financial services business. As the value of offshoring 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, Healthcare, Industrial, NBC Universal and GE's corporate offices.

Our leadership team, our methods and our culture have been deeply influenced by our eight years as a captive operation of GE. Many elements of GE's success-the rigorous use of metrics and analytics, the relentless focus on improvement, a strong emphasis on the client and innovative human resources practices-are the foundations of our business.

As of March 31, 2009 we have more than 36,500 employees with operations in twelve countries. In the first quarter of 2009, we had net revenues of $265.8 million, of which 57.9% was from clients other than GE, which we refer to as Global Clients.

Our registered office is located at Canon's Court, 22 Victoria Street, Hamilton HM, Bermuda.

The Company

The 2004 Reorganization

Prior to December 30, 2004, our business 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 SICAR S.à.r.l., or GGH, a newly formed Luxembourg entity. GE's affiliate, GE Capital International (Mauritius) also sold an indirect 60% interest in GGH to Genpact Investment Co. (Lux) SICAR
S.à.r.l., or GICo, an entity owned in equal portions by General Atlantic LLC, or General Atlantic, and Oak Hill Capital Partners, or Oak Hill. On December 16, 2005, GE's affiliate sold a portion of its equity in us to a subsidiary of Wachovia Corporation. Wachovia Corporation merged with Wells Fargo & Company on December 31, 2008. On December 22, 2006, we redeemed shares held by GE affiliates. On December 18, 2007, GE's affiliate, GE Capital (Mauritius) Holdings Ltd., sold a further portion of its equity in us to an affiliate of a limited partner of one of our shareholders. As of March 31, 2009, GE, through its affiliates, owned 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. 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.

The 2007 Reorganization and IPO

On March 29, 2007, we formed Genpact Limited in Bermuda to be the new holding company for our business. It was initially a wholly-owned subsidiary of GGH. On July 13, 2007, we effectuated a transaction that resulted in Genpact Limited owning 100% of the capital stock of GGH. This transaction together with other related transactions is referred to as the "2007 Reorganization." This transaction occurred by the shareholders of GGH exchanging their common shares of GGH for common shares of Genpact Limited and the shareholders of Genpact Global (Lux) S.à.r.l., or GGL, exchanging their common and preferred shares of GGL for common shares of Genpact Limited. In addition, as part of the 2007 Reorganization, GGL, which owned approximately 63% of the outstanding equity of GGH, became a wholly owned subsidiary of Genpact Limited pursuant to a share exchange. GGL had no operations or assets other than its ownership interest in GGH, and had no liabilities other than obligations for accumulated dividends on preferred shares that were eliminated in the 2007 Reorganization and certain tax liabilities of $2.1 million that were paid on July 27, 2007. GE, through its affiliate GE Capital (International) Mauritius Holdings Ltd., and GICo reimbursed us for such tax liabilities in accordance with their agreement to indemnify us for such liabilities. As part of the 2007 Reorganization, GGH became a Bermuda company and changed its name to Genpact Global Holding (Bermuda) Limited and GGL also became a Bermuda company, in accordance with the laws of Bermuda and Luxembourg and its name was changed to Genpact Global (Bermuda) Limited. We use the terms "Genpact", "Company", "we" and "us" to refer to both GGH and its subsidiaries prior to July 13, 2007 and Genpact Limited and its subsidiaries after such date.

On August 1, 2007, we commenced an initial public offering of our common shares, pursuant to which we and certain of our existing shareholders each sold 17.65 million common shares at a price of $14 per share. The offering resulted in gross proceeds of $494.1 million and net proceeds to us and the selling shareholders of approximately $233.5 million each after deducting underwriting discounts and commissions. Additionally, we incurred offering-related expenses of approximately $9.0 million. On August 14, 2007, the underwriters exercised their option to purchase 5.29 million additional common shares from us at the initial offering price of $14 per share to cover over-allotments resulting in additional gross proceeds of $74.1 million and net proceeds of approximately $70.0 million to us, after deducting underwriting discounts and commissions.

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, 2008.

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 on cash flow hedges 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 period ended March 31, 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 ended
March 31, 2008 and 2009.



                                             Three months Ended March 31,
                                           2008                         2009
                                                 (dollars in millions)
Net revenues-GE                  $      114.3         48.7 %  $     112.0         42.1 %
Net revenues-Global Clients             120.3         51.3 %        153.8         57.9 %
Total net revenues                      234.6        100.0 %        265.8        100.0 %

Cost of revenue                         146.1         62.3 %        163.7         61.6 %
Gross profit                             88.5         37.7 %        102.1         38.4 %
Operating expenses
Selling, general and
administrative expenses                  62.1         26.5 %         63.9         24.0 %
Amortization of acquired
intangible assets                        10.2          4.4 %          6.9          2.6 %
Other operating (income)
expense, net                             (1.1 )        0.5 %         (1.7 )        0.6 %

Income from operations                   17.3          7.4 %         33.1         12.5 %
Foreign exchange (gains)
losses, net                              (6.7 )        2.9 %         (2.8 )        1.1 %
Other income (expense), net               1.9          0.8 %          1.1          0.4 %

Income before share of equity
in (earnings) loss of
affiliates and income tax
expense (benefit)                        25.9         11.0 %         37.0         13.9 %
Equity in loss of affiliates              0.2          0.1 %          0.2          0.1 %
Income tax expense (benefit)              3.2          1.3 %          4.9          1.8 %
Net Income                               22.5          9.6 %         31.9         12.0 %
Net income attributable to
noncontrolling interest                   2.8          1.2 %          1.9          0.7 %

Net income attributable to
Genpact Limited common
shareholders                     $       19.7          8.4 %  $      30.0         11.3 %

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Net revenues. Our net revenues increased by $31.2 million, or 13.3%, in the first quarter of 2009 compared to the first quarter of 2008. We continue to grow our net revenues primarily through relationships with existing clients. Our total headcount increased by 6% to 36,500 at the end of the first quarter 2009 from 34,500 at the end of the first quarter of 2008. In addition, our net revenue per employee increased due to a higher volume of more expensive service offerings including re-engineering and more effective deployment and utilization of personnel. Our revenue per employee increased from $29.0 thousand per employee in the first quarter of 2008 to $30.3 thousand in the first quarter of 2009.

Net revenues from GE decreased by $2.3 million, or 2.0%. 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, 2008, certain businesses in which GE ceased to be a 20% shareholder in 2008 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 first quarter of 2009 grew by 5.0% over the first quarter of 2008 after excluding such dispositions by GE. GE net revenues declined as a percentage of our total net revenues from 48.7% in the first quarter of 2008 to 42.1% in the first quarter of 2009, due to growth in revenues from our Global Clients.

Net revenues from Global Clients increased by $33.5 million, or 27.9%. This increase resulted from revenues from clients with which we entered into master service agreements, or MSAs, in 2005 through 2008. 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 51.3% in the first quarter of 2008 to 57.9% in the first quarter of 2009. Excluding revenues from businesses divested by GE in 2008, Global Client revenues increased organically by approximately 20.2%.

Revenues from business process services increased to 83% of total net revenues in the first quarter of 2009 from 78% in the first quarter of 2008. Our business process services business grew 20% from the first quarter of 2008 to $221 million in the first quarter of 2009 primarily due to growth with several existing clients. Revenues from our information technology business declined to 17% of total net revenues in the first quarter of 2009 from 22% in the first quarter of 2008 due to a general slow down in the information technology sector resulting in lower volumes and reduction in prices in the first quarter of 2009.

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 March 31,
                                       2008               2009
                                       (dollars in millions)
Personnel expenses              $     91.1    38.8 % $  100.0   37.6 %
Operational expenses                  42.1    17.9       52.7   19.8
Depreciation and amortization         13.0     5.5       11.0    4.2
Cost of revenue                 $    146.1    62.3 % $  163.7   61.6 %

Cost of revenue increased by $17.6 million, or 12.1%. This increase reflected the general growth of our business. As a percentage of net revenues, cost of revenue decreased from 62.3% in the first quarter of 2008 to 61.6% in the first quarter of 2009. This decrease was primarily due to the reduction in personnel expenses and depreciation and amortization as a percentage of net revenues, partially off-set by higher operational costs.

The largest component of the increase in cost of revenue was personnel expenses, which increased by $8.9 million, or 9.8%. This increase in absolute amount was primarily due to the hiring of new resources to manage growth. Our total headcount increased by approximately 2,000 employees during the twelve months ended March 31, 2009, the majority of whom are directly working for our clients and generating revenue. The increase also reflects overall wage inflation, although the rate at which salaries are increasing slowed during the last quarter of 2008 and the first quarter of 2009. Our personnel expenses as a percentage of net revenues decreased from 38.8% in the first quarter of 2008 to 37.6% in the first quarter of 2009 primarily due to the increase in revenue per employee attributable to a higher volume of more expensive service offerings including re-engineering and more effective deployment and utilization of personnel.

Operational expenses increased by $10.7 million, or 25.2%. 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 and Hyderabad), Poland, Romania, China, Morocco and the Philippines to support growth, including the 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. As a percentage of net revenues, operational expenses increased from 17.9% in the first quarter of 2008 to 19.8% in the first quarter of 2009. Depreciation and amortization expenses as a component of cost of revenue decreased by $1.9 million to $11.0 million in the first quarter of 2009, primarily due to a $3.3 million charge in the first quarter of 2008 attributable to the write-off of certain software licenses which did not have any further useful life. This was partially offset by the increase due to opening of new Delivery Centers in 2008.

As a result of the foregoing, our gross profit increased by $13.6 million, or 15.3% and our gross margin increased from 37.7% in the first quarter of 2008 to 38.4% in the first quarter of 2009.

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 March 31,
                                                      2008                2009
                                                      (dollars in millions)
Personnel expenses                             $     37.8     16.1 % $  41.3   15.5 %
Operational expenses                                 21.6      9.2      20.2    7.6
Depreciation and amortization                         2.8      1.2       2.4    0.9
Selling, general and administrative expenses   $     62.1     26.5 % $  63.9   24.0 %

Selling, general and administrative expenses, or SG&A expenses, increased by $1.7 million, or 2.8%. This increase reflects general growth in our business. As a percentage of net revenues, SG&A expenses decreased from 26.5% in the first quarter of 2008 to 24.0% in the first quarter of 2009. This was primarily due to cost reduction measures, such as restrictions on travel, recruitment, transportation, management meeting expenses, consultant fees, as well as the renegotiation of rates with certain vendors, adopted in the fourth quarter of 2008, the majority of which were continued through the first quarter of 2009.

Personnel expenses increased by $3.5 million, or 9.3%, reflecting the general growth in our business. 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. As a percentage of net revenues, personnel expenses decreased from 16.1% in the first quarter of 2008 to 15.5% in the first quarter of 2009, which was primarily due to reduction in support personnel attributable to more effective deployment and utilization, and lower salary increases.

The operational expenses component of SG&A expenses decreased by $1.4 million, or 6.4%. This decrease is attributable to our reducing the number of support personnel as explained above in the first quarter of 2009 compared to the first quarter of 2008 and a $0.6 million reserve in the first quarter of 2008 that was established for loans subject to repurchase in Genpact Mortgage Services. This decrease is partly off-set by an increase in reserve for doubtful debts by $1.0 million in the first quarter of 2009 compared to the first quarter of 2008. As a percentage of net revenues, such costs decreased from 9.2% in the first quarter of 2008 to 7.6% in the first quarter of 2009 primarily due to more effective deployment and utilization of employees in internal support functions such as finance, legal and human resources resulting in reduction of personnel.

Depreciation and amortization expenses as a component of SG&A expenses decreased by $0.4 million to $2.4 million in the first quarter of 2009. This decrease in depreciation and amortization expenses is due to the reduced number of support personnel in the first quarter of 2009 compared to the first quarter of 2008 and consequent reduced allocation to SG&A.

Amortization of acquired intangibles. In the first quarter of 2008 and 2009, we continued to incur significant non-cash charges of $10.2 million and $6.9 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 $1.7 million in the first quarter of 2009 compared to $1.1 million in the first quarter of 2008 primarily due to the 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 . . .