Executive Summary / Key Takeaways

• Genpact delivered a strong Q1 2025, exceeding revenue and EPS expectations, driven by solid execution and the annuitized nature of its business.
• The company's strategic pivot to Data-Tech-AI and AI-led innovation is gaining traction, evidenced by accelerating GenAI bookings, a growing number of solutions in production, and early success with Agentic AI.
• Increased macroeconomic uncertainty and shifting global trade dynamics have led to delays in large deals, particularly impacting the near-term outlook for Digital Operations and resulting in a more conservative full-year 2025 revenue guidance.
• Despite revenue outlook adjustments, Genpact maintains its gross and adjusted operating income margin guidance, supported by operating leverage, cost discipline, and AI-led internal efficiencies.
• The company continues to generate strong cash flow, enabling robust capital return to shareholders through increased dividends and share repurchases, while maintaining a healthy balance sheet.

Genpact Limited (NYSE: G) operates at the intersection of business process management, technology services, and digital transformation, helping global enterprises reimagine core operations spanning finance, risk, supply chain, and more. The company positions itself as an advanced technology services and solutions provider, leveraging deep industry expertise and operational excellence. In a competitive landscape populated by large consulting and IT services firms like Accenture (ACN), Cognizant (CTSH), Infosys (INFY), Wipro (WIT), and DXC Technology (DXC), Genpact differentiates itself through its focus on embedding advanced technology, including AI and analytics, directly into managed services and offering outcome-based solutions.

The company's strategic direction is currently guided by its "3+1 Execution Framework," introduced in 2024. This framework emphasizes strengthening partnerships, developing comprehensive Data-Tech-AI solutions, simplifying internal processes, and using Genpact itself as a proving ground for AI-led transformation. This pivot aims to expand the total addressable market and deepen client relationships by delivering higher-value, technology-enabled outcomes.

Technological Differentiation and Innovation at the Core

Genpact's core technological differentiation lies in its ability to integrate advanced technologies, particularly data, analytics, and AI, into end-to-end business processes. This goes beyond simply providing IT support; it involves transforming how operations are performed to achieve superior efficiency and effectiveness. The company's Data-Tech-AI services are designed to build solutions that harness the power of data and AI to transform clients' businesses, encompassing advisory, implementation, and execution work.

A key focus area is the rapid development and deployment of Artificial Intelligence, especially Generative AI (GenAI) and Agentic Solutions. As of Q1 2025, Genpact had over 215 GenAI solutions in production environments with clients, a significant increase of approximately 50% quarter-over-quarter. GenAI bookings demonstrated strong acceleration in 2024, reaching $100 million in Q4 alone, with over 95% of H1 2024 GenAI bookings contracted on a non-FTE basis, often linked to outcomes.

The company is seeing early traction with its Agentic Solutions, launching the first for accounts payable in February 2025. These solutions aim to deliver strong productivity gains for clients, such as reduced manual effort and faster processing times. While AI-driven productivity gains are shared with clients, incremental revenue is generated through expanded scope and increased volumes, contributing to net revenue growth.

To accelerate enterprise AI adoption, Genpact launched the AI Gigafactory in January 2025, designed to scale AI solutions rapidly from pilot to production. By Q2 2025, the Gigafactory was live across manufacturing, retail, and financial services, having onboarded over 30 existing clients since launch. This initiative includes prebuilt AI models combining industry knowledge with data engineering tools. The AI Value Studio complements this by helping clients identify high-impact AI use cases. The recent acquisition of XponentL Data in June 2025 further bolsters Genpact's capabilities in domain-led data strategy and AI solutions.

Internally, Genpact is leveraging AI through its "Client Zero" initiative. This has led to AI-driven efficiencies allowing for headcount reductions in IT and HR, contributing to margin protection and a leaner cost structure. The internal AI agent family, Scout, and the Cora AI assistant for the IT help desk have shown tangible benefits, including a 2x increase in user satisfaction and a 30% reduction in service desk staff. This internal application serves as a credential for clients.

For investors, this technological push is critical. It underpins Genpact's competitive moat by enabling higher efficiency (e.g., AI tools offering estimated 20-30% efficiency gains in certain processes) and the ability to offer outcome-based pricing, which typically carries higher margins than traditional FTE-based contracts. While precise, directly comparable quantitative metrics for all competitor technologies are not publicly detailed, Genpact's focused investment in domain-specific AI and Agentic Solutions positions it to capture value in a market where competitors like Accenture and Infosys also invest heavily in AI, but potentially with different industry or service line emphases. Genpact's ability to translate these technological advancements into quantifiable client benefits and profitable revenue streams is key to its long-term growth strategy.

Competitive Dynamics and Market Position

Genpact operates in a highly competitive global market. While precise market share figures vary by service line and geography, Genpact holds an estimated 5-10% aggregate share in its core BPO and IT services segments. Larger competitors like Accenture and Cognizant possess greater scale and broader service portfolios, including extensive consulting arms. Infosys and Wipro, like Genpact, leverage significant delivery capabilities in India, offering cost advantages. DXC Technology competes in certain IT services segments.

Comparing recent financial performance, Genpact's Q1 2025 revenue growth of 7.4% (8.3% CC) and FY 2024 growth of 6.5% demonstrate solid performance, outpacing some rivals like Cognizant (2-3% FY24 growth) and Wipro (1-2% FY24 growth), though potentially trailing Accenture (8% FY24 growth). Genpact's TTM operating margin of 14.90% sits within the range of key competitors (ACN 15-17%, CTSH 12-14%, INFY 20-22%, WIT 10-12%, DXC 5%), indicating competitive profitability despite ongoing investments.

Genpact's strategic focus on Data-Tech-AI and its deep domain expertise in specific verticals like financial services, consumer goods, and healthcare are key differentiators. The company's success in winning large deals, including two over $50 million in Q1 2025, and expanding relationships with existing clients (growing numbers of clients contributing over $5M, $25M, and $100M annually) underscores its ability to compete effectively for significant contracts. Its strong win rates (40% in Q1 2025) and a notable proportion of sole-sourced deals (54% in Q1 2025 bookings) suggest a strong value proposition resonating with clients.

However, the competitive environment is dynamic. Wage inflation, particularly in delivery locations like India, presents a cost challenge that impacts margins, requiring continuous operational efficiency improvements. Geopolitical risks, especially concerning its significant operations in India, are also a factor, though the company has contingency plans in place. While Genpact's AI initiatives aim to provide a technological edge, the rapid pace of AI development across the industry necessitates continuous investment to maintain a competitive advantage.

Financial Performance and Liquidity

Genpact entered 2025 with strong momentum, building on solid performance in 2024.

Q1 2025 net revenues reached $1.215 billion, a 7.4% increase year-over-year (8.3% in constant currency), exceeding the high end of the company's guidance. This growth was broad-based, with Data-Tech-AI revenues increasing 11.1% (12% CC) and Digital Operations revenues growing 4.2% (5% CC). The High Tech and Manufacturing segment led growth among verticals at 10.9%, followed by Financial Services at 6.8%, and Consumer and Healthcare at 4.2%.

Profitability metrics also showed improvement. Gross profit increased 8.2% year-over-year to $429 million, with the gross profit margin expanding 30 basis points to 35.3%. Income from operations rose 14.8% to $183.7 million, resulting in an operating margin of 15.1%, a 100 basis point improvement from Q1 2024. Adjusted Operating Income (AOI), a key non-GAAP measure used by management, increased 15.3% to $209.7 million, with the AOI margin expanding 120 basis points to 17.3%. This margin expansion was primarily driven by improved operating leverage and better SGA expense management as a percentage of revenue (down to 19.8%). Net income grew 11.9% to $130.9 million, yielding a net margin of 10.8%. Adjusted diluted EPS increased 16% year-over-year to $0.84.

The company maintains a healthy balance sheet. As of March 31, 2025, cash and cash equivalents stood at $561.6 million. Total liabilities decreased to $2.44 billion from $2.60 billion at the end of 2024, while total equity increased to $2.45 billion. Genpact generates strong operating cash flow, reporting $40.4 million in Q1 2025 and $615 million for the full year 2024. Days Sales Outstanding (DSOs) remained healthy at 88 days in Q1 2025, down 3 days year-over-year.

Genpact actively manages its capital structure and returns value to shareholders. The company was in compliance with its debt covenants under the 2022 Credit Agreement as of March 31, 2025, which includes a term loan and revolving credit facility. Outstanding debt also includes the 2021 and 2024 Senior Notes. The company's Board approved an 11% increase in the quarterly dividend to $0.17 per share in February 2025, representing a planned annual dividend of $0.68 per share. Genpact also continues its share repurchase program, with $63 million in repurchases during Q1 2025 and $584 million remaining under the $2.75 billion authorization as of March 31, 2025. The company aims to return at least 50% of cash flow to investors while retaining flexibility for strategic investments, such as acquisitions like XponentL Data.

Outlook and Risks

Despite the strong Q1 2025 performance, Genpact revised its full-year 2025 guidance to reflect increased caution regarding the macroeconomic environment and its impact on client decision-making. The company now expects full-year net revenue in the range of $4.862 billion to $5.005 billion, representing growth of 2% to 5% (3.5% at the midpoint), down from the initial guidance of 5.5% to 7.7% growth. This revision is primarily due to a few very large deals, particularly in Digital Operations and industries sensitive to global trade (like manufacturing and high tech hardware), being pushed out from late March and April. Management emphasized these deals are delayed, not canceled, but the timing impacts in-year revenue potential. The Data-Tech-AI outlook was also modestly reduced out of caution, despite continued strength.

The updated guidance assumes approximately 5.1% growth for Data-Tech-AI and 2% growth for Digital Operations at the midpoint. Despite the revenue adjustment, Genpact maintained its full-year gross margin guidance at 36% and Adjusted Operating Income margin guidance at 17.3%, reflecting confidence in operational efficiencies and cost discipline. Adjusted diluted EPS is now projected to be between $3.41 and $3.52, representing 5.7% growth at the midpoint, continuing the trend of EPS growth outpacing revenue growth. Full-year operating cash flow is expected to be approximately $610 million.

Key risks to this outlook include the potential for prolonged macroeconomic uncertainty, further delays in client decision-making, and the impact of geopolitical tensions on global supply chains and operating environments. Specific risks highlighted in filings include potential liabilities related to Indian judicial pronouncements on defined contribution plans and tax assessments, though the company believes its position will prevail in the latter. Wage inflation and the ability to attract and retain talent with advanced technology skills are also ongoing operational challenges.

Conclusion

Genpact's Q1 2025 results underscore its operational strength and the resilience of its business model, particularly the highly annuitized revenue base, in a challenging environment. The company's strategic pivot towards Data-Tech-AI and AI-led transformation is clearly gaining momentum, driving growth in key areas and expanding the potential market opportunity through innovative solutions and partnerships. Initiatives like the AI Gigafactory and Agentic Solutions demonstrate a tangible commitment to leveraging technology for client and internal benefit, contributing to operational efficiency and margin expansion.

However, the revised full-year guidance highlights the impact of external macroeconomic headwinds, specifically increased uncertainty and slower sales cycles for large deals in certain industries. While these delays are a near-term challenge, management's commentary suggests the underlying demand and deal pipeline remain strong, particularly for AI-driven solutions that address clients' needs for productivity and transformation. Genpact's solid financial position, consistent cash flow generation, and commitment to returning capital provide a stable foundation. The investment thesis hinges on Genpact's ability to navigate the current uncertain environment while continuing to execute on its strategic transformation, leveraging its technological advancements and domain expertise to capture market share and drive profitable growth as the macro picture stabilizes.