BPO firm WNS Global Services reaffirmed its guidance for FY10 as its first quarter revenues grew on the back of its acquisition of Aviva Global Services and operating profit margins improved on cost efficiencies.

The second-largest India-based pure-play BPO firm, which is listed on the NYSE, saw its first quarter revenues grow 11% to $136.7 million (about Rs 656 crore at current exchange rates), but net profit slipped on amortisation charges and higher foreign exchange losses to $1 million (Rs 4.8 crore). The net profit in the corresponding quarter last year was $3.3 million (Rs 15.8 crore).

On Wednesday, a downward revision in guidance by BPO leader Genpact had sparked concerns about a similar revision by other players in the industry. But reaffirming its FY10 guidance, WNS said revenue was expected to be between $385-$390 million (Rs 1,848-1,872 crore) and adjusted income between $50 million-$52 million (Rs 240-250 crore).

WNS was optmistic about client additions and demand for BPO services. In the US, we are seeing the market settling down. Europe may be six months behind. We are seeing a recovery in the consumer sector and in the financial services sector. Deals and closures are happening in 6-9 months compared with 12 months or more, said WNS CEO Neeraj Bhargava.

Pressure on prices is however likely to continue, he said. Demand is being driven by clients looking for quick results in terms of improved performance or reduced costs, he added.

Referring to forex losses, WNS CFO Alok Misra said he anticipates the losses to roll off during the year and continued benefits of cost synergies from acquisitions to accrue in the year.

The company attributed the growth in its adjusted net profit during the quarter to higher business from existing clients, tighter cost management, benefits from scale of operations and increased income from acquisitions.

During the quarter under review, the company prepaid $5 million (about Rs 24 crore) of the $200 million (Rs 960 crore) term loan taken for acquisition of Aviva Global. It also agreed to pay Aviva around 3.18 million (Rs 25.37 crore) for liabilities inherited as part of this acquisition in 18 installments starting December 2009.