UPDATE 2-IGate posts strong Q3; sees higher 2010 IT budgets

* Q3 EPS from cont ops $0.16 vs est. $0.13

* Q3 rev from cont ops $49.1 mln vs est. $48.2 mln

* CEO sees IT budgets increasing in 2010

* Sees impact of Q1 price cuts to continue for "sometime"

By Deepti Govind

BANGALORE, Oct 20 (Reuters) - IGate Corp (IGTE.O), which provides information technology and outsourcing services, posted better-than-anticipated quarterly earnings on lower expenses, and expects IT budgets to increase in 2010.

Pent-up demand in the market, stronger corporate earnings, and a better overall environment would lead to a 2 to 4 percent rise in 2010 budgets, Chief Executive Phaneesh Murthy told Reuters.

However, the company, which had cut prices for its services in the first quarter to fight competition, expects the price reductions to continue to hurt for sometime.

It reported third-quarter net income from continuing operations of $8.9 million, or 16 cents per share, compared with $8.5 million, or 15 cents per share, a year ago.

Revenue from continuing operations fell 11 percent to $49.1 million.

Analysts on average were expecting IGate to earn 13 cents a share on revenue of $48.2 million, according to Thomson Reuters I/B/E/S.

The company's selling, general and administrative expenses fell 21 percent to $9.2 million.

Quarterly operating margin increased to 18.6 percent of revenue from 13.4 percent last year.

"However, the global currencies market continues to be volatile and is still a cause of concern," Chief Financial Officer Sujit Sircar said in a statement.

IGate shares closed at $8.93 Tuesday on Nasdaq. (Reporting by Deepti Govind in Bangalore; Editing by Aradhana Aravindan)