Shares in PeopleSupport Inc. lost more than 34 percent Friday after the outsourcing service provider gave a grim outlook for 2008, despite reporting a strong fourth quarter.

Net income for the quarter jumped 353 percent to $18.1 million (81 cents per share), in part due to a gain from currency contracts. The results smashed the Wall Street consensus of 29 cents per share in profit, according to Thomson Financial. But revenue for the Los Angeles-based company rose 15 percent to $35.8 million, falling short of Wall Street’s expectations of $36.4 million.

For the year, the company reported net income of $33 million ($1.37 per share), on revenue of $141 million.

In a separate announcement, PeopleSupport warned that a slowing economy may affect the company. For the first quarter of 2008, PeopleSupport expects to post earnings between 11 cents and 12 cents per share on approximately 22.3 million shares, below Wall Street’s estimates of 17 cents. Revenue is forecast to fall between $35 million and $36 million also well below analysts’ preditions of $40.9 million.

For the 2008 fiscal year, the company expects earnings between 47 cents and 58 cents per share on revenue between $162 million and $170 million.

Shares were down 34 percent, or $3.90 per share, to $7.50 in trading Friday on the Nasdaq.