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What changed in ExlService Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ExlService Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+388 added−402 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-29)

Top changes in ExlService Holdings, Inc.'s 2024 10-K

388 paragraphs added · 402 removed · 307 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

81 edited+35 added−37 removed42 unchanged
Biggest changeAs of December 31, 2023, we employed approximately 250 sales, marketing, business development and client management professionals, with the majority of these employees based in either the U.S. or India. Our professionals generally have significant experience in consulting, analytics, digital operations and solutions services and digital technology within our focus industries.
Biggest changeOur sales and client management teams are aligned by industry verticals, and have expertise in data and AI, analytics services, and digital operations and solutions. As of December 31, 2024, we employed approximately 320 sales, marketing, business development, and client management professionals based in various geographies, including the United States, the United Kingdom, Ireland, Australia and India.
We embed digital operations and solutions into clients’ businesses and introduce our data and AI-led approach to transform operations with every new engagement, which helps our clients achieve better customer experience, higher productivity, cost efficiency and improved business outcomes.
We embed AI, digital operations and solutions into clients’ businesses and introduce our data and AI-led approach to transform operations with every new engagement, which helps our clients achieve better customer experience, higher productivity, cost efficiency and improved business outcomes.
Our Emerging Business strategic business unit provides data and AI-led enterprise solutions in the areas of finance and accounting, customer experience management and revenue enhancement to clients primarily in the banking and capital markets, utilities, retail and consumer packaged goods, technology, media, and telecom, travel and leisure, manufacturing, transportation and logistics and business services industries.
Our Emerging Business strategic business unit provides AI and data led enterprise solutions in the areas of finance and accounting, customer experience management and revenue enhancement to clients primarily in the banking and capital markets, utilities, retail and consumer packaged goods, technology, media, and telecom, travel and leisure, manufacturing, transportation and logistics and business services industries.
For digital operations and solutions other than consulting, we generally enter into long-term agreements with our clients with typical initial terms between three to five years. Consulting engagements have typical terms of six to twelve months. Agreements for our analytics services are either project based or have shorter initial terms, which are typically between one to three years.
For digital operations and solutions other than consulting, we generally enter into long-term agreements with our clients with typical initial terms of three to five years. Consulting engagements have typical terms of six to twelve months. Agreements for our analytics services are either project based or have shorter initial terms, which are typically between one to three years.
See Part I, Item 1A, “Risk Factors” under “Risks Related to the International Nature of Our Business––Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, including, accreditation or licensing standards that govern our business, and violations of these requirements could harm our business.” We currently benefit from certain corporate tax holidays for our operations located in qualified Philippines Economic Zone Authority units.
See Part I, Item 1A, “Risk Factors” under “Risks Related to the International Nature of Our Business––Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, including, accreditation or licensing standards that govern our business, and violations of these requirements could harm our business.” We benefit from certain corporate tax holidays for our operations located in qualified Philippines Economic Zone Authority units.
We either manage and digitally transform these operations for our clients by deploying our solutions through a software-as-a-service (“SaaS”) model via our partners’ cloud network or a client’s on-cloud deployment model, to digitally transform their retained operations.
We manage and digitally transform these operations for our clients by deploying our solutions through a software-as-a-service (“SaaS”) model via our partners’ cloud network or a client’s on-cloud deployment model, to digitally transform their retained operations.
Similar to our Insurance strategic business unit, we also provide finance and accounting services, digital transformation and advisory/consulting services for our clients in the healthcare industry.
Similar to our Insurance strategic business unit, we also provide finance and accounting services, digital transformation and advisory/consulting services to our clients in the healthcare industry.
Our Analytics engagements span both project work and longer-term arrangements where we provide ongoing analytics modeling and services for a year or longer. We utilize our deep industry knowledge to drive these engagements across our various competencies, including, data management and cloud enablement, AI, generative AI, ML, advanced analytics and insights, data-enabled marketing solutions and strategic data assets.
Our Analytics engagements include both project work and longer-term arrangements where we provide ongoing analytics modeling and services for a year or longer. We utilize our deep industry knowledge to drive these engagements across our various competencies, including, data management and cloud enablement, AI, generative AI, ML, advanced analytics and insights, data-enabled marketing solutions and strategic data assets.
We expect that the digital assets and intellectual property this ecosystem provides will enhance our go-to-market opportunities, expand the scope and effectiveness of our services and solutions, help us to win new clients, and allow us to enter new industry verticals and geographic markets.
We expect that the digital assets, intellectual property and client access this ecosystem provides will enhance our go-to-market opportunities, expand the scope and effectiveness of our services and solutions, help us to win new clients, and allow us to enter new industry verticals and geographic markets.
We also provide industry-specific digital operations and solutions. For our clients in the banking and financial services sector, we provide a range of digital solutions, including residential mortgage lending, title verification and validation, retail banking and credit cards, trust verification, commercial banking and investment management.
We also provide industry-specific digital operations and solutions. For our clients in the banking and financial services sector, we provide a range of AI enabled digital solutions, including residential mortgage lending, title verification and validation, retail banking and credit cards, trust verification, commercial banking and investment management.
Our Analytics services support: (1) retail banking, commercial banking and investment banking and management for the banking and financial services industries; (2) marketing analytics, clinical analytics, patient engagement, pharmaco-economics outcomes and cost optimization solution in the healthcare industry; (3) marketing and agency analytics, actuarial, servicing and operations, customer management and claims and money movement in the insurance industry; and (4) marketing analytics, supply chain, logistics and digital operations and solutions in the retail and consumer packaged goods, media and telecom and utilities and manufacturing industries.
Our Analytics services support: (1) retail banking, commercial banking, wealth management and investment banking and management for the banking and financial services industries; (2) marketing analytics, clinical analytics, patient engagement, pharmaco-economics outcomes and cost optimization solution within the healthcare industry; (3) marketing and agency analytics, actuarial, servicing and operations, customer management and claims and money movement within the insurance industry; and (4) marketing analytics, supply chain, logistics and digital operations and solutions within the retail and consumer packaged goods, media and telecom and utilities and manufacturing industries.
Our strategic business units, through which we provide digital operations and solutions, are described below: Our Insurance strategic business unit serves property and casualty insurance, life insurance, disability insurance, insurance brokers, reinsurers, annuity and retirement services and insurtech companies.
Our strategic business units, which provide digital operations and solutions, are described below: Our Insurance strategic business unit serves property and casualty insurance, life insurance, disability insurance, insurance brokers, reinsurers, annuity and retirement services and insurtech companies.
Increased global demand, cost improvements in international communications and the automation of many business services have created opportunities for digital operations providers with offshore delivery capabilities, and many companies are moving select office processes to providers with the capacity to perform these functions from overseas locations.
Increased global demand, cost improvements in international communications and the automation of many business services have created opportunities for digital operations 6 Table of Contents providers with offshore delivery capabilities, and many companies are moving select office processes to providers with the capacity to perform these functions from overseas locations.
These initiatives reflect our core values and will make us a stronger, more impactful organization to work for and allow us to deliver exceptional results for our clients, employees, communities and stockholders. Our most recent Sustainability Report is available on our website.
These initiatives reflect our core values and will make us a stronger, more impactful organization to work for that can deliver exceptional results for our clients, employees, communities and stockholders. Our most recent Sustainability Report is available on our website.
Our operations are also subject to compliance with a variety of other laws, including tax laws in the countries where we conduct our business.
Our operations are also subject to compliance with a variety of other laws, including tax laws in the jurisdictions where we conduct our business.
Demand for our services is expected to continue to exhibit growth in the next several years. Integrating our Data and AI-Led and Domain Capabilities The combination of our data and AI-led capabilities and domain expertise has been central to our market differentiation.
Demand for our services is expected to continue to exhibit growth in the next several years. Integrating our Data and AI-Led and Domain Capabilities 5 Table of Contents The combination of our data and AI-led capabilities and domain expertise has been central to our market differentiation.
The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically through the EDGAR System. You may access the information filed by us with the SEC by visiting its website. 11 Table of Contents We also maintain a website at http://ir.exlservice.com.
The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically through the EDGAR System. You may access the information filed by us with the SEC by visiting its website. We also maintain a website at http://ir.exlservice.com.
The key digital and AI capabilities that allow us to drive data and technology-led transformation for our clients include generative AI, reinforcement learning, hyper-automation, cloud data management, conversational AI, robotics, enterprise architecture development, integration platform as a service and AI for Operations.
Our key digital and AI capabilities that drive data and technology-led transformation for our clients include generative AI, reinforcement learning, hyper-automation, cloud data management, conversational AI, robotics, enterprise architecture development, integration platform as a service and AI for Operations.
Our top three, five and ten clients generated 16.3%, 22.9% and 34.9% of our revenues, respectively, in 2022. No client accounted for more than 10% of our total revenues in 2023 or 2022. Our revenue concentration with our top clients remains consistent year-over-year and we continue to develop relationships with new clients to diversify our client base.
Our top three, five and ten clients generated 16.4%, 22.9% and 34.0% of our revenues, respectively, in 2023. No client accounted for more than 10% of our total revenues in 2024 or 2023. Our revenue concentration with our top clients remains consistent year-over-year and we continue to develop relationships with new clients to diversify our client base.
These include our Insurance Academy, Travel Academy, Finance and Accounting Academy, Healthcare Academy, Analytics Academy, 9 Table of Contents Utilities Academy, Consulting Academy, Sales Academy and Digital Academy. These academies focus on achieving excellence and developing skill sets that can be used across the different domains.
These include our Insurance Academy, Travel Academy, Finance and Accounting Academy, Healthcare Academy, Analytics Academy, Utilities Academy, Consulting Academy, Sales Academy and Digital Academy. These academies focus on achieving excellence and developing skill sets that can be used across the different domains.
These enterprise solutions complement our domain-specific industry solutions enabling our clients to deliver superior performance. Our data and AI-led finance and accounting services include high-end analytical services, including financial planning and analysis, management reporting, advanced forecasting and decision support, data management, regulatory reporting and risk and compliance services in addition to core transactional finance operations.
These enterprise solutions complement our domain-specific industry solutions enabling our clients to deliver superior performance. 2 Table of Contents Our AI and data driven finance and accounting services include high-end analytical services, including financial planning and analysis, management reporting, advanced forecasting and decision support, data management, regulatory reporting and risk and compliance services in addition to core transactional finance operations.
We provide end-to-end digital transformation solutions and data and AI-led operations services across the insurance industry in areas such as claims processing, premium and benefit administration, agency management, account reconciliation, policy research, underwriting support, new business acquisition, policy servicing, premium audit, surveys, billing and collection, commercial and residential survey and customer service using digital technology, AI, including generative AI, ML and advanced automation.
We provide end-to-end digital transformation solutions and data and AI-led operations services across the insurance industry encompassing claims processing, premium and benefit administration, agency management, account reconciliation, policy research, underwriting support, new business acquisition, policy servicing, premium audit, surveys, billing and collection, commercial and residential survey and customer service using digital technology, AI, including generative AI, machine learning (“ML”) and advanced automation.
We enhance, modernize and enrich structured and unstructured data and use a spectrum of advanced analytical tools and techniques, including our in-house and third-party AI, generative AI, and ML capabilities and proprietary solutions, to create insights, improve decision making for our clients and address a range of complex industry-wide priorities, including: • Superior customer experience, driving engagement, loyalty and increasing cross-sell through a deeper understanding of consumer behavior; • Solutions for risk models, stress testing, Basel risk-weighted assets, reserves, and economic capital calculation; • ML models for fraud monitoring, loss mitigation, and implementation and execution of fraud strategies; • Enhanced decision-making in underwriting, claims processing and policy renewal through cognitive image analytics; and • Payment integrity services in the U.S. healthcare industry ensuring accurate reimbursement and help prevent fraud, denials, and revenue leakage.
We enhance, modernize and enrich structured and unstructured data and use a spectrum of advanced analytical tools and techniques, including our in-house and third-party AI, generative AI, and ML capabilities and proprietary solutions, to create insights, improve decision making for our clients and address a range of complex industry-wide priorities, including: • Superior customer experience, driving engagement, loyalty and increasing cross-sell through a deeper understanding of consumer behavior; • Solutions for risk models, stress testing, Basel risk-weighted assets, reserves, and economic capital calculation; • ML models for fraud monitoring, loss mitigation, and implementation and execution of fraud strategies; • Enhanced decision-making in underwriting, claims processing and policy renewal through cognitive image analytics; and • Payment integrity services in the U.S. healthcare industry ensuring accurate reimbursement and help prevent fraud, denials, and revenue leakage. 3 Table of Contents Our Analytics team is comprised of approximately 9,900 professionals, including data scientists, data architects, business analysts, statisticians, modelers and industry domain specialists.
We use AI, data, and cloud technology, including our suite of solutions and accelerators, in a standardized, reusable and shared engineering and delivery infrastructure, enabling us to leverage our investments across multiple clients.
We use AI, data, and cloud technology, including our suite of solutions and accelerators, within a standardized, reusable and shared engineering and delivery infrastructure, which allows us to leverage our investments across multiple clients.
See Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We face competition globally from other providers and from our clients, who may build shared services centers to perform digital operations and solutions and analytics services themselves, either in-house or other arrangements.” Many companies, including certain of our clients, choose to perform some or all of their front-, middle- and back-office analytics and processes internally, utilizing their own employees and digital applications to provide these services as part of their regular business operations.
For further details, refer to Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We face competition globally from other providers and from our clients, who may build global capability centers to perform digital operations and solutions and analytics services themselves, either in-house or other arrangements.” Many companies, including some of our clients, opt to perform some or all of their front-, middle- and back-office analytics and processes internally, utilizing their own employees and digital applications to provide these services as part of their regular business operations.
We are headquartered in New York and have approximately 54,000 employees spanning six continents. We deliver data analytics and digital operations and solutions to our clients, driving enterprise-scale business transformation initiatives that leverage our deep expertise in advanced analytics, AI, generative AI and cloud technology.
We are headquartered in New York and have approximately 59,500 employees spanning six continents. We deliver advanced analytics and AI-powered digital operations and solutions to our clients, driving enterprise-scale business transformation initiatives that leverage our deep domain expertise in generative AI and cloud technology.
Optimizing our Global Delivery Footprint and Operational Infrastructure in the Countries and Regions where we Operate Our network of delivery centers and operational footprint is designed to serve the needs of our business, including delivering for our clients, driving efficiencies and adapting to hybrid working model.
Optimizing our Global Delivery Footprint and Operational Infrastructure in the Countries and Regions where we Operate Our network of delivery centers and operational footprint is designed to serve the needs of our business, including delivering for our clients, driving efficiencies and adapting to hybrid working model. We continually optimize our network based on facility usage and business requirements.
We also continue to build our client portfolio in finance and accounting and consulting services in all our business segments. We are strategically equipped to help clients apply relevant digital technologies to enterprise processes and business priorities at every step of the digital transformation journey, by bringing together domain expertise with data, advanced analytics, cloud, AI and ML.
We also continue to build our client portfolio and increase client penetration across all of our services offerings. We are strategically equipped to help clients apply relevant digital technologies to enterprise processes and business priorities at every step of the digital transformation journey, by bringing together domain expertise with data, advanced analytics, cloud, AI and ML.
We believe our key advantage over in-house business processes and analytics management is our ability to orchestrate relevant domain, data, digital, advanced analytics and human design expertise to enable delivery of sustainable outcomes that allow companies to focus on their customers, core products and markets.
We believe our key advantage over in-house business processes and analytics management lies in our ability to orchestrate relevant domain, data, digital, 7 Table of Contents advanced analytics and human design expertise to enable delivery of sustainable outcomes allowing companies to focus on their customers, core products and markets.
Some of our key solutions are: • Generative AI platform for the development and deployment of our proprietary solutions, including, among others, Smart Agent Assist, Claims Assist, Conversational Business Intelligence and Code Harbor. • Xtrakto.AI is a patented and AI-powered solution designed to alleviate the challenges of managing unstructured data. • PayMentor is an AI-powered collections and receivables management solution designed to enhance the debt collection process. 1 Table of Contents • Digital Finance Suite automates and streamlines financial processes and key finance and accounting tasks, which helps customers gain real-time visibility into financial operations leading to faster decision making and reduced risks, among others. • Data and AI-led Customer Experience: Delivers AI-infused customer experiences across multiple customer journeys and touchpoints. • Digital Lending and Embedded Financing: AI-powered financing solution that reimagines and delivers a seamless and end-to-end origination, service and payments journeys for multiple credit and loan products across industries. • Data and AI-led Automation Solution eliminates friction and fragmentation in transaction processing using some of our proprietary workflow solutions.
Some of our key solutions are: • Insurance Large Language Model (“LLM”) is an industry-specific LLM that supports critical claims and underwriting-related tasks, such as claims reconciliation, data extraction and interpretation, question-answering, anomaly detection and chronology summarization. • Generative AI platform for the development and deployment of our proprietary solutions, including, among others, Smart Agent Assist, Claims Assist, Conversational Business Intelligence and Code Harbor. • Xtrakto.AI is a patented and AI-powered solution designed to alleviate the challenges of managing unstructured data. 1 Table of Contents • PayMentor is an AI-powered collections and receivables management solution designed to optimize the debt collection process. • Digital Finance Suite automates and streamlines financial processes and key finance and accounting tasks, which helps customers gain real-time visibility into financial operations leading to faster decision making and reduced risks, among others. • Data and AI-led Customer Experience: Delivers AI-infused customer experiences across multiple customer journeys and touchpoints. • Digital Lending and Embedded Financing: AI-powered financing solution that reimagines and delivers a seamless and end-to-end origination, service and payments journeys for multiple credit and loan products across industries. • Data and AI-led Automation Solution eliminates friction and fragmentation in transaction processing using some of our proprietary workflow solutions.
See Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We may fail to attract and retain enough sufficiently trained employees to support our operations or professionals with sufficient leadership capabilities, which may result in loss of revenue and an inability to expand our business” and “Employee wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin.” Sustainability Strategy The world we work and live in is powered by innovation.
See Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We may fail to attract and retain enough sufficiently trained employees to support our operations or professionals with sufficient leadership capabilities” and “Employee wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin.” 10 Table of Contents Sustainability Strategy The world we work and live in is powered by innovation.
We do this through our data and AI-led value creation framework to enable better and faster decision making, leveraging our end-to-end data and analytics 4 Table of Contents capabilities to drive improved business outcomes, and we re-design operating models to integrate advanced technology into operational workflows.
We do this through our data and AI-led value creation framework to enable better and faster decision making, leveraging our end-to-end data and analytics capabilities to drive improved business outcomes, and we re-design operating models to integrate advanced technology into operational workflows. Below are some of our strategic focus areas.
Some of our data and AI-led digital operations and solutions include: a) multi-modal data ingestion using AI, and converting unstructured content into curated and usable data, b) real-time and comprehensive data insights, including end-to-end data management and building a 360-degree view of our clients’ customers, c) omni-channel and frictionless customer experience including self-service, conversational AI and smart agent assist, d) intelligent and AI-powered redesign and automation of transaction processing and e) automated quality, compliance and audit.
Some of our data and AI-driven digital operations and solutions include: a) multi-modal data ingestion using AI, and converting unstructured content into curated and usable data, b) real-time and comprehensive data insights with end-to-end data management and 360-degree customer views for our clients, c) omni-channel and frictionless customer experience including self-service, conversational AI and smart agent assist, d) AI-powered automation of transaction processing and e) automated quality, compliance and audits.
We continuously monitor our operations to ensure we continue to qualify for the reduced rate. We currently operate in the Philippines and Ireland where we will be subject to a minimum tax rate pursuant to the Pillar Two Framework prescribed by Organization for Economic Co-operation and Development (“OECD”).
We monitor our operations to ensure we continue to qualify for the reduced rate. In the Philippines and Ireland, we are subject to a minimum tax rate under the Pillar Two Framework prescribed by Organization for Economic Co-operation and Development (“OECD”).
Further, through domestic subsidiaries, we are licensed or otherwise eligible to provide third-party administrator services in all states within the United States, as well as utilization review, claims adjuster and insurance producer services in select states.
We provide third-party administrator insurance services from India and the Philippines in a majority of states in the United States. Further we are licensed or otherwise eligible to provide third-party administrator services in all states within the United States, as well as utilization review, claims adjuster and insurance producer services in select states.
Our client experience management solutions that run on our proprietary EXL CONNECX TM platform, help our clients improve their end-customer experience across the front, middle and back-office, integrating data flows, redesigning customer service processes and leveraging digital omni-channel platforms.
Our client experience management solutions that run on a combination of client, partner and proprietary platforms, help our clients improve their end-customer experience across the front, middle and back-office, integrating data flows, redesigning customer service processes and delivering a digital omni-channel customer experience.
Our Analytics services for our clients include: 3 Table of Contents • Identification, cleansing, matching and use of structured, semi-structured and unstructured data, available internally to our client’s organization and also externally; • Integration of data insights and predictive models into real-time, decision-making processes to drive measurable business impact; • Design and implementation of services that enable data visualization and management reporting enabling business users to segment, drill down, and filter data; • Deployment of analytics professionals and data scientists who utilize analytics tools, cutting edge statistical techniques and methodologies in ways designed to help customers better understand their data to generate actionable business insights; and • Harnessing the power of AI, including generative AI to elevate decision-making paradigms, enabling our clients to achieve a sustainable competitive advantage amid rapid technological innovation.
Our Analytics services include: • Identifying, cleansing, matching and using of internal and external structured, semi-structured and unstructured data; • Integrating data insights and predictive models into real-time, decision-making processes to drive measurable business impact; • Designing and implementing services that enable data visualization and management reporting enabling business users to segment, drill down, and filter data; • Deploying analytics professionals and data scientists who utilize analytics tools, cutting edge statistical techniques and methodologies in ways designed to help customers better understand their data to generate actionable business insights; and • Harnessing the power of AI, including generative AI to elevate decision-making paradigms, enabling our clients to achieve a sustainable competitive advantage amid rapid technological innovation.
See Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We earn a substantial portion of our revenues from a limited number of clients.” 6 Table of Contents Our long-term relationships with our clients typically evolve from providing a single, discrete service or process into providing a series of complex, integrated processes across multiple business lines.
For details refer Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We earn a substantial portion of our revenues from a limited number of clients that are mainly located in the United States.” Our long-term relationships with our clients typically evolve from providing a single, discrete service or process into providing a series of complex, integrated processes across multiple business lines.
The OECD continues to release additional guidance on the Pillar Two Framework, with implementation generally effective for 2024. We will continue to evaluate any potential impact on our operations.
The OECD continues to release additional guidance on the Pillar Two Framework and we will continue to evaluate any potential impact on our operations.
Our sales, marketing and business development teams are responsible for new client acquisitions, public relations, relations with outsourcing advisory companies, analyst relations, lead generation, knowledge management, content development, campaign management, digital or web presence, brand awareness and participation in industry forums and conferences.
Our sales, marketing and business development teams are responsible for new client acquisition, nurturing and growing current client relationships, public relations, analyst relations, lead generation, content development, campaign management, digital and/or web presence, brand awareness and participation in industry forums and conferences.
We seek to continue providing value to our clients with our deep industry knowledge, ability to advise clients on how to transform their processes and deliver transformation that drives business value, and ability to provide innovative services and solutions, including digital offerings 7 Table of Contents that incorporate AI and ML capabilities.
We operate in a highly competitive and rapidly evolving global market. We seek to continue providing value to our clients with our deep industry knowledge, ability to advise clients on how to transform their processes and deliver transformation that drives business value, and ability to provide innovative services and solutions, including digital offerings that incorporate AI and ML capabilities.
We are managing our business in accordance with the guidelines issued in 2022 by the Philippines Fiscal Incentives Review Board to continue availing the tax holidays. We have established a headquarters for international business in Dublin, Ireland, and qualify for a reduced tax rate subject to certain conditions.
We are managing our business in accordance with the applicable guidelines issued by the Philippines Fiscal Incentives Review Board to continue availing the tax holidays. 11 Table of Contents In 2023, we established an international business headquarters in Dublin, Ireland, and qualify for a reduced tax rate.
Employee Retention Our attrition rate for employees who had been with EXL for more than 180 days was 25.8% and 31.6% for the years ended December 31, 2023 and 2022, respectively. The attrition rate in 2023 decreased from 2022, which we believe reflects better employee engagement. As competition in our industry increases, our turnover rate could increase.
Employee Retention Our attrition rate for employees who had been with EXL for more than 180 days was 26.1% and 25.8% for the years ended December 31, 2024 and 2023, respectively. As competition in our industry increases, our turnover rate could increase.
Below are some of our strategically focused considerations: Expanding our Services in Large Addressable Markets We continue to focus on the insurance, healthcare, banking and financial services, retail, media and technology industries, among others, which are large markets with high demand, as well as pursuing opportunities in emerging industries.
Expanding our Services in Large Addressable Markets We continue to focus on the insurance, healthcare, banking and capital markets, retail, communications and media, and energy and infrastructure industries, among others, which are large markets with high demand, as well as pursuing opportunities in emerging industries.
By leveraging our suite of end-to-end analytics capabilities, we aim to drive better business outcomes for our clients by unlocking deep insights from data and creating data and AI-led solutions across all parts of clients’ businesses.
Analytics Our Analytics strategic business unit helps clients build data-led businesses using AI, generative AI, advanced analytics solutions and services, and cloud technology. By leveraging our suite of end-to-end analytics capabilities, we aim to drive better business outcomes for our clients by unlocking deep insights from data and creating data and AI-led solutions across all aspects of our clients’ businesses.
EXL harnesses the power of data, analytics, artificial intelligence (“AI”), and deep industry knowledge to transform operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others. EXL was founded in 1999 with the core values of innovation, collaboration, excellence, integrity and respect.
EXL harnesses the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare, banking and capital markets, retail, communications and media, and energy and infrastructure, among others. EXL was founded in 1999 with the core values of innovation, collaboration, excellence, integrity and respect.
Regulation Our operations are subject to rules, regulations and statutes in the countries where we have operations and where we deliver services as a result of the diverse and complex nature of our service offerings. More often, however, our clients contractually require that we comply with certain rules and regulations applicable to us in delivering our services to them.
Regulation Our operations are subject to rules, regulations and statutes in the jurisdictions in which we have operations and where we deliver services as a result of the diverse and complex nature of our offerings. Consequently, we comply with certain rules and regulations applicable to us in delivering our services.
Our training includes behavioral and functional components to enhance and ensure job readiness as well as also boosting ongoing productivity and effectiveness. We also focus on promoting better diversity, equity and inclusion through our training programs. We have a global presence catering to the specific learning requirements of each geography.
Our training includes behavioral and functional components to enhance and ensure job readiness as well as also boosting ongoing productivity and effectiveness. We have a global presence catering to the specific learning requirements of each geography. We provide learning through our blended learning methodology comprising of virtual, classroom, on the job coaching and technology-led learning.
Our Digital Finance Suite, which is 2 Table of Contents powered by our integrated cloud-based hyper-automation and insights platform, helps chief financial officers transform finance into a digitally enabled, scalable data and AI-led function with lower cost to serve, superior business outcomes and improved stakeholder experience.
Our Digital Finance Suite, which is now an AI powered integrated cloud-based hyper-automation insights, and processing platform, helps chief financial officers transform finance into an AI and data-led, digitally enabled, scalable function that drives economic performance for the enterprise, delivers improved business outcomes with lower cost to serve, and better stakeholder experience.
We intend to continue building a portfolio of Fortune 500 and Forbes Global 2000 companies in our focus industries that have complex and diverse data-led processes and, accordingly, stand to benefit significantly from our services. We also intend to cultivate long-term relationships with medium-sized companies in our focus industries by leveraging our data analytics, and digital operations and solutions offerings.
We intend to continue building a portfolio of Fortune 500 and Forbes Global 2000 companies in our focus industries that have complex and diverse data and AI-led processes and, accordingly, stand to benefit significantly from our services.
Our Industry Digital operations and solutions As a provider of digital operations and solutions, we work with clients to execute enterprise-scale business transformation initiatives that enable improved customer experience, revenue growth, operational efficiency and reduced 5 Table of Contents risk.
Our Industry Digital operations and solutions As a provider of digital operations and solutions, we work with clients to execute enterprise-scale business transformation initiatives that enable improved customer experience, revenue growth, operational efficiency and reduced risk. Our asset-based operations services combine the industry-specific knowledge of our global workforce with an ecosystem of partner and proprietary digital solutions.
Business Strategy EXL is a leading data analytics and digital operations and solutions company and is a key strategic partner for data and AI-led businesses. We reinvent business models, drive better business outcomes and unlock growth with speed for our clients through advanced analytics and AI -powered digital solutions on the cloud.
We reinvent business models, drive better business outcomes and unlock growth with speed for our clients through advanced analytics and AI -powered digital solutions on the cloud.
We recognize that the world we live and work in is diverse and fueled by innovation. To thrive in this environment, we foster a culture that values diverse perspectives, embraces differences and promotes leadership opportunities in a way that reflects the communities in which we operate.
We recognize that the world we live and work in is diverse and fueled by innovation. To thrive in this environment, we foster a culture that values varied experiences and perspectives.
Clients EXL generated revenues from approximately 560 clients and 550 clients in 2023 and 2022, respectively (with annual revenue exceeding $50,000 per client). We won 63 and 59 new clients during 2023 and 2022, respectively. Our top three, five and ten clients generated 16.4%, 22.9% and 34.0% of our revenues, respectively, in 2023.
Clients We generated revenues from approximately 570 clients and 560 clients in 2024 and 2023, respectively (with annual revenue exceeding $50,000 per client). We won 69 and 63 new clients during 2024 and 2023, respectively. Our top three, five and ten clients generated 17.2%, 23.0% and 33.2% of our revenues, respectively, in 2024.
Our employees and independent contractors are required to sign work-for-hire agreements containing confidentiality covenants as a condition to their employment and engagement, respectively. We also have policies requiring our employees, independent contractors, and associates to respect the intellectual property rights of others, including obtaining appropriate licenses when using, selling or distributing third-party materials.
We also have policies requiring our employees, independent contractors, and associates to respect the intellectual property rights of others, including obtaining appropriate licenses when using, selling or distributing third-party materials.
ITEM 1. Business ExlService Holdings, Inc. (“EXL,” “we,” “us,” “our” or the “Company”), incorporated in Delaware in 2002, is a leading data analytics and digital operations and solutions company. We partner with clients using a data and AI-led approach to reinvent business models, drive better business outcomes and unlock growth with speed.
ITEM 1. Business ExlService Holdings, Inc. (“EXL,” “we,” “us,” “our” or the “Company”), incorporated in Delaware in 2002, is a global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed.
We believe success in such a world will come through passing along social goods to the communities in which we operate, and ensuring that we conduct our operations in a sustainable and safe manner.
We believe success in such a world will come through supporting the communities in which we operate, and ensuring that we conduct our operations in a sustainable and safe manner that is aligned with, and contributes toward, our business objectives.
Some of our clients’ operations that we have transformed using the above solutions include underwriting operations, claims processing, accounts payables processing, utilization management, member and provider contact center services and collections and accounts receivables.
Using these solutions, we have transformed client operations such as underwriting operations, claims processing, accounts payables processing, utilization management, member and provider contact center services and collections and accounts receivables.
By leveraging our end-to-end service offerings, we develop industry-specific AI and advanced analytics solutions and generate data insights, which makes us well-positioned to benefit from this global trend.
By leveraging our end-to-end offerings, we develop industry-specific AI and advanced analytics solutions and generate data insights, which makes us well-positioned to benefit from this global trend. Sales, Marketing and Client Management We market and sell our services to existing and prospective clients through our sales and client management teams, partner relationships, industry forums, and marketing programs.
We seek to protect our intellectual property through a combination of patent, trademark, copyright and trade secret laws, as well as through confidentiality procedures and contractual provisions. Clients and business partners typically agree in writing to confidential treatment of our information.
We consider many of our business processes and implementation methodologies to be trade secrets or proprietary know-how and confidential information. We seek to protect our intellectual property through a combination of patent, trademark, copyright and trade secret laws, as well as through confidentiality procedures and contractual provisions.
We leverage shared resources across our services through personnel who have skill sets applicable to a wide variety of data, digital, cloud and AI/ML services. We also have specialized experts in various domains, in our chosen industries and subject matters through our training academies.
We optimize shared resources across our services by leveraging personnel with versatile skill sets applicable to a broad range of data, digital, cloud, and AI/ML services. Additionally, we have dedicated domain experts in key industries and subject matters, supported by our specialized training academies.
Our vision of being an indispensable partner for data and AI-led businesses reflects the long-term priorities of our clients' businesses across industry sectors, and we continue to evolve our offerings to drive business outcomes through advanced analytics and AI-powered solutions on the cloud.
Data, AI, analytics and digital have become core to virtually every significant move a business makes to serve customers, optimize business processes, stay competitive and grow. Our vision of being an indispensable partner for data and AI-led transformation reflects the long-term priorities of our clients' businesses across industry sectors, and we continue to evolve our offerings to drive business outcomes.
In the retail and consumer packaged goods sector, we provide supply chain management services and analytical services including merchandising, pricing and demand forecasting. For our clients in the utilities sector, we offer digital operations and solutions related to end-to-end customer life cycle management including onboarding and terminations, engineering field services, customer service, billing and debt management and collections.
For our clients in the utilities sector, we offer AI enabled digital operations and solutions related to end-to-end customer life cycle management including onboarding and terminations, engineering field services, customer service, billing and debt management and collections. In the technology, media, and telecom sector, we manage media and advertising reconciliations, order entry, fulfillment and licensing management operations.
We also leverage strategic partnerships with third parties to facilitate our solution offerings to clients, including, among others, robotics and process automation software providers, financing platform providers, and AI solutions providers. We typically retain ownership of any pre-existing proprietary intellectual property assets, including modifications or enhancements to such pre-existing proprietary assets developed while providing client services.
We also leverage strategic partnerships with third parties to facilitate our solution offerings to clients, including, among others, robotics and process automation software providers, platform providers, and AI solutions providers.
Intellectual Property Our intellectual property consists of proprietary platforms, software, data, databases, models, methodologies, know-how, names, designs, domains, user interfaces, applications and operating procedures among other materials. We consider many of our business processes and implementation methodologies to be trade secrets or proprietary know-how and confidential information.
Intellectual Property Our intellectual property consists of proprietary platforms, software, data, databases, models, methodologies, know-how, names, designs, domains, user interfaces, applications and operating procedures among other materials. We have obtained or are in the process of obtaining patents on a number of our proprietary solutions.
We have expanded our footprint within our existing clients in the insurance, healthcare, banking and financial services, retail and consumer packaged goods, media and telecom, utilities and manufacturing industries by cross-selling our enhanced data management and cloud enablement offerings.
We have expanded our footprint within our existing clients in the insurance, healthcare, banking and financial services, retail and consumer packaged goods, media and telecom, utilities and manufacturing industries by cross-selling our enhanced data management and cloud enablement offerings. 4 Table of Contents 2025 Operating Model In the first quarter of 2025, we began to implement operational and structural changes to accelerate the execution of our data and AI strategy, capture a greater share of the growing AI market and drive our long-term growth.
Our Analytics team is comprised of approximately 9,100 professionals, including data scientists, data architects, business analysts, statisticians, modelers and industry domain specialists. We help our clients leverage internal and external data sources, enhance their data assets, identify and visualize data patterns, and utilize data and AI-led insights to improve their effectiveness.
We help our clients leverage internal and external data sources, enhance their data assets, identify and visualize data patterns, and utilize data and AI-led insights to boost their effectiveness.
We have also established Company-wide and worksite-specific workplace safety objectives that are integrated into our EHS Management System. Where practical, we seek to integrate EHS with our business activities, focusing on conducting our activities in an environmentally responsible manner and ensuring the health and safety of our employees, contractors, customers, visitors and the communities in which we operate.
We have also established Company-wide and worksite-specific workplace safety objectives that are integrated into our EHS Management System. Where aligned with our strategic objectives, we seek to integrate EHS with our business activities and to maintain a responsible supply chain by stating our expectations for our vendors in our Supplier Standards of Conduct.
We have seen a significant acceleration in the shift to digital and cloud-based solutions across all our target markets over the past few years. Capturing data and enriching data has become a key differentiator for clients and their speed of decision making necessitating the adoption of AI, including generative AI and ML techniques.
As technology evolves and AI adoption increases, capturing and enriching data has become a key differentiator for clients and their speed of decision making necessitating the adoption of AI, including generative AI and ML techniques. The accelerated adoption of cloud-based solutions has increased our clients’ needs for a suite of cloud migration and enablement capabilities.
These business units develop client-specific solutions, build capabilities, maintain a unified go-to-market approach and are integrally responsible for service delivery, customer satisfaction, growth and profitability. By integrating data and analytics directly into our client workflows, we drive more intelligence into our clients’ increasingly digital operations that drive superior customer outcomes, optimize costs and power resilient and agile business models.
By integrating AI, data and analytics directly into our client workflows, we drive intelligence into our clients’ digital operations that drive superior sales outcomes, optimize costs and power resilient and agile business models.
In the transportation and logistics sector, we provide our clients with freight billing, collections, claims management, freight audit, freight scheduling, supply chain management and revenue assurance services. Analytics Our Analytics strategic business unit helps clients build data-led businesses using AI, generative AI, advanced analytics solutions and services, and cloud technology.
For our clients in the travel and leisure sector, we provide corporate and leisure travel services, including, AI enabled digital reservations, customer service and fulfilment services. In the transportation and logistics sector, we provide our clients with AI enabled digital freight billing, collections, claims management, freight audit, freight scheduling, supply chain management and revenue assurance services.
The information contained on our website is not included in, or incorporated by reference into, this Annual Report on Form 10-K. Community Activities EXL finds meaningful ways to help the communities in which we operate.
The information contained on our website (including the Sustainability Report) is not included in, or incorporated by reference into, this Annual Report on Form 10-K. Community Activities Our community engagement strategy focuses on four key pillars: education, digital skills development, employee engagement, and community impact.
Our AI and analytics solutions include Bank Transaction Insights, which provides insights from bank data and Customer 360 Insights, which provides agent and customer relationship insights. Our EXLClarity TM platform supports risk adjustment and quality management for payers and providers and helps to optimize their revenue.
Conversational business intelligence generates insights from data using natural language and other Generative AI-led assistants for various functions. Our EXLClarity TM platform supports risk adjustment and quality management for payers and providers and helps to optimize their revenue.
We consider selective strategic relationships with industry leaders that add new long-term client relationships, enhance the depth and breadth of our services and solutions and complement our business strategy. Through our Connected Intelligence Partnership programs, we expand our technology and innovation ecosystem with select partnerships, alliances or investments.
Pursuing Strategic Acquisitions and Partnerships We intend to continue making selective acquisitions within our target industry verticals that enhance our competitive differentiation and meet our strategic and financial criteria. We consider selective strategic partnerships with industry leaders that can establish new long-term client relationships, enhance the depth and breadth of our services and solutions and complement our business strategy.
We manage and report financial information through our four reportable segments or strategic business units: Insurance, Healthcare, Analytics and Emerging Business, which reflects how management reviews financial information and makes operating decisions. Our strategic business units align our products and services with how we manage our business, approach our key markets and interact with our clients.
Through the end of 2024, we managed and reported financial information through our four reportable segments or strategic business units: Insurance, Healthcare, Analytics and Emerging Business, which reflected how management reviewed financial information and made operating decisions throughout that period.
Human Capital Management At EXL, our organizational ethos is distinctly shaped by five core values: innovation, collaboration, excellence, integrity and respect. In line with our core values, we recognize our workforce’s pivotal role in driving our success. We prioritize the ongoing development and progression of our employees, because we believe it to be critical to our sustained performance and longevity.
Human Capital Management At EXL, our identity is deeply rooted in five core values: innovation, collaboration, excellence, integrity, and respect. Guided by these principles, we acknowledge the essential role our workforce plays in our success.
The accelerated adoption of cloud-based solutions has increased our clients’ needs for a suite of cloud migration and enablement capabilities. We expect the trend in increased demand for analytics solutions to continue, and to capture these new opportunities, we have built a scalable and customizable multi-cloud cross-sector generative AI platform with pre-built accelerators and packaged solutions.
We have built a scalable and customizable multi-cloud cross-sector generative AI platform with pre-built accelerators and packaged solutions. Our AI and analytics solutions include Bank Transaction Insights, which provides insights from bank data and Customer 360 Insights, which provides agent and customer relationship insights.
Our talent strategy is a key driver for EXL’s long-term business strategy of turning data into a sustainable competitive advantage for our clients. To deliver on this complex work, we focus on identifying the critical skills and roles necessary to our business so that we can attract and retain the talent needed.
Our talent strategy aims to facilitate EXL’s current needs and support the long-term business objective of transforming data into a competitive edge for our clients. To achieve these objectives, we identify critical skills and roles that are our core business requirements and then build a talent pipeline through market mapping exercises followed by initiatives to attract and retain talent.
Our facilities in the Philippines, as well as one domestic subsidiary, are accredited by the Utilization Review Accreditation Commission (URAC) and National Committee for Quality Assurance (NCQA), the leading healthcare and education accreditation organizations. We continue to obtain licenses and accreditations required from time to time by our business operations.
Our utilization management and case management services that we provide from the Philippines, are accredited by the Utilization Review Accreditation Commission (URAC) and National Committee for Quality Assurance (NCQA), both independent U.S. organizations that work to improve health care quality through the administration of evidence-based standards, measures, programs, and accreditation.
We maintain licenses in various jurisdictions (or require certain categories of our professionals to be individually licensed, as applicable) in service areas such as debt collection, utilization review, workers’ compensation utilization review, claims adjuster, mortgage loan processing and underwriting and telemarketing services.
We require certain categories of our professionals to be individually licensed, as applicable.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we have entered into employment and non-competition agreements with all of our executive officers, certain terms of those agreements may not be enforceable, particularly in light of recent regulatory scrutiny from the U.S. Federal Trade Commission and others, and in any event these agreements do not ensure the continued service of these executive officers.
Biggest changeSpecifically, the loss of the services of our Chairman and Chief Executive Officer could seriously impair our ability to continue to manage and expand our business. Although we have entered into employment and non-competition agreements with all of our executive officers, certain terms of those agreements may not be enforceable, particularly in light of recent regulatory scrutiny from the U.S.
Our business could be materially and adversely affected if we do not protect our intellectual property or if our services are found to infringe on the intellectual property of others. Our success depends in part on certain methodologies, practices, tools and technical expertise we utilize in providing our services and solutions.
Our business could be materially and adversely affected if we do not protect our intellectual property or if our services or solutions are found to infringe on the intellectual property of others. Our success depends in part on certain methodologies, practices, tools and technical expertise we utilize in providing our services and solutions.
In many of our digital operations and solutions contracts we commit to long-term and other pricing structures (such as full-time equivalent-based pricing, fixed-price arrangements, transaction-based and outcome-based pricing) with our clients and therefore bear the risk of cost overruns, completion delays, resource requirements, wage inflation and adverse movements in exchange rates in connection with these contracts.
In many of our digital operations and solutions contracts we commit to long-term and other pricing structures (such as full-time equivalent-based pricing, fixed-price arrangements, transaction-based and outcome-based pricing) with our clients and therefore may bear the risk of cost overruns, completion delays, resource requirements, wage inflation and adverse movements in exchange rates in connection with these contracts.
Health Insurance Portability and Accountability Act of 1996, as amended, of our clients’ customers in connection with our services, including names, addresses, social security numbers, personal health information, credit card account numbers, checking and savings account numbers and payment history records, such as account closures and returned checks. In addition, we collect and store data regarding our employees.
Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA), of our clients’ customers in connection with our services, including names, addresses, social security numbers, personal health information, credit card account numbers, checking and savings account numbers and payment history records, such as account closures and returned checks. In addition, we collect and store data regarding our employees.
General Risk Factors Our results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on our clients’ businesses and levels of business activity. Global economic and political conditions affect our clients’ businesses and the markets they serve, which are increasingly becoming more interdependent.
General and Other Risk Factors Our results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on our clients’ businesses and levels of business activity. Global economic and political conditions affect our clients’ businesses and the markets they serve, which are increasingly becoming more interdependent.
Some of these existing and potential competitors may have greater financial, personnel and other resources, a broader range of service offerings, greater technological expertise, more recognizable brand names and more established relationships in industries that we currently serve or may serve in the future.
Some of these existing and potential competitors may have greater financial, personnel and other resources, a broader range of offerings, greater technological expertise, more recognizable brand names and more established relationships in industries that we currently serve or may serve in the future.
Our operations centers and our data and voice communications, particularly in India, the Philippines and South Africa, may be damaged or disrupted as a result of natural disasters such as earthquakes, floods, volcano eruptions, heavy rains, drought, extreme heat, epidemics or pandemics, such as COVID-19, tsunamis and cyclones, technical disruptions such as electricity or infrastructure breakdowns, including damage to telecommunications cables, computer glitches and electronic viruses or man-made events such as political unrest, terrorist attacks, other acts of violence or war, protests, riots and labor unrest.
Our operations centers and our data and voice communications, particularly in India, the Philippines and South Africa, may be damaged or disrupted as a result of natural disasters such as earthquakes, floods, volcano eruptions, heavy rains, drought, extreme heat, epidemics or pandemics, tsunamis and cyclones, technical disruptions such as electricity or infrastructure breakdowns, including damage to telecommunications cables, computer glitches and electronic viruses or man-made events such as political unrest, terrorist attacks, other acts of violence or war, protests, riots and labor unrest.
Such events may lead to the disruption of information systems and telecommunication services or our supply chain for sustained periods. They also may make it difficult or impossible for employees to reach our business locations and for us to deliver our solutions and services.
Such events may lead to the disruption of business operations, information systems and telecommunication services or our supply chain for sustained periods. They also may make it difficult or impossible for employees to reach our business locations and for us to deliver our solutions and services.
If an actual or perceived breach of our security occurs (or a breach of a client’s security that can be attributed to our fault or is perceived to be our fault), the market perception of the effectiveness of our security measures could be harmed and we could lose users and clients.
If an actual or perceived breach of our security occurs (or a breach of a client’s security that can be attributed to our fault or is perceived to be our fault), the market perception of the effectiveness of our security measures could be harmed and we could lose clients.
Delaware law and our restated certificate of incorporation and sixth amended and restated by-laws contain certain anti-takeover provisions that could delay or discourage business combinations and takeover attempts that stockholders may consider favorable.
Delaware law and our fourth amended and restated certificate of incorporation and sixth amended and restated by-laws contain certain anti-takeover provisions that could delay or discourage business combinations and takeover attempts that stockholders may consider favorable.
Changes in our operating model, such as the foregoing, or other changes to our infrastructure facilities or how we are organized, as the needs and size of our business change, limit our ability to forecast the need to hire additional skilled employees as and when they are required to meet the ongoing needs of our clients, and we may not be able to develop and improve our internal systems.
Changes in our operating model or other changes to our infrastructure facilities or how we are organized, as the needs and size of our business change, limit our ability to forecast the need to hire additional skilled employees as and when they are required to meet the ongoing needs of our clients, and we may not be able to develop and improve our internal systems.
Our intellectual property consists of proprietary and licensed platforms, software, data, databases, methodologies, models, know-how, names, designs, domains, user interfaces, applications and operating procedures, among other materials. We consider many of our business processes and implementation methodologies to be trade secrets or proprietary know-how and confidential information.
Our intellectual property consists of proprietary and licensed platforms, software, data, datasets, methodologies, models, know-how, names, designs, domains, user interfaces, applications and operating procedures, among other materials. We consider many of our business processes and implementation methodologies to be trade secrets or proprietary know-how and confidential information.
We may in the future require additional financing to fund one or more acquisitions and may not be able to obtain such additional financing on competitive terms or at all, which could restrict our ability to complete such transactions. Risks Related to Our Common Stock Our stock price continues to be volatile.
We may in the future require additional financing to fund one or more acquisitions or similar corporate transactions and may not be able to obtain such additional financing on competitive terms or at all, which could restrict our ability to complete such transactions. Risks Related to Our Common Stock Our stock price continues to be volatile.
Our asset utilization levels are affected by a number of factors, including our ability to transition employees from completed projects to new assignments, attract, train and retain employees, forecast demand for our services (including potential client terminations or reductions in required resources) and maintain an appropriate headcount in each of our locations, as well as our need to dedicate resources for employee training and development, other typically non-chargeable activities and optimizing our operational infrastructure.
Our asset utilization levels are affected by a number of factors, 14 Table of Contents including our ability to transition employees from completed projects to new assignments, attract, train and retain employees, forecast demand for our services (including potential client terminations or reductions in required resources) and maintain an appropriate headcount in each of our locations, as well as our need to dedicate resources for employee training and development, other typically non-chargeable activities and optimizing our operational infrastructure.
AI technologies are complex and are rapidly evolving, and we face significant competition, including from our own clients, who may potentially develop their own internal, or acquire from third parties, which in each case, can lead to reduced demand for our services and solutions.
AI technologies are complex and are rapidly evolving, and we face significant competition, including from our own clients, who may potentially develop their own internal AI technology, or acquire such technology from third parties, which in each case, can lead to reduced demand for our services and solutions.
Damage or destruction that interrupts our provision of services could adversely affect our reputation, our relationships with and liability to our clients, our leadership team’s ability to administer and supervise our business or it may cause us to incur substantial additional expenditure to repair or replace damaged equipment or delivery centers.
Damage or destruction that interrupts our provision of services could adversely affect our reputation, our relationships with and liability to our clients, our leadership team’s ability to administer and supervise our business or it may cause us to incur substantial additional expenditure to repair or replace damaged equipment or operations centers.
In the United States, several states have enacted or are considering enacting privacy regulations, including, the California Consumer Privacy Act, as amended; and there are several privacy regulations in other jurisdictions, such as the General Data Protection Regulation in the European Union, the International Data Transfer Agreement in the United Kingdom and the Digital Personal Data Protection Act, 2023 in India.
In the United States, several states have enacted or are considering enacting privacy regulations, including, the California Consumer Privacy Act. In addition, there are privacy regulations in other jurisdictions, such as the General Data Protection Regulation in the European Union, the International Data Transfer Agreement in the United Kingdom and the Digital Personal Data Protection Act, 2023 in India.
For example, wage costs in India and the Philippines have historically been significantly lower than wage costs in the United States, the United Kingdom and Europe for comparably skilled professionals, and having a significant number of our employees in those lower wage costs countries has been one of our competitive advantages.
For example, wage costs in India, the Philippines and South Africa have historically been significantly lower than wage costs in the United States, the United Kingdom and Europe for comparably skilled professionals, and having a significant number of our employees in those lower wage costs countries has been one of our competitive advantages.
The successful assertion of one or more large claims against us that are excluded from our insurance coverage or exceed available insurance coverage, or changes in our insurance policies (including premium increases, the imposition of large deductible or co-insurance requirements, or our insurers’ disclaimer of coverage as to future claims), could have a material adverse effect on our business, results of operations, financial condition and cash flows.
The successful assertion of one or 23 Table of Contents more large claims against us that are excluded from our insurance coverage or exceed available insurance coverage, or changes in our insurance policies (including premium increases, the imposition of large deductible or co-insurance requirements, or our insurers’ disclaimer of coverage as to future claims), could have a material adverse effect on our business, results of operations, financial condition and cash flows.
The majority of our digital operations and solutions contracts have longer terms, typically ranging from three to five years, and generally require a longer notice period for termination and may include an early termination fee to be paid to us, but this might not be sufficient to cover our costs or make up for the loss of revenues 13 Table of Contents and profit upon termination of the contract.
The majority of our digital operations and solutions contracts have longer terms, typically ranging from three to five years, and generally require a longer notice period for termination and may include an early termination fee to be paid to us, but this might not be sufficient to cover our costs or make up for the loss of revenues and profit upon termination of the contract.
Acquisitions, including completed acquisitions, involve a number of risks, including diversion of management’s attention, ability to finance the acquisition on attractive terms, failure to retain key personnel or valuable clients, legal liabilities and the need to amortize acquired intangible assets, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Acquisitions, including completed acquisitions, involve a number of risks, including diversion of management’s attention, ability to finance the acquisition on attractive terms, failure to retain key personnel or valuable clients, legal liabilities and the need to amortize acquired intangible assets or recognize any impairment on goodwill and intangible assets, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Unauthorized disclosure of sensitive or confidential client and employee data, whether through breach of our computer systems or otherwise, could cause us significant reputational damage, expose us to protracted and costly litigation, and cause us to lose clients. 14 Table of Contents We are typically required to process, and sometimes collect and/or store sensitive data, including data regulated by the U.S.
Unauthorized disclosure of sensitive or confidential client and employee data, whether through breach of our computer systems or otherwise, could cause us significant reputational damage, expose us to protracted and costly litigation, and cause us to lose clients. We are typically required to process, and sometimes collect and/or store sensitive data, including data regulated by the U.S.
Congress and in state legislatures to address these concerns. If any such measure is enacted, our ability to do business with U.S. clients through our non-U.S. affiliates could be negatively impacted.
Congress or in state legislatures to address these concerns. If any such measure is enacted, our ability to do business with U.S. clients through our non-U.S. affiliates could be negatively impacted.
Any change in demand from any of our large clients for any reason could have 16 Table of Contents a material adverse effect on our business, results of operations, financial condition and cash flows. Moreover, the loss of a major client could also impact our reputation in the market, making it more difficult to attract and retain clients more generally.
Any change in demand from any of our large clients for any reason could have a material adverse effect on our business, results of operations, financial condition and cash flows. Moreover, the loss of a major client could also impact our reputation in the market, making it more difficult to attract and retain clients more generally.
We face competition globally from other providers and from our clients, who may build shared services centers to perform digital operations and solutions and analytics services themselves, either in-house or other arrangements. The market for our services is highly competitive, and we expect competition to intensify and increase in the future as more companies enter the market.
We face competition globally from other providers and from our clients, who may build global capability centers to perform digital operations and solutions and analytics services themselves, either in-house or other arrangements. The market for our services is highly competitive, and we expect competition to intensify and increase in the future as more companies enter the market.
We have also made changes to our operating model driven by delivery of a significant portion of our services from a hybrid working model, which has led to contraction of our operation centers.
We have also made changes to our operating model driven by delivery of a significant portion of our services from a hybrid working model, which has led to contraction of our operations centers.
Bribery Act), data privacy and protection, government compliance, wage-and-hour standards, employment and labor relations, health and safety, environmental and human rights, state laws on third party administration services, utilization review services, telemarketing services or state laws on debt collection in the United States and the Financial Services Act in the United Kingdom as well as similar consumer 20 Table of Contents protection laws in other countries where our clients’ customers are based.
Bribery Act), data privacy and protection, government compliance, wage-and-hour standards, employment and labor relations, health and safety, environmental and human rights, state laws on third party administration services, utilization review services, telemarketing services or state laws on debt collection in the United States and the Financial Services Act in the United Kingdom as well as similar consumer protection laws in other countries where our clients’ customers are based.
Our profitability is, in part, a function of the efficiency with which we utilize our assets, in particular our people and our operations centers, and the price we can charge for our services.
Our profitability is, in part, a result of the efficiency with which we utilize our assets, in particular our people and our operations centers, and the price we can charge for our services.
Outside parties may attempt to fraudulently induce employees, users, or clients to disclose sensitive information in order to gain access to our data or our users’ or clients’ data.
Outside parties may attempt to fraudulently induce employees, clients to disclose sensitive information in order to gain access to our data or our clients’ data.
We may not be able to detect unauthorized use and take appropriate steps to enforce our rights, and any such steps may not be successful. Infringement by others of our intellectual property, including the costs of enforcing our intellectual property rights, may have a material adverse effect on our business, results of operations, financial condition and cash flows.
We may not be able to detect unauthorized use and steps we take to enforce our rights may not always be successful. Infringement by others of our intellectual property, including the costs of enforcing our intellectual property rights, may have a material adverse effect on our business, results of operations, financial condition and cash flows.
Our restated certificate of incorporation and sixth amended and restated by-laws (the “by-laws”) contain provisions that may make it more difficult, expensive or otherwise discourage a tender offer or a change in control or takeover attempt by a 21 Table of Contents third-party that is opposed by our board of directors.
Our fourth amended and restated certificate of incorporation and sixth amended and restated by-laws (the “by-laws”) contain provisions that may make it more difficult, expensive or otherwise discourage a tender offer or a change in control or takeover attempt by a third-party that is opposed by our board of directors.
In addition, you may be unable to enforce against these persons outside the jurisdiction of their residence judgments obtained in courts of the United States, including judgments predicated solely upon the federal securities laws of the United States.
In addition, our investors may be unable to enforce against these persons outside the jurisdiction of their residence judgments obtained in courts of the United States, including judgments predicated solely upon the federal securities laws of the United States.
The terms of our project-based analytics and consulting services contracts generally do not exceed one year and may not produce ongoing or recurring business for us once the project is completed, and these contracts typically permit a client to terminate the agreement with shorter term notice.
The terms of our project-based engagements generally do not exceed one year and may not produce ongoing or recurring business for us once the project is completed, and these contracts typically permit a client to terminate the agreement with shorter term notice.
The exchange rates among the Indian rupee, the Philippine peso, the U.K pound sterling, the South African rand and other currencies in which we incur costs 19 Table of Contents or earn revenues and the U.S. dollar have changed substantially in recent years and may fluctuate substantially in the future.
The exchange rates among the Indian rupee, the Philippine peso, the U.K pound sterling, the South African rand and other currencies in which we incur costs or earn revenues and the U.S. dollar have changed substantially in recent years and may fluctuate substantially in the future.
However, because of economic growth in India and the Philippines, increased demand for competitive services from such countries and increased competition for skilled employees, wages for comparably skilled employees are increasing at a faster rate than in the United States, the United Kingdom and Europe. This may reduce our competitive advantage.
However, because of increased demand for competitive services from such countries and increased competition for skilled employees, wages for comparably skilled employees are increasing at a faster rate than in the United States, the United Kingdom and Europe. This may reduce our competitive advantage.
If our cash flow from operations declines, we may not be able to service or refinance our current debt or obtain financing on favorable terms to us or at all, which could adversely affect our business and financial condition.
If our cash flow from operations declines, 21 Table of Contents we may not be able to service or refinance our current debt or obtain financing on favorable terms to us or at all, which could adversely affect our business and financial condition.
We may be unable to protect our intellectual property and proprietary technology effectively, which may allow competitors to duplicate our technology and products and may adversely affect our ability to compete with them.
We may be unable to protect our intellectual property and proprietary technology effectively, which may allow competitors to duplicate our technology and solution offerings and may adversely affect our ability to compete with them.
However, these measures may not prevent misappropriation or infringement of our intellectual property or proprietary information and a resulting loss of competitive advantage. Additionally, we may not be successful in obtaining or maintaining patents, trademarks or other intellectual property rights protections for which we have applied or may in the future apply.
However, these measures may not prevent misappropriation or infringement of our intellectual property and a 16 Table of Contents resulting loss of competitive advantage. Additionally, we may not be successful in obtaining or maintaining patents, trademarks or other intellectual property rights protections for which we have applied or may in the future apply.
Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services to offshore providers to avoid any negative perception that may be associated with using an offshore provider. Measures aimed at limiting or restricting outsourcing by U.S. companies have been put forward by the U.S.
Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services to offshore providers to avoid any negative perception that may be associated with using an offshore provider. Measures aimed at limiting or restricting outsourcing by U.S. companies may be put forward by the President via executive action, U.S.
As a result, you may be unable to effect service of process upon our affiliates who reside in India and the Philippines outside their jurisdiction of residence.
As a result, our investors may be unable to effect service of process upon our affiliates or officers who reside in India and the Philippines outside their jurisdiction of residence.
Such technological developments and spending delays can negatively impact our results of operations if we are unable to introduce new pricing or commercial models that reflect the value of these technological developments or if the pace and level of spending on new technologies are not sufficient to make up for any shortfall.
Such technological developments and spending delays can negatively impact our results of operations, if we are unable to introduce new pricing or commercial models that reflect the value of these technological developments or if the pace and level of spending on new technologies, and integration of the new technologies into our services, are not sufficient to make up for any shortfall, or if our existing services are otherwise displaced by such technologies.
Further, a client may choose to use its own internal resources rather than engage an outside firm to perform the types of services we provide. In addition, the trend toward offshore outsourcing, international expansion by foreign and domestic competitors and continuing technological changes, such as cloud computing, will result in new and different competition for our services.
Further, a client may choose to use its own internal resources rather than engage an outside firm to perform the types of services we provide, including by creating in-house global capability centers. 18 Table of Contents In addition, the trend toward offshore outsourcing, international expansion by foreign and domestic competitors and continuing technological changes, such as cloud computing, will result in new and different competition for our services.
GAAP requires us to make estimates and assumptions about certain items and future events 22 Table of Contents that affect our reported financial condition, and our accompanying disclosure.
GAAP requires us to make estimates and assumptions about certain items and future events that affect our reported financial condition, and our accompanying disclosure.
We have earned and believe that we will continue to earn in the near or foreseeable future a substantial portion of our total revenues from a limited number of large clients.
We earn a substantial portion of our revenues from a limited number of clients that are mainly located in the United States We have earned and believe that we will continue to earn in the near or foreseeable future a substantial portion of our total revenues from a limited number of large clients that are primarily located in the United States.
Consistent with industry practice, most of our client contracts may be terminated by our clients without cause and do not commit our clients to provide us with a specific volume of business.
Client demand may be impacted by the selling cycle and terms of our client contracts. Consistent with industry practice, most of our client contracts may be terminated by our clients without cause and do not commit our clients to provide us with a specific volume of business.
Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, we cannot provide assurances that a future assertion of an infringement claim against us or our clients will not cause us to alter our business practices, lose significant revenue, incur significant license, royalty or technology development expenses, or pay significant monetary damages or legal fees and costs.
Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, any future infringement claim against us or our clients may cause us to alter our business practices, lose significant revenue, incur significant license, royalty or technology development expenses, or pay significant monetary damages or legal fees and costs.
Although we have not experienced a material incident to date, there can be no assurance that these measures will prevent or limit the impact of a future incident. We may incur significant costs in protecting against or remediating cyberattacks or other cyber incidents.
Although we have not experienced a material incident to date, there can be no assurance that these measures will prevent or limit the impact of a future incident. We may 15 Table of Contents incur significant costs in protecting against or remediating cyberattacks/other cyber incidents, settling data breach claims or paying associated penalties.
We rely on third party vendors and partners to deliver services and components for client critical services, which exposes us to a variety of risks that could have a material adverse effect on our business.
We rely on third party vendors and partners to deliver services and components for client critical services, and require data use rights from third parties and our clients for many of our services and solutions, which exposes us to a variety of risks that could have a material adverse effect on our business.
Further, growth in state sponsored cyber activity, including the increased rate of cyberattacks arising from the Russia-Ukraine conflict and the risk that these cyberattacks could spread globally, showcases the increasing sophistication of cyber threats and could dramatically expand the global threat landscape.
Further, growth in state-sponsored cyber activity, and the risk that these cyberattacks could spread globally, showcases the increasing sophistication of cyber threats and could dramatically expand the global threat landscape.
The credit agreement provides for a $400 million revolving credit facility including a letter of credit sub-facility and is guaranteed by certain subsidiaries.
The credit agreement provides for a $500 million revolving credit facility, including a letter of credit sub-facility, and a $100 million term loan facility, which is guaranteed by certain subsidiaries.
We could also experience financial or other setbacks if transactions encounter unanticipated problems, including problems related to execution, integration or underperformance relative to prior expectations.
We could also experience financial or other setbacks if transactions encounter unanticipated problems, including problems related to execution, integration or underperformance relative to prior expectations, or problems with the intellectual property that we may acquire.
Any performance failure on the part of our vendors or partners, or the discontinuance by such vendors or partners of services that we rely on them to perform, could delay our performance, or require us to engage alternative third parties to perform the services at our cost or to perform the services ourselves, any of which could result in a negative impact on our reputation, a loss of revenue or adversely impact our cash flows and profitability. 15 Table of Contents Employee wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin.
Any performance failure on the part of our vendors or partners, or the discontinuance by such vendors or partners of services that we rely on them to perform, could delay our performance, or require us to engage alternative third parties to perform the services at our cost or to perform the services ourselves, any of which could result in a negative impact on our reputation, a loss of revenue or adversely impact our cash flows and profitability.
As these technologies evolve, some services and tasks currently performed by our employees may be replaced by automation and AI technologies. We may not be successful in addressing these changes on a timely basis, or at all, or successfully marketing any changes that we implement. In addition, products or technologies developed by others may render our services uncompetitive or obsolete.
We may not be successful in addressing these changes on a timely basis, or at all, or successfully marketing any changes that we implement. In addition, products or technologies developed by others may render our services uncompetitive or obsolete.
Our inability to execute our growth strategy, to ensure the continued adequacy of our current systems or to manage our expansion effectively could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Our inability to execute our growth strategy, to ensure the continued adequacy of our current systems or to manage our expansion effectively could have a material adverse effect on our business, results of operations, financial condition and cash flows. 17 Table of Contents We may engage in strategic acquisitions or transactions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
If we are unable to efficiently deploy talent because of increased regulation of immigration or work visas, including limitations placed on the number of visas granted, limitations on the type of work performed or location in which the work can be performed, and new or higher minimum salary requirements, it could be more difficult to staff our employees on client engagements and could increase our costs and have an adverse effect on our net income and cash flows.
If we are unable to efficiently deploy talent because of increased regulation of immigration or work visas, including limitations placed on the number of visas granted, limitations on the type of work performed or location in which the work can be performed, and new or higher minimum salary requirements, it could be more difficult to staff our employees on client engagements and could increase our costs and have an adverse effect on our net income and cash flows. 20 Table of Contents Investors may have difficulty effecting service of process or enforcing judgments obtained in the United States against our foreign subsidiaries or our executive officers.
Methodologies for reporting sustainability data may be updated and previously reported sustainability data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.
In addition, standards for tracking and reporting on sustainability matters have not been harmonized and continue to evolve. Methodologies for reporting sustainability data may be updated and previously reported sustainability data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.
Although we take steps to hedge a substantial portion of our Indian rupee/U.S. dollar, U.K pound sterling/U.S. dollar, Philippine peso/U.S. dollar and South African rand/U.S. dollar foreign currency exposures, there is no assurance that our hedging strategy will be successful or that the hedging markets will have sufficient liquidity or depth to allow us to implement our hedging strategy in a cost-effective manner.
Although we take steps to hedge a substantial portion of our foreign currency exposures, there is no assurance that our hedging strategy will be successful or that the hedging markets will have sufficient liquidity or depth to allow us to implement our hedging strategy in a cost-effective manner.
Any such claim for intellectual property infringement may have a material adverse effect on our business, results of operations, financial condition and cash flows. We earn a substantial portion of our revenues from a limited number of clients.
Any such claim for intellectual property infringement may have a material adverse effect on our business, results of operations, financial condition and cash flows.
We have operations centers across India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland. Our headcount has increased significantly over the past several years.
Our inability to manage our rapid infrastructure and personnel growth across countries could adversely affect our business operations. We have operations centers across India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland. Our headcount has increased significantly over the past several years.
We currently benefit from corporate tax holidays in our qualified Philippines Economic Zone Authority operations centers in the Philippines. Our ability to utilize these tax holidays could be adversely affected by any new unfavorable tax legislative changes. We continuously monitor such changes to assess and quantify the potential impacts on our consolidated financial statements.
We currently benefit from corporate tax holidays in our qualified Philippines Economic Zone Authority operations centers in the Philippines. Our ability to utilize these tax holidays could be adversely affected by any new unfavorable tax legislative changes.
Inappropriate or controversial data practices by us or others could impair the acceptance of AI solutions or subject us to lawsuits and regulatory investigations. These deficiencies could undermine the decisions, predictions or analysis AI applications produce, or lead to unintentional bias and discrimination, subjecting us to competitive harm, legal liability, and brand or reputational harm.
Inappropriate or controversial data practices by us or others or flawed AI algorithms could undermine the decisions, predictions or analysis AI applications produce, or lead to unintentional bias and discrimination, subjecting us to competitive, brand or reputational harm and legal liability.
We seek to protect our intellectual property through a combination of patent, trademark, copyright and trade secret laws, as well as through confidentiality procedures and contractual provisions. Clients and business partners typically agree in writing to confidential treatment of our information.
We seek to protect our intellectual property through a combination of patent, trademark, copyright and trade secret laws, as well as through confidentiality procedures and contractual provisions.
We currently do not maintain “key person” insurance covering any member of our management team. The loss of any of our key management personnel, particularly to competitors, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
The loss of any of our key management personnel, particularly to competitors, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
We also need to manage cultural differences among our employee populations and varying legal and regulatory regimes across jurisdictions, and that may create a risk for employment claims.
Without these investments, we risk losing key talent to competitors, jeopardizing our ability to innovate and grow. We also need to manage cultural differences among our employee populations and varying legal and regulatory regimes across jurisdictions, and that may create a risk for employment claims.
Technological developments may materially affect the cost and use of technology by our clients and, in the case of cloud and as-a-service solutions, could affect the nature of how we generate revenue. Some of these technological developments have reduced and replaced some of our historical services and solutions and may continue to do so in the future.
Technological developments may materially affect the cost and use of technology by our clients and, in the case of cloud and as-a-service solutions, could affect the nature of how we generate revenue.
Investors may have difficulty effecting service of process or enforcing judgments obtained in the United States against our foreign subsidiaries or our executive officers. Our primary operating subsidiaries are organized outside the United States and some of our executive officers may reside outside of the United States. A substantial portion of our assets are located in India and the Philippines.
Our primary operating subsidiaries are organized outside the United States and some of our executive officers may reside outside of the United States. A substantial portion of our assets are located in India and the Philippines.
We may fail to attract and retain enough sufficiently trained employees to support our operations or professionals with sufficient leadership capabilities, which may result in loss of revenue and an inability to expand our business.
We may fail to attract and retain enough sufficiently trained employees to support our operations or professionals with sufficient leadership capabilities.
In addition, our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or may not meet the expectations of investors or other stakeholders.
We may experience increased compliance burdens and costs to meet obligations related to new and existing laws and regulations related to sustainability matters. In addition, our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or may not meet the expectations of investors or other stakeholders.
Our processes and controls for reporting sustainability matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting sustainability metrics, including sustainability-related disclosures that may be required by the SEC and other regulators, including state, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Our processes and controls for reporting sustainability matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting metrics, including disclosures that may be required by the applicable regulators, may change over time, which could result in significant impacts to our business. ITEM 1B. Unresolved Staff Comments None.
Offshore outsourcing is a politically sensitive topic in the United States and elsewhere, and many organizations and public figures have publicly expressed concern about a perceived association between offshore outsourcing providers and the loss of jobs in the United States, where the majority of our clients are located, and elsewhere.
Risks Related to Our Industry Our industry may not develop in ways that we currently anticipate due to negative public reaction in the United States and elsewhere to offshore outsourcing, anti-outsourcing executive action, legislation or otherwise. 22 Table of Contents Offshore outsourcing is a politically sensitive topic in the United States and elsewhere, and many organizations and public figures have publicly expressed concern about a perceived association between offshore outsourcing providers and the loss of jobs in the United States, where the majority of our clients are located, and elsewhere.
We have established a headquarters for international business in Dublin, Ireland, and qualify for a reduced tax rate subject to certain conditions. We continuously monitor our operations to ensure we continue to qualify for the reduced rate.
We continuously monitor such changes to assess and quantify the potential impacts on our consolidated financial statements. 19 Table of Contents We have established our headquarters for international business in Dublin, Ireland, and qualify for a reduced tax rate. We continuously monitor our operations to ensure we continue to qualify for the reduced rate.
Measures taken by governmental authorities may in the future disrupt the continuity of our provision of services to our clients and adversely impacted our business, results of operations and financial condition. 18 Table of Contents Our risk management, business continuity and disaster recovery plans may not be effective at preventing or mitigating the effects of such disruptions, particularly in the case of a catastrophic event.
Our risk management, business continuity and disaster recovery plans may not be effective at preventing or mitigating the effects of such disruptions, particularly in the case of a catastrophic event.
Our growth strategy focuses on responding to these types of developments by driving innovation that will enable us to expand our business into new growth areas. Our growing use of AI, including generative AI and ML, in our offerings presents additional risks. AI algorithms may be flawed, and datasets may be insufficient or contain biased information.
Our growth strategy focuses on responding to these types of developments by driving innovation that will enable us to expand our business into new growth areas. The use of AI technology presents competitive, reputational and legal risks, and our use of AI technology may not be successful.
While we do not anticipate any material weaknesses in our internal controls framework, we cannot be certain that we will be able to prevent future significant deficiencies or material weaknesses.
While we do not anticipate any material weaknesses in our internal controls framework, we cannot be certain that we will be able to prevent future significant deficiencies or material weaknesses. Our sustainability initiatives and disclosures may expose us to reputational risks and legal liability. Our brand and reputation are also associated with various corporate sustainability initiatives.
Consequently, any acquisition we complete may not result in long-term benefits to us or we may not be able to further develop the acquired business in the manner we anticipated.
Consequently, any acquisition we complete may not result in long-term benefits to us or we may not be able to further develop the acquired business in the manner we anticipated. Our business could be negatively affected if we incur financial penalties or legal liability, including with respect to our contractual obligations, in connection with providing our solutions and services.
Our most significant costs are the salaries and related benefits of our operations staff and other employees.
Employee wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin. Our most significant costs are the salaries and related benefits of our operations staff and other employees.
Our sustainability commitments and disclosures may expose us to reputational risks and legal liability. 23 Table of Contents Our brand and reputation are also associated with our public commitments to various corporate sustainability initiatives. Our disclosures on these matters and any failure or perceived failure to achieve or accurately report on our commitments, could harm our reputation.
Our disclosures on these matters, and any failure or perceived failure to achieve or accurately report on our initiatives, are subject to risks outside of our control and could harm our reputation.
This has caused, and may in the future cause, clients to delay spending under existing contracts and engagements and to delay entering into new contracts while they evaluate new technologies.
This has caused, and may in the future cause, clients to delay or stop using some of our existing services as they evaluate and pivot to newer technologies, including our own data and AI-led solutions.
Client demand may be impacted by the selling cycle and terms of our client contracts. Client demand may be impacted by the selling cycle and terms of our client contracts.
Our use of, and/or reliance on, AI could give rise to legal or regulatory action or increased scrutiny or liability and may damage our reputation or otherwise materially harm our business. 13 Table of Contents Client demand may be impacted by the selling cycle and terms of our client contracts.
Removed
Our success depends to a significant extent on our ability to attract, hire, train and retain qualified employees, including our ability to attract employees with needed skills in the geographies where we operate. Our industry, including us, experiences high employee turnover due to significant competition for professionals with skills necessary to perform the services we offer to our clients.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTraining and Awareness We maintain a comprehensive information and cybersecurity awareness and training program for all employees and contracted resources. This includes a mandatory annual information security training, periodic simulations such as red teaming and tabletops, regular communications on relevant topics and policies related to data privacy, phishing, email security best practices, among others.
Biggest changeThis includes a mandatory annual information security training, periodic simulations such as red teaming and tabletops, regular communications on relevant topics and policies related to data privacy, phishing, email security best practices, among others. We provide specialized security training for certain roles with access to sensitive data, including human resources or employees who regularly handle personal or sensitive information.
We have implemented a third-party risk management program to proactively identify and mitigate any potential risks that emerge from our supplier and partner ecosystem. There are processes in place to restrict and provide need-based access to sensitive or confidential data for third parties. We conduct periodic evaluations of key suppliers and partners for ongoing monitoring of the risk environment.
We have implemented a third-party risk management program to proactively identify and mitigate any potential risks that emerge from our supplier and partner ecosystem. We have processes in place to restrict and provide need-based access to sensitive or confidential data for third parties. Additionally, we conduct periodic evaluations of key suppliers and partners for ongoing monitoring of the risk environment.
We also 24 Table of Contents regularly assess and deploy technical safeguards and conduct vulnerability assessment and penetration testing of our technology environment independently and through third parties. We use the outcome of these assessments to align our cybersecurity program and technical safeguards with the evolving cybersecurity threat landscape and adjust and augment our security controls environment as required.
We also regularly assess and deploy technical safeguards and conduct vulnerability assessment and penetration testing of our technology environment independently and through third parties. We use the outcome of these assessments to align our cybersecurity program and technical safeguards with the evolving cybersecurity threat landscape and adjust and augment our security controls environment as required.
Although we maintain cybersecurity insurance to manage potential liabilities resulting from specific cybersecurity incidents, there is no guarantee that our insurance coverage limits will protect against any future claims or that such insurance proceeds will be paid to us in a timely manne r .
Although we maintain cybersecurity insurance to mitigate potential liabilities resulting from specific cybersecurity incidents, there is no guarantee that our insurance coverage limits will comprehensively protect us against any future claims or that such insurance proceeds will be paid to us in a timely manne r .
Annually, our board of directors receives a report from management on our cybersecurity posture, our readiness and our capability to reduce the risk of, detect and respond to a cyberattack. In 2022 and 2023, our senior management and board of directors completed cyber tabletop exercises to further enhance our preparedness in the event of an actual incident.
Annually, our board of directors receives a report from management on our cybersecurity posture, our readiness and our capability to reduce the risk of, detect and respond to a cyberattack. Our senior management and board of directors participate in periodic cyber tabletop exercises to further enhance our preparedness in the event of an actual incident.
We provide no assurance that the policies and procedures outlined below will be properly followed in every instance or that they will be effective in safeguarding against every possible cybersecurity threat.
No assurance can be given that the policies and procedures outlined below will be properly followed in every instance or that they will be effective in safeguarding against every possible cybersecurity threat.
We regularly conduct cybersecurity and other risk assessments and compliance audits both internally and through third party auditors that we independently engage or that we engage in connection with our certification to certain international standards, such as the ISO 27001:2013 standard for information security management systems, the ISO 22301:2012 for business continuity management systems, the ISO 9001:2008 standard for quality management systems, among others.
We regularly conduct cybersecurity and other risk assessments and compliance audits both internally and through third party auditors that we independently engage or that we engage in connection with our certification to certain international standards, such as the ISO 27001:2013 standard for information security management systems, PCI DSS for handling financial data, the ISO 22301:2012 for business continuity management systems, the ISO 9001:2008 standard for quality management systems, SOC 1 TYPE II and SOC 2 TYPE II, among others.
We have invested in people, processes and technology intended to protect information throughout the business life cycle and to manage cybersecurity risk, and we intend to continue to do so as cybersecurity risks and methods for preventing against them evolve.
We aim to continually strengthen our cybersecurity posture and protocols by investing in people, processes and technology intended to protect information throughout the business life cycle and to manage cybersecurity risk, and we intend to continue to do so as cybersecurity risks and methods for preventing against them evolve.
We have undertaken measures designed to comply with applicable privacy laws and regulations that are applicable to our services. These security capabilities are designed to mitigate material vulnerabilities and the impact of cyber incidents.
We have undertaken measures designed to comply with applicable privacy laws and regulations that are applicable to our services. These security capabilities are designed to mitigate vulnerabilities and the impact of cyber incidents. Cyber security is an inherent consideration for our data and AI-led digital solutions.
We describe how cybersecurity threats are likely to materially affect our business, results of operations, and financial conditions in Part I, Item 1A, “Risk Factors. ” We believe that these risks have not materially affected our business to date, but we can provide no assurance that they will not affect us in the future.
We describe how cybersecurity threats are likely to materially affect our business, results of operations, and financial conditions in Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business–– Unauthorized disclosure of sensitive or confidential client and employee data, whether through breach of our computer systems or otherwise, could cause us significant reputational damage, expose us to protracted and costly litigation, and cause us to lose clients.” We believe that these risks have not materially affected our business to date, but we can provide no assurance that they will not affect us in the future.
ITEM 1C. Cybersecurity We maintain a comprehensive information and cybersecurity and data privacy program to safeguard the security, confidentiality, integrity, availability and protection of the Company’s and our clients’ information. We aim to continually strengthen our cybersecurity posture and protocols.
ITEM 1C. Cybersecurity 24 Table of Contents We maintain a comprehensive cybersecurity and data privacy program to safeguard the security, confidentiality, integrity, availability and protection of the Company’s and our clients’ information. Cyber security is also an inherent consideration for our data and AI-led solutions.
See “Risks Related to Our Business-Unauthorized disclosure of sensitive or confidential client and employee data, whether through breach of our computer systems or otherwise, could cause us significant reputational damage, expose us to protracted and costly litigation, and cause us to lose clients.” Cybersecurity Strategy and Risk Management Our cybersecurity strategy is founded on policies, processes and practices that are integrated into our overall risk management system.
Cybersecurity Strategy and Risk Management Our cybersecurity strategy is founded on policies, processes and practices that are integrated into our overall risk management system.
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We provide specialized security training for certain roles with access to sensitive data, including human resources or employees who regularly handle personal or sensitive information.
Added
Specifically, there is a heightened focus on institutionalizing a Responsible AI framework to proactively identify and mitigate data protection and privacy risks.
Added
There is heightened focus on institutionalizing a Responsible AI framework that includes periodic Secure AI assessments to proactively identify and mitigate data protection and privacy risks.
Added
Periodic tabletop and crisis simulation exercises are conducted to reinforce our incident response controls on an ongoing basis. Training and Awareness 25 Table of Contents We maintain a comprehensive information and cybersecurity awareness and training program for all employees and contracted resources.
Added
The Cyber Security program including security operations, governance, risk and compliance, data privacy, and business continuity is led by our Chief Information Security Officer (“CISO”) who has over 25 years of extensive experience in technology and data center architecture, client solutioning, complex program management and nearly a decade in cyber risk management, governance and incident handling.
Added
Our CISO is supported by a team of cyber experts, many of whom are certified professionals in areas of security architecture, threat hunting, incident response, application security, business resiliency and data privacy among others.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also believe that we will be able to obtain suitable additional facilities on commercially reasonable terms on an “as needed basis.” 25 Table of Contents
Biggest changeWe also believe that we will be able to obtain suitable additional facilities on commercially reasonable terms on an “as needed basis”.
ITEM 2. Properties Our corporate headquarters are located in New York, New York.
ITEM 2. Properties Our corporate headquarters are located in New York.
We also have multiple operations centers and regional offices in the United States. Our corporate headquarters and all of our operations centers are leased under long-term leases with varying expiration dates, except for an operations center in Pune, India with an area of 86,361 sq. ft. and containing approximately 1,670 agent workstations, which we own.
We also have multiple operations centers and regional offices in the United States. Our corporate headquarters and all of our operations centers are leased under long-term leases with varying expiration dates, except for an operations center in Pune, India with an area of 86,361 sq. ft. and containing approximately 1,690 agent workstations, which we own.
We have multiple operations centers spread across India, the Philippines, South Africa, Columbia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland with an aggregate area of approximately 1,579,000 square feet and a current installed capacity of approximately 24,800 workstations, including workstations for training and our employees in enabling functions.
We have multiple operations centers spread across India, the Philippines, South Africa, Columbia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland with an aggregate area of approximately 1,810,000 square feet and a current installed capacity of approximately 28,000 workstations, including workstations for training and our employees in enabling functions.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. Mine Safety Disclosures 26 PART II. ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 ITEM 6. [Reserved] 29 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 47 ITEM 8.
Biggest changeITEM 4. Mine Safety Disclosures 26 PART II. ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 ITEM 6. [Reserved] 28 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 46 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−2 removed5 unchanged
Biggest changeThe weighted average purchase price of $33.13 was the closing price of our shares of our common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the restricted stock units.
Biggest changeThe weighted average purchase price of $33.79 was the closing price of our shares of our common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the restricted stock units. 27 Table of Contents Pursuant to the Inflation Reduction Act, effective January 1, 2023, we are required to pay a 1% excise tax on the fair market value of each share of common stock repurchased, net of stock issuances.
Repurchases may be discontinued at any time by our management. Repurchased shares are recorded as treasury shares and are held until our board of directors designates that these shares be retired or used for other purposes.
Repurchases may be discontinued at any time by management. Repurchased shares are recorded as treasury shares and are held until our board of directors designates that these shares be retired or used for other purposes.
The returns assume that $100 was invested on December 31, 2018 and that all dividends were reinvested. The stock performance shown on the graph below is not indicative of future price performance. This graph will not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section.
The returns assume that $100 was invested on December 31, 2019 and that all dividends were reinvested. The stock performance shown on the graph below is not indicative of future price performance. This graph will not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section.
Under the 2022 Repurchase Program, shares may be purchased by us from time to time from the open market and through private transactions, or otherwise, as determined by our management as market conditions warrant. We have structured open market purchases under the 2022 Repurchase Program to comply with Rule 10b-18 under the Exchange Act.
Under these two repurchase programs, shares may be purchased by us from time to time from the open market and through private transactions, or otherwise, as determined by our management as market conditions warrant. We have structured open market purchases under our two repurchase programs to comply with Rule 10b-18 under the Exchange Act.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the Nasdaq Global Select Market under the symbol “EXLS.” As of February 27, 2024, there were 9 holders of record of our outstanding common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the Nasdaq Global Select Market under the symbol “EXLS.” As of February 21, 2025, there were 7 holders of record of our outstanding common stock.
During the year ended December 31, 2023, we purchased 237,047 shares from employees in connection with withholding tax payments related to the vesting of restricted stock units for an aggregate purchase consideration of $7.9 million.
During the year ended December 31, 2024, we purchased 303,836 shares from employees in connection with withholding tax payments related to the vesting of restricted stock units for an aggregate purchase consideration of $10.3 million.
See Note 23 - Stock-Based Compensation to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” for further details. 28 Table of Contents Performance Graph The following graph compares the cumulative total stockholder return on our common stock with the cumulative total return of the Nasdaq 100 Index (capitalization weighted) and our peer group of companies for the period beginning December 31, 2018.
Performance Graph The following graph compares the cumulative total stockholder return on our common stock with the cumulative total return of the Nasdaq 100 Index (capitalization weighted) and our peer group of companies for the period beginning December 31, 2019.
During the three months ended December 31, 2023, purchases of common stock were as follows: Shares Purchased from Employees in connection with satisfaction of Withholding Tax Obligations Shares Purchased as Part of Publicly Announced Programs Total Number of Shares Purchased Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs Period Number of Shares Purchased Average Price Paid per share Number of Shares Purchased Average Price Paid per share October 1, 2023 through October 31, 2023 — $ — 227,287 $ 28.00 227,287 $ 131,632,598 November 1, 2023 through November 30, 2023 — — 533,050 27.42 533,050 $ 117,014,194 December 1, 2023 through December 31, 2023 — — 365,495 29.96 365,495 $ 106,063,003 Total — $ — 1,125,832 $ 28.36 1,125,832 — During the year ended December 31, 2023, we purchased 4,127,451 shares of our common stock for an aggregate purchase consideration of $125.4 million, including commission and excluding excise tax, representing an average purchase price per share of $30.39.
During the three months ended December 31, 2024, purchases of common stock were as follows: Shares Purchased from Employees in connection with satisfaction of Withholding Tax Obligations Shares Purchased as Part of Publicly Announced Programs Total Number of Shares Purchased Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs Period Number of Shares Purchased Average Price Paid per share Number of Shares Purchased Average Price Paid per share October 1, 2024 through October 31, 2024 — $ — — $ — — $ 334,692,888 November 1, 2024 through November 30, 2024 — — 41,919 42.63 41,919 $ 332,905,839 December 1, 2024 through December 31, 2024 11,869 45.93 219,177 45.63 231,046 $ 322,905,872 Total 11,869 $ 45.93 261,096 $ 45.14 272,965 — During the year ended December 31, 2024, we purchased 6,273,381 shares of our common stock for an aggregate purchase consideration of $196.5 million, including commission and excluding excise tax, representing an average purchase price per share of $31.33.
Removed
Pursuant to the Inflation Reduction Act, effective January 1, 2023, we are required to pay a 1% excise tax on the fair market value of each share of common stock repurchased, net of stock issuances. 27 Table of Contents Equity Compensation Plan Information The following table provides information as of December 31, 2023 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.
Added
On February 26, 2024, our board of directors authorized a $500 million (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), and terminated the 2022 Repurchase Program on February 29, 2024.
Removed
For a description of our equity compensation plans, see Note 23 - Stock-Based Compensation to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.” Plan Category Number of Securities to be Issued Upon Exercise/Vesting of Outstanding Options, Warrants and Rights* Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column 1) Equity compensation plans approved by security holders 5,367,317 $ 30.14 3,249,875 Equity compensation plans not approved by security holders — — — Total 5,367,317 $ 30.14 3,249,875 * This includes outstanding options and unvested restricted stock units, which include time-based restricted stock units and performance-based restricted stock units.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

100 edited+20 added−37 removed74 unchanged
Biggest changeThese factors include but are not limited to: • our ability to maintain and grow client demand for our services and solutions, including anticipating and incorporating the latest technologies, for instance, artificial intelligence (“AI”), including generative AI into our offerings; • impact on client demand by the selling cycle and terms of our client contracts; • fluctuations in our earnings; • our ability to hire and retain enough sufficiently trained employees to support our operations or any changes in the senior management team; • our ability to accurately estimate and/or manage costs; • our ability to adjust our pricing terms or effectively manage our asset utilization levels to meet the changing demands of our clients and potential clients; • cyber security incidents, data breaches, or other unauthorized disclosure of sensitive or confidential client and employee data; • reliance on third parties to deliver services and infrastructure for client critical services; • employee wage increases; • failure to protect our intellectual property; • our dependence on a limited number of clients in a limited number of industries and our ability to withstand the loss of a significant client; • our ability to grow our business or effectively manage growth and international operations; • our ability to successfully consummate or integrate strategic acquisitions including the impact from the impairment of goodwill and other intangible assets, if any; • legal liability arising out of customer and third party contracts; • increasing competition in our industry; • telecommunications or technology disruptions or breaches, natural or other disasters, medical epidemics or pandemics, such as COVID-19, or acts of violence or war; 30 Table of Contents • operational and information security failures arising as a result of remote work solutions adopted due to COVID-19; • adverse outcome of our disputes with the tax authorities in the geographies where we operate; • the introduction of new or unfavorable tax legislation, including legal restrictions on repatriation of funds held abroad; • exposure to currency exchange rate fluctuations in the various currencies in which we do business including the potential effects of Russian-Ukraine and Israel-Hamas conflicts, rising inflation, high interest rates and economic recessionary trends on currency exchange rates; • restrictions on immigration; • regulatory, legislative and judicial developments, including our ability to adhere to regulations or accreditation or licensing standards that govern our business; • our ability to service debt or obtain additional financing on favorable terms.
Biggest changeThese factors include but are not limited to: • our ability to maintain and grow client demand for our services and solutions, including anticipating and incorporating the latest technologies, for instance, artificial intelligence (“AI”), including generative AI into our offerings; • use of AI technology presents competitive, reputational and legal risks, and our use of AI technology may not be successful; • impact on client demand by the selling cycle and terms of our client contracts; • fluctuations in our earnings; • our ability to hire and retain enough sufficiently trained employees to support our operations or any changes in the senior management team; • our ability to accurately estimate and/or manage costs; • our ability to adjust our pricing terms or effectively manage our asset utilization levels to meet the changing demands of our clients and potential clients; • cyber security incidents, data breaches, or other unauthorized disclosure of sensitive or confidential client and employee data; • reliance on third parties to deliver services and infrastructure for client critical services, and on third party data use rights for certain of our offerings; • employee wage increases; • failure to protect our intellectual property; • our dependence on a limited number of clients and our ability to withstand the loss of a significant client; • our ability to manage rapid infrastructure and personnel growth across countries; • our ability to successfully consummate or integrate strategic acquisitions including the impact from the impairment of goodwill and other intangible assets, if any; • legal liability arising out of customer and third party contracts; • increasing competition in our industry; 29 Table of Contents • telecommunications or technology disruptions or breaches, natural or other disasters, medical epidemics or pandemics, or acts of violence or war; • challenges by applicable tax authorities to transfer pricing determinations or the introduction of new or unfavorable tax legislation, including legal restrictions on repatriation of funds held abroad; • exposure to currency exchange rate fluctuations in the various currencies in which we do business including the rising inflation, high interest rates and economic recessionary trends on currency exchange rates; • restrictions on immigration and work permits; • difficulty of enforcing judgments against our foreign subsidiaries or officers; • regulatory, legislative and judicial developments, including our ability to adhere to regulations or accreditation or licensing standards that govern our business; • our ability to service debt or obtain additional financing on competitive terms, or exposure to interest rate fluctuations that are not fully hedged through interest rate swaps. • negative public reaction in the U.S. or elsewhere to offshore outsourcing; • effects of political and economic conditions globally, particularly in the geographies where we operate; • our ability to make accurate estimates and assumptions in connection with the preparation of our consolidated financial statements; • credit risk fluctuations in the market values of our investment and derivatives portfolios; and • our ability to meet our sustainability-related initiatives.
Depreciation and Amortization Expense Depreciation and amortization pertains to depreciation of our property and equipment, including network equipment, cabling, computers, office furniture and equipment, motor vehicles and leasehold improvements and amortization of intangible assets acquired in business combinations.
Depreciation and Amortization Expense Depreciation and amortization expense pertains to depreciation of our property and equipment, including network equipment, cabling, computers, office furniture and equipment, motor vehicles and leasehold improvements and amortization of intangible assets acquired in business combinations.
Other Income/(Expense), net Other income/(expense), net primarily consists of gain/(loss) on sale, mark to market, dividend income and interest income on our short-term and long-term investments, cash equivalents, as applicable.
Other Income/(Expense), Net Other income/(expense), net primarily consists of gain/(loss) on sale and mark-to-market, dividend income and interest income on our short-term and long-term investments, cash equivalents, as applicable.
Significant judgment is required in the determination of probability and whether an exposure is reasonably estimable, both. Our judgments are subjective and based on the information available from the status of the legal or regulatory proceedings, the merits of our defenses and consultation with in-house and outside legal counsel.
Significant judgment is required in the determination of both probability and whether an exposure is reasonably estimable. Our judgments are subjective and based on the information available from the status of the legal or regulatory proceedings, the merits of our defenses and consultation with in-house and outside legal counsel.
See Part I, Item 1A, “Risk Factors” under “Risks Related to the International Nature of Our Business––Currency exchange rate fluctuations in the various currencies in which we do business, or the failure of our hedging strategies to mitigate such fluctuations, could have a material adverse effect on our results of operations,” as well as Note 2 - Summary of Significant Accounting Policies and Note 17 - Derivatives and Hedge Accounting to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” and Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk-Components of Market Risk-Foreign Currency Risk.” 34 Table of Contents Interest Expense Interest expense primarily consist of interest on our borrowings under our revolving credit facility and convertible senior notes, finance leases and notional interest implicit in the purchase of property and equipment.
See Part I, Item 1A, “Risk Factors” under “Risks Related to the International Nature of Our Business––Currency exchange rate fluctuations in the various 34 Table of Contents currencies in which we do business, or the failure of our hedging strategies to mitigate such fluctuations, could have a material adverse effect on our results of operations,” as well as Note 2 - Summary of Significant Accounting Policies and Note 17 - Derivatives and Hedge Accounting to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” and Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk-Components of Market Risk-Foreign Currency Risk.” Interest Expense Interest expense primarily consist of interest on our borrowings under our revolving credit facility, term loan facility and convertible senior notes, finance leases and notional interest implicit in the purchase of property and equipment.
Accounts receivable balances are written-off against the allowance for expected credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. Business Combinations We account for all business combinations using the acquisition method of accounting as prescribed by ASC Topic 805, Business Combinations .
Accounts receivable balances are written-off against the allowance for expected credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. Business Combinations and Goodwill We account for all business combinations using the acquisition method of accounting as prescribed by ASC Topic 805, Business Combinations .
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon the financial statements included in this Annual Report on Form 10-K, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements included in this Annual Report on Form 10-K, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
We either manage and digitally transform these operations for our clients by deploying our solutions through a software-as-a-service model via our partners’ cloud network or a client’s on-cloud deployment model, to digitally transform their retained operations.
We manage and digitally transform these operations for our clients by deploying our solutions through a software-as-a-service model via our partners’ cloud network or a client’s on-cloud deployment model, to digitally transform their retained operations.
With respect to any entity that benefits from a corporate tax holiday, deferred tax assets or liabilities for existing temporary differences are recorded only to the extent such temporary differences are expected to reverse following the expiration of the tax holiday. 38 Table of Contents We also evaluate potential exposures related to tax contingencies or claims made by the tax authorities in various jurisdictions in order to determine whether a reserve may be required.
With respect to any entity that benefits from a corporate tax holiday, deferred tax assets or liabilities for existing temporary differences are recorded only to the extent such temporary differences are expected to reverse following the expiration of the tax holiday. 37 Table of Contents We also evaluate potential exposures related to tax contingencies or claims made by the tax authorities in various jurisdictions in order to determine whether a reserve may be required.
Foreign exchange gains and losses are primarily attributable to the movement of the U.S. dollar against the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand during fiscal 2023, compared to fiscal 2022.
Foreign exchange gains and losses are primarily attributable to the movement of the U.S. dollar against the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand during fiscal 2024, compared to fiscal 2023.
Recent Accounting Pronouncements For a description of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.” 46 Table of Contents
Recent Accounting Pronouncements For a description of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.” 45 Table of Contents
The 2022 Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the ability to incur indebtedness, create liens, make certain investments, make certain dividends and related distributions, enter into, or undertake, certain liquidations, mergers, consolidations or acquisitions and dispose of assets or subsidiaries.
The 2024 Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the ability to incur indebtedness, create liens, make certain investments, make certain dividends and distributions, enter into, or undertake, certain liquidations, mergers, consolidations or acquisitions and dispose of certain assets or subsidiaries.
The increase in cost of revenues was primarily due to increases in employee-related costs and technology costs, partially offset by foreign exchange gain, net of hedging.
The increase in cost of revenues was primarily due to increases in employee-related costs including restructuring costs and technology costs, partially offset by foreign exchange gain, net of hedging.
The 2022 Credit Agreement bears interest at a rate equal to specified prime rate (alternate base rate) or adjusted SOFR, plus, in each case, an applicable margin.
The 2024 Credit Agreement bears interest at a rate equal to specified prime rate (alternate base rate) or adjusted SOFR, plus, in each case, an applicable margin.
G&A expenses also include acquisition-related costs, legal and professional fees (which represent the costs of third party legal, tax, accounting, immigration and other advisors), litigation claims, cost of technology solutions sought through evolving modes of cloud-based hosting arrangements, investment in product development, digital technology, advanced automation and robotics, cloud, AI and ML, bad debt allowance and stock-based compensation expenses related to grant of our equity awards to members of our board of directors.
G&A expenses also include acquisition-related costs, legal and professional fees (which represent the costs of third party legal, tax, accounting, immigration and other advisors), litigation claims, cost of technology solutions sought through evolving modes of cloud-based hosting arrangements, investment in product development, AI and other digital technologies, bad debt allowance and stock-based compensation expenses related to grant of our equity awards to members of our board of directors.
We have also observed that prospective larger clients are entering into multi-vendor relationships with regard to their digital operations and solutions needs to seek more favorable contract terms and diversification of the risk of concentration on a few vendors. We believe that the trend toward multi-vendor relationships will continue.
We have also observed that prospective larger clients are entering into multi-vendor relationships with regard to their digital operations and solutions needs, in order to achieve more favorable contract terms and diversification of the risk of concentration on a few vendors. We believe that the trend toward multi-vendor relationships will continue.
The guidance requires the use of significant estimates and assumptions in determining the fair value of identifiable assets acquired and liabilities assumed, including intangible assets and contingent consideration, and allocation of purchase price over such assets and liabilities on the acquisition date.
The guidance requires the use of significant estimates and assumptions in determining the fair value of identifiable assets acquired and liabilities assumed, including intangible assets and contingent consideration, and allocation of 36 Table of Contents purchase price over such assets and liabilities on the acquisition date.
In particular, we expect recruitment and training costs to continue to increase as we hire additional staff to service new clients and train existing staff to provide them with evolving skill sets. There is significant competition for professionals with skills necessary to perform the services we offer to our clients.
In particular, we expect recruitment and 33 Table of Contents training costs to continue to increase as we hire additional staff to service new clients and train existing staff to provide them with evolving skill sets. There is significant competition for professionals with skills necessary to perform the services we offer to our clients.
The short-term nature and specificity of these projects could lead to fluctuations and uncertainties in the revenues generated from providing analytics services. We anticipate that revenues from our analytics services will grow as we expand our service offerings and client base, both organically and through acquisitions.
The short-term nature and specificity of these projects could lead to fluctuations and uncertainties in the revenues generated from providing analytics services. We anticipate that revenues from our analytics services will grow as we expand our offerings, client base and go-to-market strategy, both organically and through acquisitions.
Due to rounding, the numbers presented in the tables included in this Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided. 40 Table of Contents Fiscal 2023 Compared to Fiscal 2022 Revenues.
Due to rounding, the numbers presented in the tables included in this Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided. 39 Table of Contents Fiscal 2024 Compared to Fiscal 2023 Revenues.
Cost of Revenues Our cost of revenues primarily consists of: • employee costs, which include salary, bonus and other compensation expenses; retirement benefits, recruitment and training costs; employee health and life insurance; transport; rewards and recognition for certain employees; and non-cash stock-based compensation expense; • costs relating to our facilities and communications network, which include telecommunication and IT costs; facilities and customer management support; operational expenses for our operations centers; lease cost; • Outsourced/subcontractors and professional services costs; • travel and other billable costs to our clients; and • costs relating to our direct mail operations and other digital operations and solutions.
Cost of Revenues Our cost of revenues primarily consists of: • employee costs, which include salary, bonus and other compensation expenses; retirement benefits, recruitment and training costs; employee health and life insurance; transport; rewards and recognition for certain employees; and non-cash stock-based compensation expense; outsourced/subcontractors costs; • costs relating to our facilities and communications network, which include telecommunication and IT costs; facilities and customer management support; operational expenses for our operations centers; lease cost; and • other costs which primarily include travel and costs relating to our direct mail operations.
Such revisions in estimates of any potential liabilities could have a material impact on our results of operations, financial position and cash flows. 39 Table of Contents Results of Operations For a discussion of our results of operations for fiscal 2021, including a year-to-year comparison between fiscal 2022 and 2021, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for fiscal 2022, filed with the SEC on February 23, 2023.
Such revisions in estimates of any potential liabilities could have a material impact on our results of operations, financial position and cash flows. 38 Table of Contents Results of Operations For a discussion of our results of operations for fiscal 2022, including a year-to-year comparison between fiscal 2023 and 2022, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for fiscal 2023, filed with the SEC on February 29, 2024.
These adjustments include fair value changes in investments, unrealized foreign currency exchange gain, deferred tax effects, stock-based employee compensation, fair value changes in contingent consideration, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, among others. • Changes in accounts receivable, including advance billings, contributed higher cash flow of $15.5 million for fiscal 2023, compared to fiscal 2022.
These adjustments include fair value changes in investments, unrealized foreign currency exchange gain, deferred tax effects, stock-based employee compensation, fair value changes in contingent consideration, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, among others. • Changes in accounts receivable, including advance billings, contributed higher cash flow of $61.8 million for fiscal 2024, compared to fiscal 2023.
For fiscal 2023 and 2022, our total revenues from our top ten clients accounted for 34.0% and 34.9% of our total revenues, respectively. Although we continue to develop relationships with new clients to diversify our client base, we believe that the loss of any of our top ten clients could have a material adverse effect on our financial performance.
For fiscal 2024 and 2023, our total revenues from our top ten clients accounted for 33.2% and 34.0% of our total revenues, respectively. Although we continue to develop relationships with new clients to diversify our client base, we believe that the loss of any of our top ten clients could have a material adverse effect on our financial performance.
See Note 25 - Commitments and Contingencies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” for further details. We believe that our existing cash, cash equivalents and short-term investments and sources of liquidity will be sufficient to satisfy our cash requirements over the next 12 months.
See Note 25 - Commitments and Contingencies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” for further details. We believe that our existing cash, cash equivalents and short-term investments and sources of liquidity will be sufficient to satisfy our short-term cash requirements.
In addition, the 2022 Credit Agreement contains a covenant to not permit the interest coverage ratio or the total net leverage ratio, both, as defined, for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.0 to 1.0 or more than 3.5 to 1.0, respectively.
In addition, the 2024 Credit Agreement contains a covenant to not permit the interest coverage ratio or the total net leverage ratio for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.0 to 1.0 or more than 3.5 to 1.0, respectively.
In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases. As of December 31, 2023 and 2022, we had outstanding letters of credit of $0.5 million, each, that were not recognized in our consolidated balance sheets.
In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases. As of December 31, 2024 and 2023, we had outstanding letters of credit of $0.8 million and $0.5 million, respectively, that were not recognized in our consolidated balance sheets.
Foreign Exchange gain, net We report our financial results in U.S. dollars. Our revenues are primarily denominated in the U.S. dollar, however, a portion of our revenues are earned in the U.K. pound sterling representing 10.1% and 8.6% of our total revenues in fiscal 2023 and 2022, respectively.
Foreign Exchange Gain, Net We report our financial results in U.S. dollars. Our revenues are primarily denominated in the U.S. dollar, however, a portion of our revenues are earned in the U.K. pound sterling representing 10.7% and 10.1% of our total revenues in fiscal 2024 and 2023, respectively.
Allowance for Expected Credit Losses We record accounts receivable net of allowances for expected credit losses. Allowances for credit losses are established through the evaluation of aging of accounts receivables, prior collection experience, current market conditions, forecasts about future economic conditions, customers’ financial condition and the amount of accounts receivable in dispute to estimate the collectability of these accounts receivable.
Allowances for credit losses are established through the evaluation of aging of accounts receivables, prior collection experience, current market conditions, forecasts about future economic conditions, customers’ financial condition and the amount of accounts receivable in dispute to estimate the collectability of these accounts receivable.
Collections in accounts receivable, including advance billings was driven by revenue growth for fiscal 2023.
Collections in accounts receivable, including advance billings was driven by revenue growth for fiscal 2024.
The revolving credit commitments under the 2022 Credit Agreement are subject to a commitment fee which is also tied to our total net leverage ratio, and ranges from 0.13% to 0.28% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.
The revolving credit commitments under the 2024 Credit Agreement are subject to a commitment fee which is also tied to our total net leverage ratio, and ranges from 0.125% to 0.275% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.
Revenues from reimbursement optimization services having contingent fee arrangements are recognized by us at the point in time when a performance obligation is satisfied, which is when we identify an overpayment claim. In such contracts, our consideration is contingent upon the actual collections made by our customers and net of any subsequent retraction claims.
Type of Contracts Requiring Judgment Revenues from payment integrity services having contingent fee arrangements are recognized by us at the point in time when a performance obligation is satisfied, which is when we identify an overpayment claim. In such contracts, our consideration is contingent upon the actual collections made by our customers and net of any subsequent retraction claims.
We also incur a significant portion of our expenses in the Indian rupee, the Philippine peso and the U.K. pound sterling, representing 28.5%, 8.2% and 3.1%, respectively, of our total expenses in fiscal 2023, compared to 29.1%, 8.2% and 3.0%, respectively, of our total expenses in fiscal 2022.
We also incur a significant portion of our expenses in the Indian rupee, the Philippine peso, the South African rand and the U.K. pound sterling, representing 29.7%, 8.2%, 3.5% and 2.8%, respectively, of our total expenses in fiscal 2024, compared to 28.5%, 8.2%, 2.0% and 3.1%, respectively, of our total expenses in fiscal 2023.
Our future cash requirements will depend on many factors, including our rate of revenue growth, our investments in strategic initiatives, applications or technologies, operation centers and acquisition of complementary businesses, continued stock repurchases under our board-authorized stock repurchase program, which may require the use of significant cash resources and/or additional financing.
Our future cash requirements will depend on many factors, including our rate of revenue growth, our investments in strategic initiatives like acquisition of complementary businesses, capital expenditures and continued stock repurchases under our board-authorized stock repurchase program, which may require the use of significant cash resources and/or additional financing.
The applicable margin is tied to our total net leverage ratio and ranges from 0% to 0.75% per annum on loans pegged to the specified prime rate, and 0.88% to 1.75% per annum on loans pegged to the adjusted SOFR.
The applicable margin on the revolving credit facility is tied to our total net leverage ratio and ranges from 0% to 0.75% per annum on loans pegged to the specified prime rate, and 0.875% to 1.75% per annum on loans pegged to the adjusted SOFR.
All references to years, unless otherwise noted, refer to our fiscal year, which ends on December 31. For example, a reference to “2023” or “fiscal 2023” means the 12-month period that ended on December 31, 2023. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.
All references to years, unless otherwise noted, refer to our fiscal year, which ends on December 31. For example, a reference to “2024” or “fiscal 2024” means the 12-month period that ended on December 31, 2024. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.
Based on the assessment of events or circumstances, we perform a quantitative assessment of goodwill impairment if we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
We also perform a quantitative assessment of goodwill impairment, if based on the qualitative factors, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
We also offer integrated solutions to help our clients in cost containment by leveraging technology platforms, customizable and configurable analytics and expertise in healthcare reimbursements to help clients enhance their claim payment accuracy.
We provide care optimization and payment integrity services for our clients through our healthcare analytics solutions and services. We also offer integrated solutions to help our clients in cost containment by leveraging technology platforms, customizable and configurable analytics and expertise in healthcare reimbursements to help clients enhance their claim payment accuracy.
The increase in cost of revenues in Emerging Business of $22.9 million for fiscal 2023 was primarily due to increases in employee-related costs of $23.5 million on account of higher headcount and wage inflation, higher technology costs of $3.5 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model and higher other operating costs $1.5 million, partially offset by foreign exchange gain, net of hedging of $3.8 million and lower travel costs of $1.8 million.
The increase in cost of revenues in Emerging Business of $30.5 million from fiscal 2023 was primarily due to increases in employee-related costs of $28.6 million on account of higher headcount, restructuring costs and wage inflation, higher technology costs of $3.0 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model and higher other operating costs $2.0 million, partially offset by foreign exchange gain, net of hedging of $3.1 million.
We serve clients mainly in the United States and the United Kingdom, with these two regions generating 84.1% and 10.9%, respectively, of our total revenues for fiscal 2023 and 85.9% and 9.5%, respectively, of our revenues for fiscal 2022.
We serve clients mainly in the United States and the United Kingdom, with these two regions generating 82.6% and 11.7%, respectively, of our total revenues for fiscal 2024 and 84.1% and 10.9%, respectively, of our total revenues for fiscal 2023.
Fiscal Dollar Change Percentage change 2023 2022 (dollars in millions) Gain on sale and fair value mark-to-market on investments $ 5.0 $ 4.9 $ 0.1 2.2 % Interest and dividend income 8.0 5.2 2.8 53.5 % Fair value changes of contingent consideration (1.9) (8.3) 6.4 (77.0) % Others, net (0.3) (1.8) 1.5 (83.9) % Other income, net $ 10.8 $ — $ 10.8 (100.0) % Other income, net increased by $10.8 million, from $nil for fiscal 2022 to $10.8 million for fiscal 2023.
Fiscal Dollar Change Percentage change 2024 2023 (dollars in millions) Gain on sale and mark-to-market on investments $ 5.7 $ 5.0 $ 0.7 12.9 % Interest and dividend income 9.9 8.0 1.9 23.6 % Fair value changes of contingent consideration 0.6 (1.9) 2.5 (131.0) % Others, net (0.1) (0.3) 0.2 (73.9) % Other income, net $ 16.1 $ 10.8 $ 5.3 (100.0) % Other income, net increased by $5.3 million, from $10.8 million for fiscal 2023 to $16.1 million for fiscal 2024.
These accounting policies, estimates and the associated risks are set out below. Future events may not develop exactly as forecasted and estimates routinely require adjustment. Revenue Recognition Revenue is recognized when services are provided to our customers, in an amount that reflects the consideration which we expect to be entitled to in exchange for the services provided.
Future events may not develop exactly as forecasted and estimates routinely require adjustment. 35 Table of Contents Revenue Recognition Revenue is recognized when services are provided to our customers, in an amount that reflects the consideration which we expect to be entitled to in exchange for the services provided.
We also expect that we will continue to incur additional costs to monitor and improve operational efficiency of our hybrid working model, invest in information technology solutions, including adaption to evolving modes of seeking such solutions through cloud-based hosting arrangements and security measures to 33 Table of Contents safeguard against information security risks and costs to protect the health and safety of our employees as they gradually return to the office.
We also expect that we will continue to incur additional costs to monitor and improve operational efficiency of our hybrid working model, invest in information technology solutions, including adaption to evolving modes of seeking such solutions through cloud-based hosting arrangements and security measures to safeguard against information security risks.
The increase in cost of revenues in Analytics of $51.0 million for fiscal 2023 was primarily due to increases in employee-related costs of $55.3 million on account of higher headcount and wage inflation, higher technology costs of $1.6 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model and higher other operating costs $4.0 million, partially offset by foreign exchange gain, net of hedging of $6.4 million and lower travel costs of $3.5 million.
The increase in cost of revenues in Healthcare of $8.6 million from fiscal 2023 was primarily due to increases in employee-related costs of $9.0 million on account of higher headcount and wage inflation, and higher technology costs of $1.3 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model, partially offset by foreign exchange gain, net of hedging of $1.7 million.
The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.23 during fiscal 2022 to 1.25 during fiscal 2023. The average exchange rate of the U.S. dollar against the South African rand increased from 16.44 during fiscal 2022 to 18.51 during fiscal 2023.
The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.25 during fiscal 2023 to 1.28 during fiscal 2024. The average exchange rate of the U.S. dollar against the South African rand decreased from 18.51 during fiscal 2023 to 18.35 during fiscal 2024.
Our reportable segments are as follows: • Insurance, • Healthcare, • Analytics, and • Emerging Business Our global delivery network, which includes highly trained industry and process specialists across the United States, the United Kingdom, Latin America, South Africa, Europe and Asia (primarily India and the Philippines), is a key asset.
Our global delivery network, which includes highly trained industry and process specialists across the United States, the United Kingdom, Latin America, South Africa, Europe and Asia (primarily India and the Philippines), is a key asset.
Revenue growth in Healthcare of $8.6 million was primarily driven by expansion of business from our new and existing clients during fiscal 2023. Revenue growth in Emerging Business of $47.1 million was primarily driven by expansion of business from our new and existing clients of $47.4 million.
Revenue growth in Insurance of $84.1 million from fiscal 2023, was primarily driven by expansion of business from our new and existing clients during fiscal 2024. Revenue growth in Healthcare of $10.4 million from fiscal 2023, was primarily driven by expansion of business from our existing clients during fiscal 2024.
The major drivers contributing to the increase of $45.1 million year-over-year included the following: • Increase in cash earnings, including adjustments for non-cash and other items contributed higher cash flow of $60.4 million for fiscal 2023, compared to fiscal 2022.
The major drivers contributing to the increase of $57.3 million year-over-year included the following: • Increase in cash earnings, including adjustments for non-cash and other items contributed higher cash flow of $18.0 million for fiscal 2024, compared to fiscal 2023.
We have established adequate reserves to cover any potential tax contingencies or claims. Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes , requires companies to recognize, measure, present and disclose uncertain tax positions. We employ a two-step process for recognizing and measuring uncertain tax positions.
We have established adequate reserves to cover any potential tax contingencies or claims. ASC Topic 740, Income Taxes , requires companies to recognize, measure, present and disclose uncertain tax positions. We employ a two-step process for recognizing and measuring uncertain tax positions.
We incurred $52.8 million of capital expenditures during fiscal 2023. We expect to incur total capital expenditures of between $50 million to $55 million in fiscal 2024, primarily to meet our growth requirements, including additions to our facilities as well as investments in technology applications, product development, digital technology, advanced automation, robotics and infrastructure.
We expect to incur total capital expenditures of between $50 million to $55 million in fiscal 2025, primarily to meet our growth requirements, including additions to our facilities and infrastructure, as well as investments in technology applications, product development and other, digital technologies.
Income from operations increased by $46.7 million, or 24.2%, from $192.1 million for fiscal 2022 to $238.8 million for fiscal 2023, primarily due to higher revenues and higher gross margins, partially offset by higher SG&A expenses during fiscal 2023. 42 Table of Contents Foreign Exchange Gain, net.
Income from operations increased by $24.8 million, or 10.4%, from $238.8 million for fiscal 2023 to $263.6 million for fiscal 2024, primarily due to higher revenues and higher gross margins, partially offset by higher SG&A expenses during fiscal 2024. 41 Table of Contents Foreign Exchange Gain, net.
Net income increased from $143.0 million for fiscal 2022 to $184.6 million for fiscal 2023, primarily due to increase in income from operations of $46.7 million and higher other income, net of $10.8 million, partially offset by higher interest expense of $5.0 million, lower foreign exchange gain, net of $4.7 million and higher income tax expense of $6.0 million. 43 Table of Contents Liquidity and Capital Resources Fiscal Dollar Change 2023 2022 Percentage Change (dollars in millions) Opening cash, cash equivalents and restricted cash $ 125.6 $ 143.8 $ (18.2) (12.6) % Net cash provided by operating activities 211.2 166.1 45.1 27.1 % Net cash used for investing activities (12.0) (96.5) 84.5 (87.6) % Net cash used for financing activities (181.4) (81.7) (99.7) 122.0 % Effect of exchange rate changes 2.0 (6.1) 8.1 (133.5) % Closing cash, cash equivalents and restricted cash $ 145.4 $ 125.6 $ 19.8 15.7 % As of December 31, 2023 and 2022, we had $290.8 million and $297.7 million, respectively, in cash, cash equivalents and short-term investments, of which $237.7 million and $260.0 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.
Net income increased from $184.6 million for fiscal 2023 to $198.3 million for fiscal 2024, primarily due to increase in income from operations of $24.8 million and higher other income, net of $5.3 million, partially offset by higher interest expense of $6.1 million, lower foreign exchange gain, net of $0.6 million and higher income tax expense of $9.4 million. 42 Table of Contents Liquidity and Capital Resources Fiscal Dollar Change 2024 2023 Percentage Change (dollars in millions) Opening cash, cash equivalents and restricted cash $ 145.4 $ 125.6 $ 19.8 15.7 % Net cash provided by operating activities 268.5 211.2 57.3 27.1 % Net cash used for investing activities (119.1) (12.0) (107.1) 892.7 % Net cash used for financing activities (119.1) (181.4) 62.3 (34.4) % Effect of exchange rate changes (4.3) 2.0 (6.3) (313.3) % Closing cash, cash equivalents and restricted cash $ 171.4 $ 145.4 $ 26.0 17.9 % As of December 31, 2024 and 2023, we had $340.6 million and $290.8 million, respectively, in cash, cash equivalents and short-term investments, of which $296.0 million and $237.7 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.
While the effective tax rate decreased in 2023, the amount of income tax expense increased primarily as a result of higher profit during fiscal 2023, compared to fiscal 2022, and an increase in non-deductible expenses, partially offset by higher excess tax benefits related to stock-based compensation during fiscal 2023, compared to fiscal 2022. Net Income .
The increase in income tax expense was primarily as a result of higher profit, increase in non-deductible expenses and lower excess tax benefits related to stock-based compensation, partially offset by decrease in foreign tax rate differential during fiscal 2024, compared to fiscal 2023. Net Income .
The following table summarizes our revenues by reportable segments: Fiscal Dollar Change Percentage change Percentage of Total Revenues for Fiscal 2023 2022 2023 2022 (dollars in millions) Insurance $ 529.9 $ 448.7 $ 81.2 18.1 % 32.5 % 31.8 % Healthcare 106.0 97.4 8.6 8.9 % 6.5 % 6.9 % Emerging Business 265.7 218.6 47.1 21.5 % 16.3 % 15.5 % Analytics 729.1 647.3 81.8 12.6 % 44.7 % 45.8 % Total revenues, net $ 1,630.7 $ 1,412.0 $ 218.7 15.5 % 100.0 % 100.0 % Revenues for fiscal 2023 were up by $218.7 million, or 15.5%, compared to fiscal 2022, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.
The following table summarizes our revenues by reportable segments: Fiscal Dollar Change Percentage change Percentage of Total Revenues for Fiscal 2024 2023 2024 2023 (dollars in millions) Insurance $ 614.0 $ 529.9 $ 84.1 15.9 % 33.4 % 32.5 % Healthcare 116.4 106.0 10.4 9.8 % 6.3 % 6.5 % Emerging Business 311.7 265.7 46.0 17.3 % 17.0 % 16.3 % Analytics 796.3 729.1 67.2 9.2 % 43.3 % 44.7 % Total revenues, net $ 1,838.4 $ 1,630.7 $ 207.7 12.7 % 100.0 % 100.0 % Revenues for fiscal 2024 were up by $207.7 million, or 12.7%, compared to fiscal 2023, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.
We have no obligation to update any forward-looking statements in this Annual Report on Form 10-K after the date of this Annual Report on Form 10-K, except as required by federal securities laws. Executive Overview We are a leading data analytics and digital operations and solutions company.
We have no obligation to update any forward-looking statements in this Annual Report on Form 10-K after the date of this Annual Report on Form 10-K, except as required by federal securities laws.
Cost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments: Cost of Revenues Gross Margin (%) Fiscal Dollar Change Percentage change Fiscal Percentage change 2023 2022 2023 2022 (dollars in millions) Insurance $ 341.8 $ 287.7 $ 54.1 18.8 % 35.5 % 35.9 % (0.4) % Healthcare 69.3 71.0 (1.7) (2.4) % 34.6 % 27.1 % 7.5 % Emerging Business 150.9 128.0 22.9 17.9 % 43.2 % 41.4 % 1.8 % Analytics 460.9 409.9 51.0 12.4 % 36.8 % 36.7 % 0.1 % Total $ 1,022.9 $ 896.6 $ 126.3 14.1 % 37.3 % 36.5 % 0.8 % Cost of revenues for fiscal 2023 increased by $126.3 million, or 14.1% compared to fiscal 2022.
Cost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments: Cost of Revenues Gross Margin Fiscal Dollar Change Percentage change Fiscal Percentage change 2024 2023 2024 2023 (dollars in millions) Insurance $ 390.4 $ 341.8 $ 48.6 14.2 % 36.4 % 35.5 % 0.9 % Healthcare 77.9 69.3 8.6 12.5 % 33.0 % 34.6 % (1.6) % Emerging Business 181.4 150.9 30.5 20.2 % 41.8 % 43.2 % (1.4) % Analytics 497.7 460.9 36.8 8.0 % 37.5 % 36.8 % 0.7 % Total $ 1,147.4 $ 1,022.9 $ 124.5 12.2 % 37.6 % 37.3 % 0.3 % Cost of revenues for fiscal 2024 increased by $124.5 million, or 12.2% compared to fiscal 2023.
Our Business We provide data analytics and digital operations and solutions to our clients. We market our services to our existing and prospective clients through our sales and client management teams, which are aligned by key industry verticals and cross-industry domains such as finance and accounting.
We market and sell our services to existing and prospective clients through our sales and client management teams, which are aligned by our clients’ industry verticals and our capabilities such as digital operations and solutions and analytics.
The increase in cost of revenues in Insurance of $54.1 million for fiscal 2023 was primarily due to increases in employee-related costs of $52.2 million on account of higher headcount and wage inflation, higher technology costs of $8.5 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model and higher other operating costs of $2.9 million, partially offset by foreign exchange gain, net of hedging of $7.5 million and lower travel costs 41 Table of Contents of $2.0 million.
The increase in cost of revenues in Insurance of $48.6 million from fiscal 2023 was primarily due to increases in employee-related costs of $42.3 million on account of higher headcount, restructuring costs and wage inflation, higher technology costs of $4.8 million on account of increased subscription to cloud-based software licenses and our continued investments in our hybrid working model, higher facilities costs of $3.9 million and higher other operating costs of 40 Table of Contents $3.1 million, partially offset by foreign exchange gain, net of hedging of $5.5 million.
The average exchange rate of the U.S. dollar against the Indian rupee increased from 78.81 during fiscal 2022 to 82.60 during fiscal 2023. The average exchange rate of the U.S. dollar against the Philippine peso increased from 54.47 during fiscal 2022 to 55.56 during fiscal 2023.
The average exchange rate of the U.S. dollar against the Indian rupee increased from 82.60 during fiscal 2023 to 83.76 during fiscal 2024. The average exchange rate of the U.S. dollar against the Philippine peso increased from 55.56 during fiscal 2023 to 57.39 during fiscal 2024.
Revenue growth in Analytics of $81.8 million was primarily driven by higher volumes in our annuity and project-based engagements from our new and existing clients of $80.8 million and an increase in revenues of $1.0 million, mainly attributable to the appreciation of the U.K. pound sterling against the U.S. dollar during fiscal 2023, compared to fiscal 2022.
Revenue growth in Analytics of $67.2 million from fiscal 2023 was primarily driven by higher volumes in our annuity and project-based engagements from our new and existing clients of $66.5 million, including incremental revenue from our August 2024 acquisition of ITI Data and an increase in revenues of $0.7 million that was mainly attributable to the appreciation of the U.K. pound sterling against the U.S. dollar during fiscal 2024.
These distributions do not constitute a change in our permanent reinvestment assertion. We recognize deferred tax assets and liabilities for temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards.
We recognize deferred tax assets and liabilities for temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards.
To the extent our large clients expand their use of multi-vendor relationships and are able to extract more favorable contract terms from other vendors, our gross margins and revenues 32 Table of Contents may be reduced with regard to such clients if we are required to modify the terms of our relationships with such clients to meet competition.
To the extent our large clients expand their use of multi-vendor relationships and are able to extract more favorable contract terms from other vendors, our gross margins and revenues may be reduced with regard to such clients, particularly if we are required to modify the terms of our relationships with such clients to meet competition. 32 Table of Contents Analytics: Our analytics services aim to drive better business outcomes for our clients by unlocking deep insights from data and creating data and AI-led solutions across all aspects of our clients’ business.
These policies include revenue recognition, allowance for expected credit losses, business combinations, goodwill, stock-based compensation, employee benefits, leases and income taxes.
These policies include revenue recognition, allowance for expected credit losses, business combinations and goodwill, stock-based compensation, income taxes, employee benefits, and contingencies. These accounting policies, estimates and the associated risks are set out below.
Some of our clients’ operations that we have transformed using the above solutions include underwriting operations, claims processing, accounts payables processing, utilization management, member and provider contact center services and collections and accounts receivables.
We have transformed various client operations using the above solutions such as underwriting operations, claims processing, accounts payables processing, utilization management, member and provider contact center services and collections and accounts receivable.
This was partially offset by foreign exchange gain, net of hedging of $2.6 million during fiscal 2023, compared to fiscal 2022. Depreciation and Amortization.
This increase in SG&A expenses was partially offset by foreign exchange gain, net of hedging of $1.4 million during fiscal 2024, compared to fiscal 2023. Depreciation and Amortization.
We subsequently re-evaluate the assets acquired and liabilities assumed, including additional assets and liabilities identified subsequent to acquisition date, with any adjustments to our preliminary estimates being recorded to goodwill within the measurement period (up to one year from the acquisition date). 37 Table of Contents Goodwill Goodwill represents the cost of the acquired businesses in excess of the fair value of identifiable tangible and intangible net assets purchased in a business combination.
We subsequently re-evaluate the assets acquired and liabilities assumed, including additional assets and liabilities identified subsequent to acquisition date, with any adjustments to our preliminary estimates being recorded to goodwill within the measurement period (up to one year from the acquisition date).
The decrease in intangibles amortization expense of $2.4 million during fiscal 2023, compared to fiscal 2022 was primarily due to end of useful lives for certain intangible assets. Income from Operations.
The decrease in intangibles amortization expense of $1.1 million was primarily due to end of useful lives for certain intangible assets, partially offset by amortization of intangibles associated with our acquisition of ITI Data in August 2024 during fiscal 2024, compared to fiscal 2023. Income from Operations.
Gross margin in Analytics increased by 10 bps during fiscal 2023, compared to fiscal 2022, primarily due to higher revenues, partially offset by increases in employee-related costs during fiscal 2023, compared to fiscal 2022. Selling, General and Administrative (“SG&A”) Expenses.
Gross margin in Analytics increased by 70 bps from fiscal 2023, primarily due to higher revenues and operational efficiencies, partially offset by impact of restructuring costs of 40 bps during fiscal 2024. Selling, General and Administrative (“SG&A”) Expenses.
The effective tax rate decreased from 25.0% during fiscal 2022 to 22.5% during fiscal 2023. We recorded income tax expense of $53.5 million and $47.5 million for fiscal 2023 and 2022, respectively.
The effective tax rate increased from 22.5% for fiscal 2023 to 24.1% for fiscal 2024. We recorded income tax expense of $62.9 million and $53.5 million for fiscal 2024 and 2023, respectively.
Financing Arrangements The following table summarizes our debt position: As of December 31 2023 2022 (dollars in millions) Revolving credit facility Current portion of long-term borrowings $ 65.0 $ 30.0 Long-term borrowings 135.0 220.0 Total borrowings $ 200.0 $ 250.0 Credit Agreement We held a $300.0 million revolving credit facility pursuant to our credit agreement (the “Credit Agreement”), dated as of November 21, 2017, with certain lenders and Citibank N.A. as Administrative Agent.
Financing Arrangements The following table summarizes our debt position: As of December 31, 2024 December 31, 2023 Revolving credit facility Term loan facility Total Revolving credit facility Term loan facility Total Current portion of long-term borrowings $ — $ 5.0 $ 5.0 $ 65.0 $ — $ 65.0 Unamortized debt issuance costs — (0.1) (0.1) — — — Total current portion of long-term borrowings — 4.9 4.9 65.0 — 65.0 Long-term borrowings 190.0 93.8 283.8 135.0 — 135.0 Unamortized debt issuance costs — (0.2) (0.2) — — — Total long-term borrowings 190.0 93.6 283.6 135.0 — 135.0 Total borrowings $ 190.0 $ 98.5 $ 288.5 $ 200.0 $ — $ 200.0 Credit Agreement We held a $300.0 million revolving credit facility pursuant to our credit agreement (the “Credit Agreement”), dated as of November 21, 2017, with certain lenders and Citibank N.A. as Administrative Agent, which was amended and restated on April 18, 2022 (the “2022 Credit Agreement”).
The following table summarizes our results of operations: (dollars in millions) Fiscal 2023 Percentage of Revenues, net Fiscal 2022 Percentage of Revenues, net Change in percentage of Revenues, net Dollar Change (A) (B) (C=A-B) Revenues, net $ 1,630.7 100.0 % $ 1,412.0 100.0 % — % $ 218.7 Cost of revenues (1) 1,022.9 62.7 % 896.6 63.5 % (0.8) % 126.3 Gross profit (1) 607.8 37.3 % 515.4 36.5 % 0.8 % 92.4 Operating expenses: General and administrative expenses 198.3 12.2 % 169.0 12.0 % 0.2 % 29.3 Selling and marketing expenses 120.2 7.3 % 98.0 6.9 % 0.4 % 22.2 Depreciation and amortization expense 50.5 3.1 % 56.3 4.0 % (0.9) % (5.8) Total operating expenses 369.0 22.6 % 323.3 22.9 % (0.3) % 45.7 Income from operations 238.8 14.6 % 192.1 13.6 % 1.0 % 46.7 Foreign exchange gain, net 1.5 0.1 % 6.2 0.4 % (0.3) % (4.7) Interest expense (13.2) (0.8) % (8.2) (0.6) % (0.2) % (5.0) Other income, net 10.8 0.7 % — — % 0.7 % 10.8 Income before income tax expense and earnings from equity affiliates 237.9 14.6 % 190.1 13.5 % 1.1 % 47.8 Income tax expense 53.5 3.3 % 47.5 3.4 % (0.1) % 6.0 Income before earnings from equity affiliates 184.4 11.3 % 142.6 10.1 % 1.2 % 41.8 Gain from equity-method investment 0.2 — % 0.4 — % — % (0.2) Net income attributable to ExlService Holdings, Inc. stockholders $ 184.6 11.3 % $ 143.0 10.1 % 1.2 % $ 41.6 (1) Exclusive of depreciation and amortization expense.
The following table summarizes our results of operations: (dollars in millions) Fiscal 2024 Percentage of Revenues, net Fiscal 2023 Percentage of Revenues, net Dollar Change Percentage Change (A) (B) (C=A-B) Revenues, net $ 1,838.4 100.0 % $ 1,630.7 100.0 % $ 207.7 12.7 % Cost of revenues (1) 1,147.4 62.4 % 1,022.9 62.7 % 124.5 12.2 % Gross profit (1) 691.0 37.6 % 607.8 37.3 % 83.2 13.7 % Operating expenses: General and administrative expenses 225.7 12.3 % 198.3 12.2 % 27.4 13.8 % Selling and marketing expenses 146.5 8.0 % 120.2 7.3 % 26.3 21.9 % Depreciation and amortization expense 55.2 3.0 % 50.5 3.1 % 4.7 9.3 % Total operating expenses 427.4 23.2 % 369.0 22.6 % 58.4 15.8 % Income from operations 263.6 14.3 % 238.8 14.6 % 24.8 10.4 % Foreign exchange gain, net 0.9 — % 1.5 0.1 % (0.6) (40.0) % Interest expense (19.3) (1.0) % (13.2) (0.8) % (6.1) 46.2 % Other income, net 16.1 0.9 % 10.8 0.7 % 5.3 49.1 % Income before income tax expense and earnings from equity affiliates 261.3 14.2 % 237.9 14.6 % 23.4 9.8 % Income tax expense 62.9 3.4 % 53.5 3.3 % 9.4 17.6 % Income before earnings from equity affiliates 198.4 10.8 % 184.4 11.3 % 14.0 7.6 % Gain/(loss) from equity-method investment (0.1) — % 0.2 — % (0.3) (150.0) % Net income $ 198.3 10.8 % $ 184.6 11.3 % $ 13.7 7.4 % (1) Exclusive of depreciation and amortization expense.
Digital Operations and Solutions: We provide our clients with a range of data and AI-led digital operations and solutions from our Insurance, Healthcare and Emerging Business strategic business units, which are focused on solving complex industry challenges, which include: a) multi-modal data ingestion using AI, and converting unstructured content into curated and usable data, b) real-time and comprehensive data insights including end-to-end data management and building a 360-degree view of our clients’ customers, c) omni-channel and frictionless customer experience including self-service, conversational AI and smart agent assist, d) intelligent and AI-powered redesign and automation of transaction processing and e) automated quality, compliance and audit.
Our sales and client management teams operate primarily from the United States, India, the United Kingdom, Ireland and Australia. 31 Table of Contents Digital Operations and Solutions: We provide our clients with a range of data and AI-driven digital operations and solutions include: a) multi-modal data ingestion using AI, and converting unstructured content into curated and usable data, b) real-time and comprehensive data insights with end-to-end data management and 360-degree customer views for our clients, c) omni-channel and frictionless customer experience including self-service, conversational AI and smart agent assist, d) AI-powered automation of transaction processing and e) automated quality, compliance and audits.
The increase was also due to higher purchases of treasury stock of $59.2 million under our share repurchase program for fiscal 2023, compared to fiscal 2022. 44 Table of Contents We expect to use cash from operating activities to maintain and expand our business by making investments, primarily related to building new digital capabilities, including generative AI and purchase telecommunications equipment and computer hardware and software in connection with managing client operations.
We expect to use cash from operating activities to maintain and expand our business by making investments, primarily related to building new digital capabilities, including AI, infrastructure and purchase telecommunications equipment and computer hardware and software in connection with managing client operations. 43 Table of Contents We incurred $46.3 million of capital expenditures during fiscal 2024.
Our ability to utilize these tax holidays could be adversely affected by any new unfavorable tax legislative changes. We continuously monitor such changes to assess and quantify any potential impacts on our consolidated financial statements.
Our ability to utilize these tax holidays could be adversely affected by any new unfavorable tax legislative changes. We continuously monitor such changes to assess and quantify any potential impacts on our consolidated financial statements. In October 2021, the Organization for Economic Co-operation and Development (“OECD”) introduced Pillar Two Framework imposing a global minimum tax rate of 15%.
Financing Activities: Cash used for financing activities were $181.4 million for fiscal 2023, compared to $81.7 million for fiscal 2022. The increase in cash used for financing activities of $99.7 million year-over-year was primarily due to net repayment of our borrowings under our revolving credit facility of $50.0 million for fiscal 2023, compared to $10.0 million for fiscal 2022.
The decrease in cash used for financing activities of $62.3 million year-over-year was primarily due to net proceeds from borrowings under our revolving credit facility and new term loan facility of $88.8 million for fiscal 2024, compared to net repayment of our borrowings of $50.0 million for fiscal 2023.
Gross margin in Healthcare increased by 750 bps during fiscal 2023, compared to fiscal 2022, primarily due to higher revenues and operational efficiencies during fiscal 2023, compared to fiscal 2022.
Gross margin in Insurance increased by 90 bps from fiscal 2023, primarily due to operational efficiencies during fiscal 2024.
We believe that the expected value method is most appropriate for determining the variable consideration since we have a large number of contracts with similar nature of transactions/services. Type of Contracts Requiring Judgment a.
We consider our historical experience, including trends with similar transactions and expectations regarding the contract in estimating the amount of variable consideration that should be recognized during a period. We believe that the expected value method is most appropriate for determining the variable consideration since we have a large number of contracts with similar nature of transactions/services.
We continue to evaluate the potential impact of the Pillar Two Framework on our consolidated financial statements.
We have determined that the impact of the Pillar Two Framework did not have material impact on our consolidated financial statements.
Variable Consideration Variability in the transaction price arises primarily due to service level agreements, volume discounts entailing variability in revenue earned, and contracts under our reimbursement optimization services whereby variability in revenue is attributable to the amount we enable our customers to recover. 36 Table of Contents We consider our historical experience, including trends with similar transactions and expectations regarding the contract in estimating the amount of variable consideration that should be recognized during a period.
Variable Consideration Variability in the transaction price arises primarily due to service level agreements, volume discounts entailing variability in revenue earned, and contracts under our payment integrity services whereby variability in revenue is attributable to the amount we enable our customers to recover.
We deliver data analytics and digital operations and solutions to our clients, driving enterprise-scale business transformation initiatives that leverage our deep expertise in advanced analytics, AI, generative AI and cloud technology. We manage and report financial information through our four strategic business units: Insurance, Healthcare, Analytics and Emerging Business, which reflects how management reviews financial information and makes operating decisions.
We deliver advanced analytics and AI-powered digital operations and solutions to our clients, driving enterprise-scale business transformation initiatives that leverage our deep domain expertise in generative AI and cloud technology.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

22 edited+2 added−2 removed16 unchanged
Biggest changeThe revolving credit facility originally had a maturity date of November 21, 2022 and was voluntarily pre-payable from time to time without premium or penalty. On April 18, 2022, we entered into the 2022 Credit Agreement, that provides for a $400.0 million revolving credit facility and a letter of credit sub-facility.
Biggest changeOn April 18, 2022, we entered into the 2022 Credit Agreement, that provides for a $400.0 million revolving credit facility and a letter of credit sub-facility.
The fair values of these financial instruments as of December 31, 2023 and 2022 were insignificant and are included in the “Foreign exchange gain, net” in our consolidated statements of income. As of December 31, 2023 and 2022, the outstanding derivative instruments had maturities of a maximum of 31 days, each. Interest Rate Risk.
The fair values of these financial instruments as of December 31, 2024 and 2023 were insignificant and are included in the “Foreign exchange gain, net” in our consolidated statements of income. As of December 31, 2024 and 2023, the outstanding derivative instruments had maturities of a maximum of 31 days, each. Interest Rate Risk.
The exchange rates among the Indian rupee, the Philippine peso, the U.K. pound sterling and the U.S. dollar have fluctuated within the fiscal 2023, over the recent years and may fluctuate in the future.
The exchange rates among the Indian rupee, the Philippine peso, the U.K. pound sterling and the U.S. dollar have fluctuated within the fiscal 2024, over the recent years and may fluctuate in the future.
The principal foreign currencies that are hedged are the Indian rupee and the Philippine peso. The impact related to these foreign currency forward contracts on earnings and/or cash flows is immaterial as the impact of the maturing cash flow hedges in respective periods are intended to primarily offset the foreign currency impact on the related expenses.
The principal foreign currencies that are hedged are the Indian rupee, the Philippine peso and the South African rand. The impact related to these foreign currency forward contracts on earnings and/or cash flows is immaterial as the impact of the maturing cash flow hedges in respective periods are intended to primarily offset the foreign currency impact on the related expenses.
We do not anticipate non-performance by the counterparties and, accordingly, do not require collateral. Credit losses and write-offs of accounts receivable balances historically have not been material. No single client owed more than 10% of our accounts receivable, net as on December 31, 2023 and 2022. 48 Table of Contents
We do not anticipate non-performance by the counterparties and, accordingly, do not require collateral. Credit losses and write-offs of accounts receivable balances historically have not been material. No single client owed more than 10% of our accounts receivable, net as on December 31, 2024 and 2023. 47 Table of Contents
The mark-to-market gain/(loss), net upon fair valuation of outstanding cash flow hedges as of December 31, 2023 and 2022 was $5.4 million and $(14.2) million, respectively, and is included in “Accumulated other comprehensive income/(loss)” on our consolidated balance sheets.
The mark-to-market gain/(loss), net upon fair valuation of outstanding cash flow hedges as of December 31, 2024 and 2023 was $(9.2) million and $5.4 million, respectively, and is included in “Accumulated other comprehensive income/(loss)” on our consolidated balance sheets.
A 50 basis point increase or decrease in short term rates would have impacted our interest and dividend income for fiscal 2023 by approximately $0.9 million. Credit Risk. As of December 31, 2023 and 2022, we have accounts receivable, net $308.1 million and $259.2 million, respectively. We believe that our credit policies reflect normal industry terms and business risk.
A 50 basis point increase or decrease in short term rates would have impacted our interest and dividend income for fiscal 2024 by approximately $0.9 million. Credit Risk. As of December 31, 2024 and 2023, we have accounts receivable, net $304.3 million and $308.1 million, respectively. We believe that our credit policies reflect normal industry terms and business risk.
For fiscal 2023 and 2022, we recognized $5.7 million and $4.3 million, respectively, as foreign exchange loss from maturing cash flow hedges, which was largely offset by the foreign exchange translation gain on the related expenses. 47 Table of Contents We also enter into foreign currency forward contracts from time to time to hedge our intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies , against the risk of fluctuations in foreign currency exchange rates associated with remeasurement of such assets and liabilities to functional currency.
For fiscal 2024 and 2023, we recognized $0.6 million and $5.7 million, respectively, as foreign exchange loss from maturing cash flow hedges, which was largely offset by the foreign exchange translation gain on the related expenses. 46 Table of Contents We also enter into foreign currency forward contracts from time to time to hedge our intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies , against the risk of fluctuations in foreign currency exchange rates associated with remeasurement of such assets and liabilities to functional currency.
A 50 basis point increase or decrease in interest rates would have impacted our interest expense for fiscal 2023 by approximately $1.1 million.
A 50 basis point increase or decrease in interest rates would have impacted our interest expense for fiscal 2024 by approximately $1.8 million.
The revolving credit commitments under 2022 Credit Agreement are subject to a commitment fee which is also tied to our total net leverage ratio, and ranges from 0.13% to 0.28% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.
The revolving credit commitments under the 2024 Credit Agreement are subject to a commitment fee which is also tied to our total net leverage ratio, and ranges from 0.125% to 0.275% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.
The applicable margin is tied to our total net leverage ratio and ranges from 0% to 0.75% per annum on loans pegged to the specified prime rate, and 0.88% to 1.75% per annum on loans pegged to the adjusted SOFR.
The applicable margin on the revolving credit facility is tied to our total net leverage ratio and ranges from 0% to 0.75% per annum on loans pegged to the specified prime rate, and 0.875% to 1.75% per annum on loans pegged to the adjusted SOFR.
We are exposed to foreign currency exchange rate risk. Our revenues are primarily denominated in the U.S. dollar representing 86.2% of our total revenues and the U.K. pound sterling representing 10.1% of our total revenues for fiscal 2023.
We are exposed to foreign currency exchange rate risk. Our revenues are primarily denominated in the U.S. dollar representing 85.1% of our total revenues and the U.K. pound sterling representing 10.7% of our total revenues for fiscal 2024.
Based upon our level of operations for fiscal 2023 and excluding any hedging arrangements that we had in place during that period, a 10% appreciation/depreciation in the Indian rupee, the Philippine peso and the U.K. pound sterling against the U.S. dollar would have increased/decreased our revenues by approximately $7.4 million, $0.6 million and $9.3 million, respectively and increased/decreased our expenses incurred by approximately $39.7 million, $11.4 million and $4.3 million, respectively for fiscal 2023.
Based upon our level of operations for fiscal 2024 and excluding any hedging arrangements that we had in place during that period, a 10% appreciation/depreciation in the Indian rupee, the Philippine peso and the U.K. pound sterling against the U.S. dollar would have increased/decreased our revenues by approximately $7.1 million, $0.5 million and $10.8 million, respectively and increased/decreased our expenses incurred by approximately $46.8 million, $12.9 million and $4.5 million, respectively for fiscal 2024.
A significant portion of our expenses are incurred in the Indian rupee, the Philippine peso and the U.K. pound sterling, representing 28.5%, 8.2% and 3.1%, respectively, of our total expenses for fiscal 2023. We also incur expenses in the U.S. dollar and currencies of other countries where we have operations.
A significant portion of our expenses are incurred in the Indian rupee, the Philippine peso, the South African rand and the U.K. pound sterling, representing 29.7%, 8.2%, 3.5% and 2.8%, respectively, of our total expenses for fiscal 2024. We also incur expenses in the U.S. dollar and currencies of other countries where we have operations.
As of December 31, 2023 and 2022, we had outstanding cash flow hedges with notional amounts of $722.8 million and $841.6 million, respectively, with the maximum outstanding term of approximately 42 months and 45 months, respectively.
As of December 31, 2024 and 2023, we had outstanding cash flow hedges with notional amounts of $984.3 million and $722.8 million, respectively, with the maximum outstanding term of approximately 45 months and 42 months, respectively.
As of December 31, 2023 and 2022, we had outstanding interest rate swaps having a notional amount of $75.0 million, each. We had cash, cash equivalents and short-term investments totaling $290.8 million and $297.7 million as of December 31, 2023 and 2022, respectively.
As of December 31, 2024 and 2023, we had outstanding interest rate swaps having a notional amount of $nil and $75.0 million, respectively. We had cash, cash equivalents and short-term investments totaling $340.6 million and $290.8 million as of December 31, 2024 and 2023, respectively.
The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.23 for fiscal 2022 to 1.25 for fiscal 2023, representing an appreciation of 1.3% against the U.S dollar.
The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.25 for fiscal 2023 to 1.28 for fiscal 2024, representing an appreciation of 2.6% against the U.S dollar.
As described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we held our $300.0 million revolving credit facility and a letter of credit sub-facility pursuant to our Credit Agreement dated November 21, 2017.
As described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we held a $300.0 million revolving credit facility and a letter of credit sub-facility pursuant to our Credit Agreement dated as of November 21, 2017, which was amended and restated on April 18, 2022 (the “2022 Credit Agreement”).
The average exchange rate of the U.S dollar against the Indian rupee increased from 78.81 for fiscal 2022 to 82.60 for fiscal 2023, representing a depreciation of 4.8% against the U.S dollar.
The average exchange rate of the U.S dollar against the Indian rupee increased from 82.60 for fiscal 2023 to 83.76 for fiscal 2024, representing a depreciation of 1.4% against the U.S dollar.
S. dollar (USD) 170.5 million, the U.K. pound sterling (GBP) 14.5 million, the Euro (EUR) 5.2 million, South African rand (ZAR) 150.2 million and the Australian dollar (AUD) 3.5 million were outstanding as of December 31, 2023 compared to USD 164.0 million, GBP 8.4 million, EUR 2.0 million and AUD 2.0 million outstanding as of December 31, 2022.
Foreign currency forward contracts with notional amounts of the U.S. dollar (USD) 178.9 million, the U.K. pound sterling (GBP) 21.0 million, the Euro (EUR) 9.0 million, South African rand (ZAR) 10.0 million and the Australian dollar (AUD) 4.8 million were outstanding as of December 31, 2024 compared to USD 170.5 million, GBP 14.5 million, EUR 5.2 million, ZAR 150.2 million and AUD 3.5 million outstanding as of December 31, 2023.
The average exchange rate of the U.S dollar against the Philippine peso increased from 54.47 for fiscal 2022 to 55.56 for fiscal 2023, representing a depreciation of 2.0% against the U.S dollar.
The average exchange rate of the U.S dollar against the Philippine peso increased from 55.56 for fiscal 2023 to 57.39 for fiscal 2024, representing a depreciation of 3.3% against the U.S dollar.
The 2022 Credit Agreement bears interest at a rate equal to specified prime rate (alternate base rate) or adjusted SOFR plus, in each case, an applicable margin.
The increased credit facility and the new term loan facility both mature on April 18, 2027. The 2024 Credit Agreement bears interest at a rate equal to specified prime rate (alternate base rate) or adjusted SOFR, plus, in each case, an applicable margin.
Removed
Foreign currency forward contracts with notional amounts of the U.
Added
On August 9, 2024, we entered into the 2024 Credit Agreement, that provides for a $100.0 million increase to the revolving credit commitments such that the aggregate amount of revolving credit commitments available is now equal to $500.0 million and provides for the issuance of a new term loan facility in the aggregate amount of $100.0 million with an annual amortization of 5%.
Removed
We have an option to increase the commitments under the 2022 Credit Agreement by up to an additional $200.0 million. The revolving credit facility has a maturity date of April 18, 2027 and is voluntarily pre-payable from time to time without premium or penalty.
Added
The applicable margin on the term loan facility is also tied to our total net leverage ratio and ranges from 0.125% to 1.00% per annum on loans pegged to the specified prime rate, and 1.125% to 2.00% per annum on loans pegged to the adjusted SOFR.

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