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What changed in ExlService Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ExlService Holdings, Inc.'s 2022 and 2023 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 2023 report.

+454 added−558 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-23)

Top changes in ExlService Holdings, Inc.'s 2023 10-K

454 paragraphs added · 558 removed · 376 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

93 edited+36 added−46 removed31 unchanged
Biggest changeIn 2022, we added a coding skills focus to the Skills to Win Initiative, aimed at elevating women and non-binary members of our communities in technology. • Education as a Foundation Initiative: This classroom-based initiative currently delivered through online and offline learning platforms provides school-aged students from communities in which we operate with data and analytics skills, language learning and career guidance. 10 Table of Contents Environmental, Health and Safety We strive to continuously improve our environmental, health and safety initiatives (“EHS”), with a focus on reducing our carbon footprint, energy conservation, waste minimization, green infrastructure and operations.
Biggest changeIn 2022, we added a coding skills focus to the Skills to Win Initiative, aimed at elevating women and non-binary members of our communities in technology in the United Kingdom, the United States and South Africa, which was further expanded to the Philippines and India in 2023. • Education as a Foundation Initiative: This classroom-based initiative currently delivered through online and offline learning platforms provides school-aged students from communities in which we operate with data and analytics skills, language learning and career guidance.
For digital operations and solutions other than consulting, we generally enter into long-term agreements with our clients with typical initial terms of 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 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.
We provide third-party administrator insurance services from India and the Philippines and are currently able to provide these services in the United States for 49 states and 48 states (and the District of Columbia), respectively by location.
We provide third-party administrator insurance services from India and the Philippines and are currently able to provide these services in the United States for 49 states (and the District of Columbia) and 48 states (and the District of Columbia), respectively by location.
Below are some of our strategically focused considerations: Expanding our Services in Large Addressable Markets We continue to focus on the insurance, healthcare, banking, retail, media and technology industries, among others, which are large markets with high demand, as well as pursuing opportunities in emerging industries.
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.
We also provide subrogation services to property and casualty insurers using business process-as-a-service (“BPaaS”) delivery model and our proprietary Subrosource® software platform, the largest commercial end-to-end subrogation platform. Subrosource® integrates with client systems, manages recovery workflow, increases recoveries and reduces costs.
We also provide subrogation services to property and casualty insurers using a business process-as-a-service delivery model and our proprietary Subrosource® software platform, the largest commercial end-to-end subrogation platform. Subrosource® integrates with client systems, manages recovery workflow, increases recoveries and reduces costs.
We maintain licenses in various jurisdictions (or require certain categories of our professionals to be individually licensed) in service areas such as debt collection, utilization review, workers’ compensation utilization review, claims adjuster, mortgage loan processing and underwriting and telemarketing services.
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.
These digital solutions help clients achieve their desired outcomes in three key ways: 1) leveraging advanced analytics that combine publicly available data, proprietary data sets and clients’ own data to help power faster, more strategic decision making, 2) integrating AI/ML-driven natural language processing solutions to help streamline manual, labor-intensive workflows and improve end-customer engagement and experience, and 3) implementing AI/ML-powered operating models that help our clients transition from legacy business operations and get to market faster.
These digital solutions help clients achieve their desired outcomes in three key ways: 1) leveraging advanced analytics that combine publicly available data, proprietary data sets and clients’ own data to help power faster, more strategic decision making, 2) integrating AI/ML-driven natural language processing to help streamline manual, labor-intensive workflows and improve end-customer engagement and experience, and 3) implementing AI/ML-powered operating models that help our clients transition from legacy business operations and get to value faster.
Information on our website does not constitute a part of, nor is it incorporated in any way, into this Form 10-K or any other report we file with or furnish to the SEC.
Information on our website does not constitute a part of, nor is it incorporated in any way, into this Annual Report on Form 10-K or any other report we file with or furnish to the SEC.
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-led solutions across all parts of clients’ businesses.
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.
Demand for our services is expected to continue to exhibit growth in the next several years. Integrating our Data-led and Domain Capabilities The combination of our data-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 The combination of our data and AI-led capabilities and domain expertise has been central to our market differentiation.
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 companies.
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.
For our female employees, EXL has several programs to promote career advancement, including leadership development for women at the mid- to senior- levels, a separate program to improve the retention and engagement of new mothers through employee friendly parental leave and similar policies, and our WE (Women at EXL) platform, which is designed to enable women at EXL advance their career and achieve professional growth through discussion, collaboration, networking, training, development and mentorship opportunities.
EXL has several programs to promote career advancement for women, including leadership development for women at the mid- to senior- levels, a separate program to improve the retention and engagement of new mothers through employee friendly parental leave and similar policies, and our WE (Women at EXL) platform, which is designed to enable women at EXL advance their career and achieve professional growth through discussion, collaboration, networking, training, development and mentorship opportunities.
EXL’s integrated care management offering, including our proprietary clinical data, connects payers, providers and members to increase efficiencies and effectiveness across all aspects of care management, including medical, pharmacy and behavioral health.
Our integrated care management offering, including our proprietary clinical data, connects payers, providers and members to increase efficiencies and effectiveness across all aspects of care management, including medical, pharmacy and behavioral health.
Our client experience management solutions that run on our proprietary CONNECx 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 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 digital operations and solutions infuse cloud, data, AI, ML, advanced analytics and robotics capabilities to improve efficiency, business outcomes and the consumer experience in healthcare across patient/member management, contracting and network management, health and care management, claims administration and business operations.
Our data and AI-led digital operations and solutions infuse advanced analytics, AI, generative AI, cloud, ML and robotics capabilities to improve efficiency, business outcomes and the consumer experience in healthcare across patient/member management, contracting and network management, health and care management, claims administration and business operations.
We compete against these entities by working to differentiate ourselves as a strategic partner for businesses with deep industry expertise, sophisticated data and analytics capabilities, innovative digital operations and solutions and technology 6 Table of Contents strong client relationships, leading industry talent, superior process capabilities and differentiated technology, which enable us to respond rapidly to market trends and the evolving needs of our clients.
We compete against these entities by working to differentiate ourselves as a strategic partner for businesses with deep industry expertise, sophisticated data and analytics capabilities, innovative digital operations and solutions and technology strong client relationships, leading industry talent, superior process capabilities and differentiated technology, which enable us to respond rapidly to market trends and the evolving needs of our clients.
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 the Company’s website.
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.
The information contained on the Company’s 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 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.
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.” Environmental, Social and Governance 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, 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 earn a substantial portion of our revenues from a limited number of clients.” 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.
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.
Through this platform, our employees are supplied with specialized learning pathways to build digital capabilities, skill mapping to direct them to courses as needed, chat groups where they can collaborate and discuss the latest trends, practice questions, practice labs for real-world and hands-on experience, supervisor dashboards and leaderboards, and learning on the go.
Our employees are supplied with specialized learning pathways to build digital capabilities, skill mapping to direct them to courses as needed, chat groups where they can collaborate and discuss the latest trends, practice questions, practice labs for real-world and hands-on experience, supervisor dashboards and leaderboards, and learning on the go.
We provide digital transformation and solutions and data-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, ML and advanced automation.
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.
In addition, we seek to maintain a responsible supply chain by stating our expectations for all our vendors in our Supplier Standards of Conduct and by collecting information from our new suppliers with respect to policies and performance on human rights, labor rights and environmental issues.
In addition, we seek to maintain a responsible supply chain by stating our expectations for all our vendors in our Supplier Standards of Conduct 10 Table of Contents and by collecting information from our new suppliers with respect to policies and performance on human rights, labor rights and environmental issues.
These programs align with the expectations clients have of service providers and benefit our other stakeholders. In 2022, we continued many of these activities in hybrid and virtual formats.
These programs align with the expectations clients have of service providers and benefit our other stakeholders. In 2023, we continued many of these activities in hybrid and virtual formats.
We believe there are significant opportunities for additional growth within our existing clients, and we seek to expand these relationships by: • Increasing the depth and breadth of the services we provide across our clients’ value chains and geographies; 4 Table of Contents • Offering the full suite of EXL services, which includes digital operations and solutions, consulting and data analytics services; and • Supporting our clients’ geographic expansions by leveraging our global footprint.
We believe there are significant opportunities for additional growth within our existing clients, and we seek to expand these relationships by: • Increasing the depth and breadth of the services we provide across our clients’ value chains and geographies; • Offering the full suite of EXL services, which includes AI-powered digital operations and solutions, consulting and data analytics services; and • Supporting our clients’ geographic expansions by leveraging our global footprint.
Additionally, our subsidiary in the Philippines is able to provide utilization review services in the United States for 47 states (and the District of Columbia).
Additionally, our subsidiary in the Philippines is able to provide utilization review services in the United States for 48 states (and the District of Columbia).
We are also well-positioned with our suite of advanced analytics, data and AI-based digital solutions to create integrated services and solutions under one brand. Cultivating Long-term Relationships and Expanding our Client Base We continue to maintain our focus on cultivating long-term client relationships as well as attracting new clients.
We are also well-positioned with our suite of advanced analytics, data and AI-powered digital solutions on the cloud to create integrated services and solutions under one brand. Cultivating Long-term Relationships and Expanding our Client Base We continue to maintain our focus on cultivating long-term client relationships as well as attracting new clients.
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 are building a scalable and customizable multi-cloud cross-sector AI and advanced analytics platform with pre-built accelerators and packaged solutions.
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 intend to continue building a portfolio of Fortune 500 and 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 BPaaS and digital 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-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.
The enhanced generation of business data across multiple formats, substantial reduction in data storage costs, growing enterprise demand for data-led decision making and availability of sophisticated analytics tools, have enabled companies to 5 Table of Contents make better decisions.
The enhanced generation of business data across multiple formats, substantial reduction in data storage costs, growing enterprise demand for data and AI-led decision making and availability of sophisticated analytics tools, have enabled companies to make better decisions.
See Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business-We face competition from U.S.-based and non-U.S.-based BPM and IT companies 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.
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.
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://www.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. 11 Table of Contents We also maintain a website at http://ir.exlservice.com.
Our Analytics engagements span both project work and longer-term arrangements where EXL provides ongoing analytics modeling and services for a year or longer. We utilize our domain and industry knowledge to drive these engagements across our various competencies including data management and cloud enablement, AI, ML and advanced analytics and insights, data-enabled marketing solutions and strategic data assets.
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.
We provide end-to-end third-party administration for life and annuity insurance policies which includes digital customer acquisition services using a software-as-a-service (“SaaS”) delivery model through our LifePRO® and Life Digital Suite platforms that help clients administer life insurance, annuities and credit life and disability insurance policies.
We provide end-to-end third-party administration for life and annuity insurance policies, which includes digital customer acquisition services using a SaaS delivery model through our LifePRO® and Life Digital Suite platforms that help clients administer life insurance, annuities and credit life and disability insurance policies.
We provide a suite of finance and accounting services that include high-end, data-led services including financial planning and analysis, decision support, GAAP and statutory reporting and compliance services in addition to core finance operations.
We provide a suite of data and AI-led finance and accounting services that include financial planning and analysis, decision support, GAAP and statutory reporting and compliance services in addition to core finance operations.
Our Analytics team is comprised of approximately 8,200 professionals, including data scientists, data architects, business analysts, statisticians, modelers, industry domain specialists and data experts. We help our clients leverage internal and external data sources, enhance their data assets, identify and visualize data patterns, and utilize data-led insights to improve their effectiveness.
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.
Optimizing our Global Delivery Footprint and Operational Infrastructure in the Countries and Regions in Which 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 and remote working models.
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 also leverage several strategic partnerships with third parties to facilitate our solution offerings to clients, including, among others, robotics and process automation software companies and a financing platform provider. 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, 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 actively work to foster the representation of underrepresented groups as well as promoting the inclusion of lesbian, gay, bisexual, transgender, and queer (or questioning) (“LGBTQ+”) employees at all levels of the organization. In addition to EXL’s employee resource groups, in 2022 we launched “The Umbrella Project,” a program for allyship and inclusion alongside our LGBTQ+ colleagues.
We actively work to foster the representation of underrepresented groups as well as promoting the inclusion of lesbian, gay, bisexual, transgender, and queer (or questioning) (“LGBTQ+”) employees at all levels of the organization. In addition to EXL’s employee resource groups, we maintain “The Umbrella Project,” an initiative for allyship and inclusion alongside our LGBTQ+ colleagues.
We maintain a supplier diversity program in the United States designed to provide opportunities for qualified diverse businesses. Recruiting, Developing and Engaging our Employees We have an integrated talent management framework that employs active collaboration between our recruitment, capability development and business human resource functions. We deploy innovative methods to recruit, train and retain our skilled employees.
We maintain a supplier diversity program in the United States designed to provide opportunities for qualified diverse businesses. Recruiting, Developing and Engaging our Employees We have an integrated talent management framework that employs active collaboration between our recruitment, capability development and business human resource functions.
Our Emerging Business strategic business unit provides data-led enterprise solutions in the areas of revenue enhancement, finance & accounting and customer experience management to clients primarily in the banking and capital markets, utilities, travel and leisure, transportation and logistics, media and communications, manufacturing, retail and business services industries.
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 website also includes announcements of investor conferences and events, information on our business strategies and results, ESG efforts, corporate governance information, and other news and announcements that investors might find useful or interesting. 12 Table of Contents
Our website also includes announcements of investor conferences and events, information on our business strategies and results, sustainability efforts, corporate governance information, and other news and announcements that investors might find useful or interesting.
Over the past two years, we have seen a significant acceleration in the shift to digital and cloud-based solutions across all our target markets, including as a result of the COVID-19 pandemic. Capturing data and enriching data has become a key differentiator for clients and their speed of decision making necessitating the adoption of advanced AI and ML techniques.
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.
We enhance, modernize and enrich structured and unstructured data and use a spectrum of advanced analytical tools and techniques, including our in-house 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; and • Enhanced decision-making in underwriting, claims processing and policy renewal through cognitive image analytics.
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.
As of December 31, 2022, we employed approximately 231 sales, marketing, business development and client management professionals, with the majority of them based in either the U.S. or Europe. Our professionals generally have significant experience in consulting, analytics, digital operations and solutions services and digital technology within our focus industries.
As 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.
Business Strategy EXL is a leading data analytics and digital operations and solutions company and is a key strategic partner for data-led businesses. We drive business outcomes for our clients through advanced analytics and AI/ML-powered digital solutions on the cloud.
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 provide trainings to our employees on topics aimed at improving diversity, equity and inclusion, such as managing unconscious bias, and have formed employee resource groups for select employee communities that are aimed at supporting diverse groups and interests.
Our Diversity and Inclusion Council consists of a global, diverse mix of leaders and oversees our diversity, equity and inclusion program. We provide trainings to our employees on topics aimed at improving diversity, equity and inclusion, such as managing unconscious bias, and have formed employee resource groups for select employee communities that are aimed at supporting diverse groups and interests.
Clients EXL generated revenues from approximately 550 clients and 459 clients in 2022 and 2021, respectively (with annual revenue exceeding $50,000 per client). We have won 59 and 58 new clients during 2022 and 2021, respectively. Our top three, five and ten clients generated 16.3%, 22.9% and 34.9% of our revenues, respectively, in 2022.
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.
Powered by our integrated cloud-based hyper-automation and insights platform EXL Digital Finance Suite, we help chief financial officers transform finance into a digitally enabled, scalable data-led function with lower cost to serve, superior business outcomes and improved stakeholder experience.
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 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 and pharmaco- 3 Table of Contents economics outcomes 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, media and entertainment industries.
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 for our clients include: • Identification, cleansing, matching and use of structured, semi-structured and unstructured data available both internally to our client’s organization and 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; and • 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.
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 domain academies focus on building domain expertise through certifications and specialization. These include our Insurance Academy, Travel Academy, Finance and Accounting Academy, Healthcare Academy, Analytics Academy, Utilities Academy, Consulting Academy and Digital Academy. These domain 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, 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.
Our vision of being an indispensable partner for data-led businesses reflects where the data and technology-led transformation of our clients’ businesses is trending across industry sectors, and we are evolving our offerings to drive business outcomes through advanced analytics and AI-powered solutions on the cloud.
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.
We seek to continue providing value to our clients with our deep domain expertise, ability to advise clients on how to transform their processes and deliver transformation that drives business value, ability to provide innovative services and solutions, including digital offerings that incorporate AI and ML capabilities, and our ability to continuously improve processes and consistently add value through digital transformation.
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.
For our clients in the banking and financial services sector, we provide a comprehensive range of digital solutions, including residential mortgage lending, title verification and validation, retail banking and credit cards, trust verification, commercial banking and investment management. For our clients in the retail sector, we provide supply chain management services and analytical services including merchandising, pricing and demand forecasting.
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.
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 that partners with clients to improve business outcomes and unlock growth.
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.
Our data-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. 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.
We do this through our data-led value creation framework to enable better and faster decision making, 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 4 Table of Contents capabilities to drive improved business outcomes, and we re-design operating models to integrate advanced technology into operational workflows.
We bring a data-led and practical digital approach to finance and accounting, enabling our clients to simplify and scale their finance and accounting processes, drive stakeholder centricity, improve controls and compliance, reduce operating costs and deliver rich data-led insights to our clients’ businesses. Our Healthcare strategic business unit primarily serves U.S.-based healthcare payers, providers and pharmacy benefit managers organizations.
We bring a data and AI-led and practical digital approach to finance and accounting, enabling our clients to simplify and scale their finance and accounting processes, drive stakeholder centricity, improve controls and compliance, reduce operating costs and deliver rich data and AI-led insights to our clients’ businesses.
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.
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.
Sales, Marketing and Client Management We market our services to our existing and prospective clients through our sales and client management teams, which are aligned by industry verticals and cross-industry domains such as finance and accounting and consulting. Our sales and client management teams operate from the U.S., Europe, Australia and South Africa are supported by our business development teams.
Sales, Marketing and Client Management We market our services to our existing and prospective clients through our sales and client management teams, which are aligned by industry verticals and cross-industry domains such as digital solutions, finance and accounting and consulting.
Our top three, five and ten clients generated 18.7%, 25.2% and 38.1% of our revenues, respectively, in 2021. No client accounted for more than 10% of our total revenues in 2022 or 2021. Our revenue concentration with our top clients has reduced year-over-year as we continue to develop relationships with new clients to diversify our client base.
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.
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 the our employees, contractors, customers, visitors and the communities where we operate.
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 seek to protect our intellectual property through a combination of patent, trademark, copyright and trade secret laws, confidentiality procedures and contractual provisions. Clients and business partners typically agree in writing to confidential treatment of our information. 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 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 also have policies requiring our associates to respect the intellectual property rights of others. The solutions we offer our clients often include our software, data and other intellectual property assets developed by our technology group, combined with software and data licensed by us or clients from third parties.
The solutions we offer our clients often include our software, data and other intellectual property assets developed by our data scientists and engineers, combined with software and data licensed by us or by clients from third parties.
Our data-led value creation framework enables better and faster decision making, leveraging our end-to-end data and analytics capabilities to drive improved business outcomes, and re-designing of operating models to integrate advanced technology into operational workflows. We embed digital operations and solutions into clients’ businesses and introduce our data-led approach to transform operations with every new engagement.
Our data and AI-led value creation framework enables better and faster decision making, leveraging our end-to-end data, analytics, AI capabilities and deep industry knowledge to drive improved business outcomes, and re-designing of operating models to integrate advanced technology into operational workflows.
We use a focused industry vertical approach, and our solutions are designed to help our clients realize their business and innovation goals and improve their strategic competitive position.
Digital Operations and Solutions Our digital operations and solutions, which we deploy for our clients from our Insurance, Healthcare and Emerging Business strategic business units, are focused on solving complex industry challenges. We use a focused industry vertical approach, and our solutions are designed to help our clients realize their business and innovation goals and improve their strategic competitive position.
Intellectual Property Our intellectual property consists of proprietary platforms, software, data sets, models, processes, algorithms, methodologies and know-how, as well as our name and marks, among other assets. 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 consider many of our business processes and implementation methodologies to be trade secrets or proprietary know-how and confidential information.
While our proprietary intellectual property assets are important to our business, we believe our company as a whole is not materially dependent on any particular intellectual property, other than our EXL brand.
While our proprietary intellectual property assets are important to our business, we believe EXL as a whole is not materially dependent on any particular intellectual property, other than our EXL brand. Our intellectual property portfolio is comprised of patents, trademarks, copyrights, and domain names to protect our brands, including our EXL brand, which is one of our most valuable assets.
We aim for our employees to develop expertise around the specific technologies, tools and frameworks required to successfully execute projects for our clients, as well as a mindset focused on agility, speed, creativity, innovation and collaboration. We create thought leaders with high industry acumen who are better able to address our clients’ business priorities.
Our talent development strategy is comprehensive and aligned to EXL’s overall business strategy. We aim for our employees to develop expertise around the specific technologies, tools and frameworks required to successfully execute projects for our clients, as well as a mindset focused on agility, speed, creativity, innovation and collaboration.
All our delivery centers worldwide are currently ISO 45001:2018 certified, meeting international standards for occupational health and safety, and ISO 14001:2015 certified, meeting international standards for effective environmental management systems.
All our delivery centers worldwide are currently ISO 45001:2018 certified, meeting international standards for occupational health and safety, and ISO 14001:2015 certified, meeting international standards for effective environmental management systems. In 2023, we received a five star rating from the British Safety Council for best practices in occupational safety for our operations centers in the United Kingdom and India.
We combine deep healthcare domain expertise with data-led insights and technology-enabled services to transform how care is delivered, managed and paid.
Our Healthcare strategic business unit primarily serves U.S.-based healthcare payers, providers and pharmacy benefit managers organizations. We combine deep healthcare domain expertise with data and AI-led insights and technology-enabled services to transform how care is delivered, managed and paid.
While working on client engagements, we also often develop new tools, methodologies and models, including robotics and process automation software, or “bots,” AI and ML capabilities. We endeavor to negotiate contracts that give us ownership or broad licenses to use, develop, demonstrate and offer such tools for other clients. We operate in a highly competitive and rapidly evolving global market.
Independently or while working on client engagements, we also often develop new tools, methodologies and models, including AI and ML models that can be leveraged for various use cases. We endeavor to negotiate contracts that give us ownership or broad licenses to use, develop, demonstrate and offer such newly developed intellectual property assets to or for other clients.
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. Analytics Our Analytics strategic business unit helps clients build data-led businesses using AI and advanced analytics solutions and services.
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.
See Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business-Failure to adhere to the regulations or accreditation or licensing standards that govern our business could have an adverse impact on our operations,” and under “General Risk Factors-Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violations of these regulations could harm our business.” We benefit from tax relief provided by laws and regulations in various geographies where we operate.
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.
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, ML and cloud. Data, analytics and digital have become core to virtually every significant move a business makes to serve customers, optimize business processes, stay competitive and grow.
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.
These enterprise solutions complement our domain-specific industry solutions enabling our clients to deliver superior performance. Our revenue enhancement solutions include lead generation, inside sales and digital marketing, pricing, customer and marketing analytics, billing and proprietary revenue assurance solutions, helping deliver direct topline and margin impact to our clients’ business.
To deliver these solutions, we combine our deep industry knowledge with advanced analytics and digital capabilities, including robotics, proprietary and partner-driven AI and ML solutions. Our revenue enhancement solutions include lead generation, inside sales and digital marketing, pricing, customer and marketing analytics, billing and proprietary revenue assurance solutions, which helps deliver direct topline and margin impact to our clients’ business.
We focus on recruiting the right talent and developing them further on relevant competencies through our learning academies, rigorous promotion standards, client and industry-specific training and competitive compensation packages, which include incentive-based compensation. 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 deploy innovative methods to recruit, train and retain 8 Table of Contents our skilled employees. We focus on recruiting the right talent and developing them further on relevant competencies through our learning academies, rigorous promotion standards, client and industry-specific training and competitive compensation packages, which include incentive-based compensation.
We consider diversity, equity and inclusion to be a key factor in our recruiting and retention goals and overall business growth strategy. As of December 31, 2022, of the United States reporting workforce, approximately 48.7% were racially/ethnically diverse individuals. As of December 31, 2022, our global workforce was approximately 41.2% female, with 18,700 women employees globally.
We consider diversity, equity and inclusion to be a key factor in our recruiting and retention goals and overall business growth strategy. As of December 31, 2023, our United States reporting workforce comprised approximately 16.2% underrepresented minorities and our global workforce was approximately 43% women. EXL is committed to providing a supportive working environment and career opportunities for our employees.
In addition, our population health analytics models can be leveraged with our campaign management and marketing analytics to support member acquisition and clinical program intervention management. We offer end-to-end data management services to support data strategy, ingestion, normalization, quality, security, governance, visualization and data architecture development and deployment via agnostic tools and flexible delivery models.
We offer end-to-end data management services to support data strategy, ingestion, normalization, quality, security, governance, visualization and data architecture development and deployment via agnostic tools and flexible delivery models. We continue to strengthen our expertise in data and product engineering, ML operations, cloud enablement and managed services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeViolations of any of these laws or regulations in the conduct of our business could result in fines, criminal sanctions against us or our officers, prohibitions on doing business, damage to our reputation and other unintended consequences such as liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations.
Biggest changeViolations of any of these laws or regulations in the conduct of our business, including being unable to maintain our accreditations, licenses or other qualifications while working for our clients, could result in fines, criminal sanctions against us or our officers, prohibitions on doing business or suspension or disqualification from government contracting or contracting with private entities in certain highly regulated industries, damage to our reputation and other unintended consequences such as liability for monetary damages, fines and/or criminal prosecution including in the form of successor liability in certain circumstances for companies we invest in or acquire, unfavorable publicity, or restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations and loss of clients.
We depend on certain significant vendors and partners for software, technology and data communications, related equipment and its maintenance, third party components that we use to deliver our services, including cloud services. Our offshore operations centers require us to maintain active voice and data communications among our operations centers, our technology and data hubs and our clients’ offices.
We depend on certain significant vendors and partners for software, technology and data communications, related equipment and its maintenance, and third party components that we use to deliver our services, including cloud services. Our offshore operations centers require us to maintain active voice and data communications among our operations centers, our technology and data hubs and our clients’ offices.
We have earned and believe that we will continue to earn in the near future or foreseeable a substantial portion of our total revenues from a limited number of large clients.
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.
Failure to consistently meet service requirements of a client or errors made by our employees in the course of delivering services to our clients could disrupt the client’s business and result in a reduction in revenues or a claim for damages against us.
Failure to consistently meet the service requirements of a client or errors made by our employees in the course of delivering services to our clients could disrupt the client’s business and result in a reduction in revenues or a claim for damages against us.
If a material security breach or incident occurs with respect to a cloud services provider, our clients and potential customers may lose trust in cloud solutions generally, and with respect to security in particular. This could adversely impact our ability to retain existing customers or attract new customers, which, in turn, could have a serious impact on our reputation.
If a material security breach or incident occurs with respect to a cloud services provider, our clients and potential clients may lose trust in cloud solutions generally, and with respect to security in particular. This could adversely impact our ability to retain existing clients or attract new clients, which, in turn, could have a serious impact on our reputation.
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 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 are not sufficient to make up for any shortfall.
Developments in the industries we serve, which may be rapid, also could shift demand to new services and solutions. If, as a result of new technologies or changes in the industries we serve, our clients demand new services and solutions, we may be less competitive in these new areas or need to make significant investment to meet that demand.
Developments in the industries we serve, which may be rapid, also could shift demand to new services and solutions. If, as a result of new technologies or developments in the industries we serve, our clients demand new services and solutions, we may be less competitive in these new areas or need to make significant investment to meet that demand.
Damage or destruction that interrupts our provision of services could adversely affect our reputation, our relationships with 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 delivery centers.
Our ability to achieve our ESG commitments, including our goals relating to sustainability, inclusion and diversity, is subject to numerous risks, many of which are outside of our control. In addition, standards for tracking and reporting on ESG matters have not been harmonized and continue to evolve.
Our ability to achieve our sustainability commitments, including our goals relating to sustainability, inclusion and diversity, is subject to numerous risks, many of which are outside of our control. In addition, standards for tracking and reporting on sustainability matters have not been harmonized and continue to evolve.
Some of these existing and future competitors 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 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.
These provisions of our amended and restated certificate of incorporation, by-laws and Delaware law could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of our common stock in the future which could reduce the market price of our stock.
These provisions of our restated certificate of incorporation, by-laws and Delaware law could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of our common stock in the future which could reduce the market price of our stock.
These provisions may have the effect of delaying or preventing a change of control or changes in management that stockholders consider favorable. Additionally, because we are incorporated in Delaware, we are subject to Section 203 of the Delaware General Corporation Law.
These provisions may have the effect of delaying or preventing a change of control or changes in management that stockholders consider favorable. Additionally, because we are incorporated in Delaware, we are subject to Section 203 of the Delaware General Corporation Law (the “DGCL”).
Any deterioration of the credit and capital markets in the United States, Europe, Asia or other regions of the world could result in volatility of our investment earnings and impairments to our investment portfolio, which could negatively impact our financial condition and reported income.
Any deterioration of the credit and capital markets in the United States, the United Kingdom, Europe, Asia or other regions of the world could result in volatility of our investment earnings and impairments to our investment portfolio, which could negatively impact our financial condition and reported income.
Any failure to meet a client’s expectations or a change in a client’s strategic direction could result in a cancellation or non-renewal of a contract or a decrease in the scope of services or solutions that we are able to provide to such client.
Any failure to meet a client’s expectations or a change in a client’s strategic direction could result in the cancellation or non-renewal of a contract or a decrease in the scope of services and solutions that we are able to provide to such client.
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 revenues, 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, 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.
Although we maintain our facilities and communications links with adequate business continuity and disaster recovery plans, disruptions could result from, among other things, technical breakdowns, computer glitches and viruses and weather conditions.
Although we maintain our facilities and communications links with business continuity and disaster recovery plans, disruptions could result from, among other things, technical breakdowns, computer glitches and viruses and weather conditions.
Delaware law and our amended and restated certificate of incorporation and 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 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.
The majority of our digital operations and solutions contracts have longer 13 Table of Contents 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 anticipated ongoing revenues and loss of 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 13 Table of Contents 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 customers, 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, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
We may need to increase the levels of employee compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and number of employees that our business requires. Wages are generally higher for employees performing analytics and digital transformation services than for employees performing digital operations and solutions.
We also may need to increase the levels of employee compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and number of employees that our business requires. Wages are generally higher for employees performing AI, analytics and digital transformation services than for employees performing digital operations and solutions.
Restrictions on visas and work permits may affect our ability to compete for and provide services to clients in the United States and other jurisdictions, which could make it more difficult to staff engagements and could increase our costs, which could have an adverse effect on our net income.
Restrictions on visas and work permits may affect our ability to compete for and provide services to clients in the United States and other countries, which could make it more difficult to staff engagements and could increase our costs, which could have an adverse effect on our net income.
Our processes and controls for reporting ESG matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting ESG metrics, including ESG-related disclosures that may be required by the SEC and other regulators, 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 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.
Investors may have difficulty effecting service of process or enforcing judgments obtained in the United States against our subsidiaries in India 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.
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.
The remote work solutions that we employ in our hybrid and remote working models may also be limited in their ability to replicate the operational oversight and security controls of our office environments and may pose a higher risk of operational and information security failures.
The remote work solutions that we employ in our hybrid working model may also be limited in their ability to replicate the operational oversight and security controls of our office environments and may pose a higher risk of operational and information security failures.
Such events may lead to the disruption of information systems and telecommunication services 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 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.
To the extent that we do not protect our intellectual property effectively through contractual provisions, confidentiality procedures, patents, 16 Table of Contents trade secret laws or other means including those set forth above, other parties, including former employees, with knowledge of our intellectual property may leave and seek to exploit our intellectual property for their own or others’ advantage.
To the extent that we do not protect our intellectual property effectively through contractual provisions, confidentiality procedures, patents, trade secret laws or other means including those set forth above, other parties, including former employees, with knowledge of our intellectual property may leave and seek to exploit our intellectual property for their own or others’ advantage.
Methodologies for reporting ESG data may be updated and previously reported ESG 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.
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.
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.
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.
Our inability to manage our rapid infrastructure and personnel growth across jurisdictions and changes to our operating model effectively could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Our inability to manage our rapid infrastructure and personnel growth across countries and changes to our operating model effectively could have a material adverse effect on our business, results of operations, financial condition and cash flows.
As the scale of our analytics services increases, wages as a percentage of revenues may increase. In addition, changes to the labor laws in the countries where we operate may also lead to a substantial increase in our wage costs.
As the scale of such services increases, wages as a percentage of revenues may increase. In addition, changes to the labor laws in the countries where we operate may also lead to a substantial increase in our wage costs.
See Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.” Additionally, because a majority of our employees are based in India and the Philippines and paid in Indian rupee or Philippine peso, while our revenues are primarily reported in U.S. dollars and U.K. pound sterling, our employee costs as a percentage of revenues may increase or decrease significantly if the exchange rates among the Indian rupee, the Philippine peso, the U.K pound sterling and the U.S. dollar fluctuate significantly.
See Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.” Additionally, because a majority of our employees are based in India, Philippines and South Africa and paid in Indian rupee or Philippine peso or South African rand, while our revenues are primarily reported in U.S. dollars and U.K. pound sterling, our employee costs as a percentage of revenues may increase or decrease significantly if the exchange rates among the Indian rupee, the Philippine peso, the U.K pound sterling, the South African rand and the U.S. dollar fluctuate significantly.
The ability of some of our executives and employees based in India and other foreign locations to work with and meet clients in the United States and other jurisdictions depends on their ability to obtain the necessary visas and work permits.
The ability of some of our executives and employees based in India and other foreign locations to work with and meet clients in the United States and other countries depends on their ability to obtain the necessary visas and work permits.
These provisions include provisions permitting the board of directors to fill vacancies created by its expansion, provisions permitting the removal of directors only for cause and with the vote of holders of two thirds of our common stock, provisions requiring the vote of holders of two thirds of our common stock for certain amendments to our organizational documents, provisions barring stockholders from calling a special meeting of stockholders or requiring one to be called or from taking action by written consent and provisions that set forth advance notice procedures for stockholders’ nominations of directors and proposals for consideration at meetings of stockholders.
These provisions include provisions permitting the board of directors to fill vacancies created by its expansion, provisions requiring the vote of holders of two thirds of our common stock for certain amendments to our organizational documents, provisions barring stockholders from calling a special meeting of stockholders or requiring one to be called or from taking action by written consent and provisions that set forth advance notice procedures for stockholders’ nominations of directors and proposals for consideration at meetings of stockholders.
Any of the above factors may adversely affect our business, results of operations, financial condition and cash flows. 19 Table of Contents Risks Related to the International Nature of Our Business If the transfer pricing arrangements we have for controlled intercompany transactions among our subsidiaries are determined to be inappropriate, our tax liability may increase.
Any of the above factors may adversely affect our business, results of operations, financial condition and cash flows. Risks Related to the International Nature of Our Business If the transfer pricing arrangements we have for controlled intercompany transactions among our subsidiaries are determined to be inappropriate, our tax liability may increase.
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. There is significant competition for professionals with skills necessary to perform the services we offer to our clients.
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.
Any future determination to pay dividends will be at the discretion of our board of directors and will be dependent on then-existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions under our credit agreement, business 22 Table of Contents prospects and other factors that our board of directors considers relevant.
Any future determination to pay dividends will be at the discretion of our board of directors and will be dependent on then-existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions under our credit agreement, business prospects and other factors that our board of directors considers relevant.
Not all of the undistributed earnings may be available for repatriation due to foreign legal restrictions that require minimum reserves to be maintained in those countries, which would limit our ability to use these earnings across our global operations in the United States or other geographies, where needed.
Not all of the undistributed earnings may be available for repatriation due to foreign legal restrictions that require minimum reserves to be maintained in those countries, which may limit our ability to use such earnings across our global operations in the United States or other geographies, where needed.
Our operations centers and our data and voice communications, particularly in India and the Philippines, may be damaged or disrupted as a result of natural disasters such as earthquakes, floods, volcano eruptions, heavy rains, 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, 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.
This has led to and may continue to lead to uncertainty over global economic conditions and unpredictable fluctuations in foreign currency exchange rates, and in particular, has impacted and may continue to impact the Indian rupee, the Philippine peso, the U.K pound sterling and other currencies in which we incur expenses.
This has led to and may continue to lead to uncertainty over global economic conditions and unpredictable fluctuations in foreign currency exchange rates, and in particular, has impacted and may continue to impact the Indian rupee, the Philippine peso, the U.K pound sterling, the South African rand and other currencies in which we incur expenses.
However, because of economic growth in India and the Philippines, increased demand for outsourced 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 and Europe. This may reduce the competitive advantage.
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.
The domestic and international capital and credit markets have in the past, and may in the future, experience volatility and disruption and uncertainty from geopolitical tensions, inflation, economic tensions, changes in legislation in the various jurisdictions in which we and our clients operate, changes in global trade policies, or global health emergencies or pandemics, such as COVID-19, which may affect our clients, us directly, or our client industries, and could result in changing demand patterns.
The domestic and international capital and credit markets have in the past, and may in the future, experience volatility and disruption and uncertainty from geopolitical tensions, inflation, economic tensions, changes in legislation in the various jurisdictions in which we and our clients operate, changes in global trade policies, or global health emergencies or pandemics, which may affect our clients, us directly, or our client industries, and could result in changing demand patterns.
For example, wage costs in India and the Philippines have historically been significantly lower than wage costs in the United States and Europe for comparable skilled professionals, and having a significant number of employees in those countries has been one of our competitive advantages.
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.
Although we devote substantial resources to protect our information assets and our clients' confidential information, any network infrastructure is to some extent vulnerable due to rapidly evolving cyber-attacks, employee error, malfeasance, or a combination of the foregoing.
Although we devote substantial resources to protect our information assets and our clients’ confidential information, any network infrastructure is to some extent vulnerable due to rapidly evolving cyberattacks, employee error, malfeasance, or a combination of the foregoing.
The growth in state sponsored cyber activity, including the increased rate of cyberattacks arising from the Russia-Ukraine crisis 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, 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.
Industry pricing models are evolving and clients increasingly request alternative pricing models , rather than annual or hourly billing rates. If we make inaccurate assumptions for contracts with such 14 Table of Contents alternative pricing models including pricing for our digital capabilities and complex transformation services or are unable to offer competitive pricing, our profitability may be negatively affected.
Industry pricing models are evolving, and clients increasingly request alternative pricing models , rather than annual or hourly billing rates. If we make inaccurate assumptions for contracts with such alternative pricing models including pricing for our digital capabilities and complex transformation services or are unable to offer competitive pricing, our profitability may be negatively affected.
COVID-19 has adversely affected and may, and any such other pandemic may, in the future materially adversely affect us, our clients, employees, contractors, suppliers and business partners, all of may be prevented from conducting business activities as usual, including due to the many and varying health and safety measures in response to such pandemic, including travel restrictions, quarantines, curfews, shelter in place and safer-at-home orders.
Any pandemic may in the future materially adversely affect us, our clients, employees, contractors, suppliers and business partners, all of may be prevented from conducting business activities as usual, including due to the many and varying health and safety measures in response to such pandemic, including travel restrictions, quarantines, curfews, shelter in place and safer-at-home orders.
Our stock has at times experienced substantial price volatility as a result of, among other reasons, variations between our actual and anticipated financial results, announcements by us and our competitors, terrorist attacks, natural disasters, epidemics or pandemics, or other such events impacting countries where we or our clients have operations, loss of one or more significant clients, announcements of technological developments, projections or speculation about our business or that of our competitors by the media or investment analysts or uncertainty about current global economic conditions.
The market price of our common stock has at times experienced or may experience substantial price volatility as a result of, among other reasons, variations between our actual and anticipated financial results, announcements by us and our competitors, terrorist attacks, natural disasters, epidemics or pandemics, or other such events impacting countries where we or our clients have operations, loss of one or more significant clients, announcements of technological developments, projections or speculation about our business or that of our competitors by the media or investment analysts, the effect of any stock split, or uncertainty about current global economic conditions.
There can be no assurance that we will successfully identify suitable 17 Table of Contents candidates in the future for strategic transactions at acceptable prices, have sufficient capital resources to finance potential acquisitions or be able to consummate any desired transactions.
There can be no assurance that we will successfully identify suitable candidates in the future for strategic transactions at acceptable prices, have sufficient capital resources to finance potential acquisitions or be able to consummate any desired transactions.
In addition, positions we take or do not take on social issues may be unpopular with some of our employees, our clients or potential clients, governments or advocacy groups, which may impact our ability to attract or retain employees or the demand for our services.
In addition, positions we take or do not take on social issues may be unpopular with some of our employees, our existing and potential clients and investors, governments, media or advocacy groups, which may impact our ability to attract or retain employees or the demand for our services.
Although we take steps to hedge a substantial portion of our Indian rupee/U.S. dollar, U.K pound sterling/U.S. dollar and Philippine peso/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 20 Table of Contents manner.
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.
Insurance is not available for certain types of claims, including patent infringement, violation of wage and hour laws, failure to provide equal pay in the U.S., and our indemnification obligations to our clients based on employment law.
Insurance is not available for certain types of claims, including patent infringement, violation of wage and hour laws, failure to provide equal pay in the United States, and our indemnification obligations to our clients based on employment law.
As a result, you may be unable to effect service of process upon our affiliates who reside in India outside their jurisdiction of residence.
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.
Section 203 may prohibit large stockholders, in particular those owning 15.0% or more of our outstanding voting stock, from merging or combining with us.
Section 203 of the DGCL may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us.
If an actual or perceived breach of our security occurs (or a breach of a customer’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 customers.
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.
ITEM 1A. Risk Factors Risks Related to Our Business Our business depends on maintaining and growing client demand for our services and solutions, including by anticipating and incorporating the latest technology into our offerings, and a significant reduction in such demand or a failure to respond to the evolving technological environment could materially affect our results of operations.
Risk Factors Risks Related to Our Business Our business depends on maintaining and growing client demand for our services and solutions, including by anticipating and incorporating the latest technology into our offerings, and a significant reduction in such demand, a failure to respond to the evolving technological environment or a change in our service or solution delivery could materially affect our results of operations.
Our failure to close transactions with potential acquisition targets for which we have invested significant time and resources could have a material adverse effect on our financial condition and cash flows.
Our failure to identify suitable candidates or close transactions with potential acquisition targets for which we have invested significant time and resources could have a material adverse effect on our financial condition and cash flows.
The transfer pricing regulations in the countries we operate in require that controlled intercompany transactions be at arm’s-length. Accordingly, the Company determines and documents pricing for controlled intercompany transactions based on an economic analysis as prescribed in the respective regulations. The tax authorities have jurisdiction to review our transfer pricing.
The transfer pricing regulations in the countries we operate in require that controlled intercompany transactions be at arm’s-length. Accordingly, we determine and document pricing for controlled intercompany transactions based on an economic analysis as prescribed in the respective regulations. The tax authorities have jurisdiction to review our transfer pricing.
We are party to a credit agreement for our bank debt facility that contains covenants, among other things, requiring maintenance of certain financial ratios (being, an interest coverage ratio and a total net leverage ratio) and restricting our ability to incur additional indebtedness, create liens, make certain investments and acquisitions, pay dividends, repurchase common shares and make other restricted payments or undertake certain fundamental changes (including, consolidations, liquidations or disposal of certain assets or subsidiaries).
We are party to a credit agreement for our bank debt facility that contains covenants, among other things, requiring maintenance of certain financial ratios and restricting our ability to incur additional indebtedness, create liens, make certain investments and acquisitions, pay dividends, repurchase common shares and make other restricted payments or undertake certain fundamental changes (including, consolidations, liquidations or disposal of certain assets or subsidiaries).
As a result, we are subject to various data protection and privacy laws in the countries in which we operate, and the failure to comply could result in significant fines and penalties.
As a result, we are subject to various data protection and privacy laws in the countries where we operate, and the failure to comply with such laws could result in significant fines and penalties.
Immigration and work permit laws and regulations in the countries in which we have customers are subject to legislative and administrative changes as well as changes in the application of standards and enforcement.
Immigration and work permit laws and regulations in the countries where we have clients are subject to legislative and administrative changes as well as changes in the application of standards and enforcement.
Our future tax liabilities could be adversely affected by any new unfavorable tax legislative changes in the countries we operate in. 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.
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 make estimates and assumptions in connection with the preparation of our consolidated financial statements, and any changes to those estimates and assumptions could adversely affect our financial results. 23 Table of Contents Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The application of U.S.
We make estimates and assumptions in connection with the preparation of our consolidated financial statements, and any changes to those estimates and assumptions could adversely affect our financial results. Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The application of U.S.
Given the uncertainty over global economic conditions and regulatory, competitive or other factors outside of our control, including but not limited to the Russia-Ukraine military conflict and COVID-19, there can be no assurance that business activity will be maintained at our expected level in order to generate the anticipated cash flows from operations.
Given the uncertainty over global economic conditions and regulatory, competitive or other factors outside of our control, including but not limited to conflicts between Russia and Ukraine, and Israel and Hamas, there can be no assurance that business activity will be maintained at our expected level in order to generate the anticipated cash flows from operations.
GAAP requires us to make estimates and assumptions about certain items and future events that affect our reported financial condition, and our accompanying disclosure.
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.
Outside parties may attempt to fraudulently induce employees, users, or customers to disclose sensitive information in order to gain access to our data or our users’ or customers’ data.
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.
Our amended and restated certificate of incorporation and 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.
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.
We expect to develop and improve our internal systems in the locations where we operate in order to address the anticipated continued growth of our business. We are also continuing to look for operations centers at locations outside of our current operating geographies.
We expect to develop and improve our internal systems in the locations in which we operate in order to address the anticipated continued growth of our business. We continue to look for operations centers at locations outside of our current operating geographies.
The exchange rates among the Indian rupee, the Philippine peso, the U.K pound sterling 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.
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.
If we breach any of these covenants and do not cure such breach within the applicable cure periods or obtain a waiver from the lenders, the outstanding indebtedness (and any other indebtedness with cross-default provisions) could be declared immediately due and payable and such acceleration could adversely affect our liquidity and 21 Table of Contents financial condition.
If we breach any of these covenants and do not cure such breach within the applicable cure periods or obtain a waiver from the lenders, the outstanding indebtedness could be declared immediately due and payable and such acceleration could adversely affect our liquidity and financial condition.
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.
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.
If we are unable to attract and retain highly-skilled technical personnel and do not invest in reskilling and upskilling our employees in the areas and skills that strategically important to our business, our ability to effectively lead our current projects and develop new business could be jeopardized, and our business, results of operations and financial condition could be adversely affected.
If we are unable to invest in reskilling and upskilling our employees in the areas and skills that strategically important to our business, our ability to effectively lead our current projects and develop new business could be jeopardized, and our business, results of operations and financial condition could be adversely affected.
Our ability to maintain and grow demand for our services and solutions requires that we continue to develop and implement offerings that keep pace with changes in the industry and anticipate and respond to rapidly evolving technology and our clients’ evolving needs in areas such as AI, ML, digital transformation and solutions, advanced analytics, blockchain, augmented reality/virtual reality, cloud based solutions, bots, hyper-automation, data management, robotics and process automation, and data engineering.
Our ability to maintain and grow demand for our services and solutions requires that we continue to develop and implement offerings that keep pace with changes in the industry and anticipate and respond to rapidly evolving technology and our clients’ evolving needs in areas such as AI, including generative AI, digital transformation and solutions, advanced analytics, cloud based solutions, data management, robotics and process automation, and data engineering, among others.
While we do not anticipate any material weaknesses, 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.
We believe that the principal competitive factors in our markets are breadth and depth of process expertise, knowledge of industries served, service quality, compliance rigor, global delivery capabilities, price and sales and client management capabilities.
We face competition globally from other providers. We believe that the principal competitive factors in our markets are breadth and depth of process expertise, offerings, knowledge of industries served, service quality, compliance rigor, global delivery capabilities, pricing, sales and client management capabilities.
We have operations centers across India, the United States, the Philippines, Colombia, the United Kingdom, the Republic of Ireland, South Africa, Bulgaria, Romania, and the Czech Republic. Further, we have acquired multiple regional offices in the United States as part of our acquisitions. Our headcount has increased significantly over the past several years.
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 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.
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.
If we do not sufficiently invest in new technology and adapt to industry developments, or evolve and expand our business at sufficient speed and scale, or if we do not make the right strategic investments to respond to these developments and successfully drive innovation, our services and solutions, our results of operations, and our ability to develop and maintain a competitive advantage and to execute on our growth strategy could be adversely affected.
If we do not sufficiently invest in new technologies, adapt to industry developments, evolve and expand our business at sufficient speed and scale and successfully drive innovation, our ability to develop and maintain a competitive advantage, our growth strategy and our results of operations could be adversely affected.
If our transfer pricing is challenged by the authorities, they could assess additional tax, interest and penalties, thereby impacting our profitability and cash flows. Our financial condition could be negatively affected if governments in the countries we operate in introduces new unfavorable tax legislation. We are subject to taxes in the countries we operate in.
If our transfer pricing is challenged by the authorities, they could assess additional tax, interest and penalties, thereby impacting our profitability and cash flows. Our financial condition could be negatively affected if governments in the countries we operate in introduce new unfavorable tax legislation, including legal restrictions for repatriation of our earnings.
We have also recently made changes to our operating model driven by delivery of a significant portion of our services from a hybrid and remote working models leading to potential 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 operation centers.
To the extent that we are not able to control or share wage increases with our clients, wage increases may reduce our margins and cash flows.
To the extent that we are not able to control such costs by our efforts to add capacity in lower wage costs countries or share wage increases with our clients, wage increases may reduce our margins and cash flows.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also have multiple operations centers and regional offices in the United States. We continue to optimize our existing network of operations centers to service our client, drive efficiencies and adapting the hybrid and remote working models.
Biggest changeSubstantially all of our owned and leased property is used to service all of our reporting segments. We believe that our current facilities are adequate to support our existing operations, however we continue to optimize our existing network of operations centers to service our client, drive efficiencies and adapting the hybrid working model.
We have multiple operations centers spread across India, the Philippines, the United Kingdom, the Republic of Ireland, Colombia, Bulgaria, the Czech Republic, Romania and South Africa with an aggregate area of approximately 1,857,000 square feet and a current installed capacity of approximately 28,300 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 1,579,000 square feet and a current installed capacity of approximately 24,800 workstations, including workstations for training and our employees in enabling functions.
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. Substantially all of our owned and leased property is used to service all of our reporting segments.
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 believe that our current facilities are adequate to support our existing operations. We also believe that we will be able to obtain suitable additional facilities on commercially reasonable terms on an “as needed basis.”
We 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

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 25 - Commitments and Contingencies to our consolidated financial statements contained herein for details regarding our tax proceedings. ITEM 4. Mine Safety Disclosures Not applicable. 26 Table of Contents PART II.
Biggest changeSee Note 25 - Commitments and Contingencies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” for details regarding our tax proceedings. ITEM 4. Mine Safety Disclosures Not applicable. 26 Table of Contents PART II.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
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. Selected Financial Data 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 50 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] 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+1 added−2 removed3 unchanged
Biggest changeThe following table provides information regarding the purchase of equity securities under the 2022 Repurchase Program during the three months ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid per share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs October 1, 2022 through October 31, 2022 (1) 4,863 $ 164.16 — $ 231,479,093 November 1, 2022 through November 30, 2022 — — — $ 231,479,093 December 1, 2022 through December 31, 2022 (1) 734 179.69 — $ 231,479,093 Total 5,597 $ 166.20 — — (1 ) All of the 5,597 shares of our common stock acquired at the price of $166.20 were in connection with the satisfaction of tax withholding obligations on vested restricted stock.
Biggest changeDuring 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.
The returns assume that $100 was invested on December 31, 2017 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, 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.
Issuer Purchases of Equity Securities On October 5, 2021, our board of directors authorized a $300 million common stock repurchase program beginning January 1, 2022 (the “2022 Repurchase Program”).
Issuer Purchases of Equity Securities On October 5, 2021, our board of directors authorized a $300 million (excluding excise tax) common stock repurchase program beginning January 1, 2022 (the “2022 Repurchase Program”).
Repurchases may be discontinued at any time by management. Repurchased shares under the 2022 Repurchase Program 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 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.
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, 2023, there were 11 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 27, 2024, there were 9 holders of record of our outstanding common stock.
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. We do not anticipate paying any cash dividends in the foreseeable future. Unregistered Sales of Equity Securities None.
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. Dividend Policy We do not anticipate paying any cash dividends in the foreseeable future.
See Note 23 - Stock Based Compensation to our consolidated financial statements 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, 2017.
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.
During the year ended December 31, 2022, we purchased 32,816 shares from employees in connection with withholding tax payments related to the vesting of restricted stock units for an aggregate purchase consideration of $4.1 million.
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.
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 1,376,635 $ 27.62 1,324,755 Equity compensation plans not approved by security holders — — — Total 1,376,635 $ 27.62 1,324,755 * This includes outstanding options and unvested Restricted Stock Units, which include Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units.
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.
Price paid per share for the restricted stock was the closing price of common stock on the trading day prior to the vesting date of the restricted stock units.
The 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.
The weighted average purchase price of $125.58 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 shares of restricted stock. 27 Table of Contents Equity Compensation Plan Information The following table provides information as of December 31, 2022 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.
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.
Removed
During the year ended December 31, 2022, we purchased 503,858 shares of our common stock under the 2022 Repurchase Program, for an aggregate purchase consideration of $68.5 million including commissions, representing an average purchase price per share of $135.99.
Added
Any future determination to pay dividends will be at the discretion of our board of directors and will be dependent on then-existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions under our credit agreement, business prospects and other factors that our board of directors considers relevant. Unregistered Sales of Equity Securities None.
Removed
For a description of our equity compensation plans, see Note 23 - Stock Based Compensation to our consolidated financial statements.

Item 7. Management's Discussion & Analysis

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

117 edited+29 added−87 removed65 unchanged
Biggest changeThe following table summarizes our results of operations: Year ended December 31, 2022 2021 2020 (dollars in millions) Revenues, net $ 1,412.0 $ 1,122.3 $ 958.4 Cost of revenues (1) 896.6 690.9 623.9 Gross profit (1) 515.4 431.4 334.5 Operating expenses: General and administrative expenses 169.0 142.1 113.9 Selling and marketing expenses 98.0 84.3 60.1 Depreciation and amortization expense 56.3 49.1 50.5 Total operating expenses 323.3 275.5 224.5 Income from operations 192.1 155.9 110.0 Foreign exchange gain, net 6.2 4.3 4.4 Interest expense (8.2) (7.6) (11.2) Other income, net — 6.8 12.1 Loss on settlement of convertible notes — (12.8) — Income before income tax expense and earnings from equity affiliates 190.1 146.6 115.3 Income tax expense 47.5 31.9 25.6 Income before earnings from equity affiliates 142.6 114.7 89.7 Gain/(loss) from equity-method investment 0.4 — (0.2) Net income attributable to ExlService Holdings, Inc. stockholders $ 143.0 $ 114.7 $ 89.5 (1) Exclusive of depreciation and amortization expense.
Biggest changeThe 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.
Other income/(loss), net also consists of changes in fair value of contingent consideration related to business combinations, interest on refunds received from income tax authorities in India on completion of tax assessments, profit or loss on disposal of long-lived assets and components of net periodic benefit cost such as interest cost, expected return on plan assets and amortization of actuarial gain or loss.
Other income/(expense), net also consists of changes in fair value of contingent consideration related to business combinations, interest on refunds received from income tax authorities in India on completion of tax assessments, profit or loss on disposal of long-lived assets and components of net periodic benefit cost such as interest cost, expected return on plan assets and amortization of actuarial gain or loss.
In addition, our projects-based analytics services are documented in contracts with terms generally not exceeding one year and may not produce ongoing or recurring business for us once the project is completed. These contracts also usually contain provisions permitting termination of the contract after a short notice period.
In addition, our project-based analytics services are documented in contracts with terms generally not exceeding one year and may not produce ongoing or recurring business for us once the project is completed. These contracts also usually contain provisions permitting termination of the contract after a short notice period.
Determining the fair value of stock-based awards at the grant date requires significant judgment, including estimating the expected term over which the stock awards will be outstanding before they are exercised and the expected volatility of our stock. We also grant performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees.
Determining the fair value of stock-based awards at the grant date requires significant judgment, including estimating the expected term over which the stock awards will be outstanding before they are exercised and the expected volatility of our stock. We grant performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees.
Selling, General and Administrative Expenses ("SG&A") Our General and Administrative expenses (“G&A”) comprise of expenses relating to salaries and benefits (including stock-based compensation), retirement benefits as well as costs related to recruitment, training and retention of senior management and other support personnel in enabling functions, telecommunications, utilities, travel and other miscellaneous administrative costs.
Operating expenses Selling, General and Administrative Expenses ("SG&A") Our General and Administrative expenses (“G&A”) comprise of expenses relating to salaries and benefits (including stock-based compensation), retirement benefits as well as costs related to recruitment, training and retention of senior management and other support personnel in enabling functions, telecommunications, utilities, travel and other miscellaneous administrative costs.
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, Latin America, South Africa, Europe and Asia (primarily India and the Philippines), is a key asset.
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.
We determine the incremental borrowing rate by adjusting the benchmark reference rates with appropriate financing spreads applicable to the respective geographies where we entered into leases and lease specific adjustments for the effects of collateral. Lease terms includes our assessment for the effects of options to extend or terminate the lease.
We determine the incremental borrowing rate by adjusting the benchmark reference rates with appropriate financing spreads applicable to the respective geographies where we entered into leases and lease specific adjustments for the effects of collateral, if applicable. Lease terms includes our assessment for the effects of options to extend or terminate the lease.
Based on guidance on “variable consideration” in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), we use our historical experience and projections to determine the expected recoveries from our clients and recognize revenue based upon such expected recoveries.
Based on guidance on “variable consideration” in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), we use our historical experience and projections to determine the expected recoveries from our customers and recognize revenue based upon such expected recoveries.
Analytics: Our analytics services aim to drive better business outcomes for our clients by unlocking deep insights from data and creating data-led solutions across all parts of our clients’ business. We provide care optimization and reimbursement optimization services, for our clients through our healthcare analytics solutions and services.
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 parts of our clients’ business. We provide care optimization and reimbursement optimization services for our clients through our healthcare analytics solutions and services.
Among other things, the 2022 Credit Agreement (a) provides for the issuance of new revolving credit commitments such that the aggregate amount of revolving 48 Table of Contents credit commitments available is equal to $400.0 million; (b) extends the maturity date of the revolving credit facility from November 21, 2022 to April 18, 2027; and (c) replaces London Inter-Bank Offered Rate (“LIBOR”) with Secured Overnight Financing Rate (“SOFR”) as the reference rate for the U.S. dollar borrowings.
Among other things, the 2022 Credit Agreement (a) provides for the issuance of new revolving credit commitments such that the aggregate amount of revolving credit commitments available is equal to $400.0 million; (b) extends the maturity date of the revolving credit facility from 45 Table of Contents November 21, 2022 to April 18, 2027; and (c) replaces London Inter-Bank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) as the reference rate for the U.S. dollar borrowings.
Other Income/(Loss), net Other income/(loss), 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, mark to market, dividend income and interest income on our short-term and long-term investments, cash equivalents, as applicable.
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 clients, in an amount that reflects the consideration which we expect to be entitled to in exchange for the services provided.
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.
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 clients and net of any subsequent retraction claims.
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.
The property and equipment that are evaluated as being used differently than as originally intended are assessed for revision of their useful life, thereby revising their future depreciation to reflect the actual use of such property and equipment over the remaining shortened life. We expect amortization of intangible assets to increase further as we pursue strategic relationships and acquisitions.
Property and equipment, if evaluated as being used differently than as originally intended are assessed for revision of their useful life, thereby revising their future depreciation to reflect the actual use of such property and equipment over the remaining shortened life. We expect amortization of intangible assets to increase further as we pursue strategic relationships and acquisitions.
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 purchases 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, 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.
Revenues for our fixed-price contracts are recognized using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby reasonably reflects transfer of control to the client.
Revenues for our fixed-price contracts are recognized using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby reasonably reflects transfer of control to the customer.
In such contracts, our consideration is contingent upon and collectable only when the actual collections are made by our clients. Based on guidance on “variable consideration” in ASC Topic 606, we use our historical experience and projections to determine the expected recoveries from our clients and recognize revenue and receivables based upon such expected recoveries.
In such contracts, our consideration is contingent upon and collectable only when the actual collections are made by our customers. Based on guidance on “variable consideration” in ASC Topic 606, we use our historical experience and projections to determine the expected recoveries from our customers and recognize revenue and receivables based upon such expected recoveries.
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, clients’ financial condition and the amount of accounts receivable in dispute to estimate the collectability of these accounts receivable.
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.
The contracts with our clients may be modified to add, remove or change existing performance obligations, which requires judgment to evaluate and determine whether such performance obligations are to be accounted for on a prospective basis as a separate contract or as a termination of an existing contract and creation of a new contract.
The contracts with our customers may be modified to add, remove or change existing performance obligations, which requires judgment to evaluate and determine whether such performance obligations are to be accounted for on a prospective basis as a separate contract or as a termination of an existing contract and creation of a new contract.
We periodically evaluate opportunities to distribute cash among our group entities to fund our operations in the United States and other geographies, and as and when we decide to distribute, we may have to accrue additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions.
We periodically evaluate opportunities to distribute cash among our group entities to fund our operations in the United States and other countries, and as and when we decide to distribute, we may have to accrue additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions.
We actively cross-sell and, where appropriate, integrate our analytics services with other digital operations and solutions as part of a comprehensive offering for our clients. Our projects-based analytics services are cyclical and can be significantly affected by variations in business cycles.
We actively cross-sell and, where appropriate, integrate our analytics services with other digital operations and solutions as part of a comprehensive offering for our clients. Our project-based analytics services are cyclical and can be significantly affected by variations in business cycles.
The significant estimates and assumptions that affect the financial statements include, but are not limited to, estimates of the fair value of the derivative financial instruments, stock-based awards, identifiable intangible assets and contingent consideration, assumptions related to credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, and variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, assets and obligations related to employee benefit plans, determination of incremental borrowing for measuring lease liabilities, deferred tax assets and liabilities, deferred tax valuation allowances, income-tax contingencies, purchase price allocation, revenue projections and discount rate applied within the discounted cash flow model.
The significant estimates and assumptions that affect the consolidated financial statements include, but are not limited to, estimates of the fair value of stock-based awards, identifiable intangible assets and contingent consideration, assumptions related to credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, and variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, assets and obligations related to employee benefit plans, determination of incremental borrowing for measuring lease liabilities, deferred tax assets and liabilities, deferred tax valuation allowances, income-tax contingencies, purchase price allocation, revenue projections and discount rate applied within the discounted cash flow model for business acquisitions.
ROU assets represent our right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease arrangement. Lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
Right-of-use (“ROU”) assets represent our right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease arrangement. Lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
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, ML and cloud. 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 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.
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), 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 MI, 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, 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.
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. 37 Table of Contents 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 We account for all business combinations using the acquisition method of accounting as prescribed by ASC Topic 805, Business Combinations .
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 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 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.
We enhance, modernize and enrich structured and unstructured data and use a spectrum of advanced analytical tools and techniques, including our in-house 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.
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.
We consider the extension option as part of our lease term for those lease arrangements where we are reasonably certain at commencement of the lease that we will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term.
We consider the extension option as part of our lease term for those lease arrangements where we are reasonably certain at commencement of the lease that we will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term reflecting single operating lease cost.
We anticipate that we will continue to rely upon cash from operating activities to finance most of our above mentioned requirements, while if we have significant growth through acquisitions, we may need to obtain additional financing. In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future.
We anticipate that we will continue to rely upon cash from operating activities to finance most of our above mentioned requirements, although if we have significant growth through acquisitions, we may need to obtain additional financing. In the ordinary course of business, we enter into contracts and commitments that obligate us to make payments in the future.
As our business continues to expand we expect additional investments in digital technologies and equipment, including laptops, desktop computers, servers and other infrastructure, and increased reliance on hybrid and remote working models, we expect increases in depreciation on assets-related to such investments.
As our business continues to expand we expect additional investments in digital technologies and equipment, including laptops, desktop computers, servers and other infrastructure, and increased reliance on hybrid working model, we expect increases in depreciation on assets-related to such investments.
Significant judgments Arrangements with Multiple Performance Obligations We sometimes enter into contracts with our clients which include promises to transfer multiple products and services to the client. Determining whether products and services are considered as distinct performance obligations that should be accounted for separately rather than as one performance obligation may require significant judgment.
Significant judgments Arrangements with Multiple Performance Obligations We sometimes enter into contracts with our customers which include promises to transfer multiple products and services to the customer. Determining whether products and services are considered as distinct performance obligations that should be accounted for separately rather than as one performance obligation may require significant judgment.
The use of this method requires significant judgment to estimate the cost required to complete the contracted scope of work, including 36 Table of Contents assumptions and estimates relative to the length of time to complete the project and the nature and complexity of the work to be performed and resources engaged.
The use of this method requires significant judgment to estimate the cost required to complete the contracted scope of work, including assumptions and estimates relative to the length of time to complete the project and the nature and complexity of the work to be performed and resources engaged.
Expenses 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 compensation expense; and • 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; rent expenses; and 33 Table of Contents • Outsourced/subcontractors and professional services costs; and • 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; • 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.
Generally, we grant PRSUs cliff vest based on an aggregated revenue target (“PUs”) for a three-year period, while grants based on market conditions (“MUs”) are contingent on meeting or exceeding the total shareholder return relative to a group of peer companies specified under the 2018 Plan, and are measured over a three-year performance period.
Generally, we grant PRSUs cliff vest based on an aggregated revenue target (“PUs”) for a three-year period, while grants based on market conditions (“MUs”) are contingent on meeting or exceeding the total shareholder return relative to a group of peer companies specified under our 2018 Omnibus Incentive Plan (the “2018 Plan”), and are measured over a three-year performance period.
As part of our ongoing evaluation of our business needs, we continually optimize our 34 Table of Contents operations centers and expect depreciation to decrease on assets related to operations centers, such as office furniture and equipment and leasehold improvements.
As part of our ongoing evaluation of our business needs, we continually optimize our operations centers and expect depreciation to decrease on assets related to operations centers, such as office furniture and equipment and leasehold improvements.
We also expect that we will continue to incur additional costs to monitor and improve operational efficiency of our hybrid and remote working models, 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 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 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.
These obligations include borrowings, including interest obligations, purchase commitments, operating and finance lease commitments, employee benefit payments under gratuity plans and uncertain tax positions.
These obligations include borrowings, including interest obligations, purchase commitments, operating and finance lease commitments, employee benefit payments under gratuity plans, payments for contingent consideration and uncertain tax positions.
These 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 technology into our offerings; • 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 the 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; • 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; • 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; • operational and information security failures arising as a result of remote work solutions adopted due to COVID-19; • legal liability arising out of customer and third party contracts; • adverse outcome of our disputes with the tax authorities, in the geographies where we operate; • our financial condition could be negatively affected if governments in the countries we operate in introduces new unfavorable tax legislation; • changes in tax laws or decisions regarding repatriation of funds held abroad; 30 Table of Contents • exposure to currency exchange rate fluctuations in the various currencies in which we do business including the potential effects of Russian-Ukraine conflict, rising inflation, high interest rates and economic recessionary trends on currency exchange rates; • restrictions on immigration; • ability to service debt or obtain additional financing on favorable terms.
These 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.
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. 42 Table of Contents Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 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. 40 Table of Contents Fiscal 2023 Compared to Fiscal 2022 Revenues.
Employee Benefits We record contributions to defined contribution plans in our consolidated statements of income in the period in which services are rendered by the covered employees. Current service costs for defined benefit plans are recognized in the period to which they relate.
We have established adequate reserves to cover all uncertain tax positions. Employee Benefits We record contributions to defined contribution plans in our consolidated statements of income in the period in which services are rendered by the covered employees. Current service costs for defined benefit plans are recognized in the period to which they relate.
A summary of our significant accounting policies is included in Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements. 35 Table of Contents We consider the policies discussed below to be critical to an understanding of our consolidated financial statements, as their application places the most significant demands on management’s judgment regarding matters that are inherently uncertain at the time an estimate is made.
A summary of our significant accounting policies is included in Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.” We consider the policies discussed below to be critical to an understanding of our consolidated financial statements, as their application places the most significant demands on management’s judgment regarding matters that are inherently uncertain at the time an estimate is made.
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. 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 incurred $44.8 million of capital expenditures during the year ended December 31, 2022. We expect to incur total capital expenditures of between $47 million to $52 million in 2023, 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 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.
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 ZAR during the year ended December 31, 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 2023, compared to fiscal 2022.
Revenue growth in Insurance of $66.7 million was primarily driven by expansion of business from our new and existing clients of $71.7 million.
Revenue growth in Insurance of $81.2 million was primarily driven by expansion of business from our new and existing clients of $83.9 million.
These policies include revenue recognition, allowance for expected credit losses, business combinations, goodwill, other intangible assets and long-lived assets, stock-based compensation, employee benefits, derivative financial instruments and hedging, leases and income taxes.
These policies include revenue recognition, allowance for expected credit losses, business combinations, goodwill, stock-based compensation, employee benefits, leases and income taxes.
We have a long selling cycle for our services and the budget and approval processes of prospective clients make it difficult to predict the timing of entering into definitive agreements with new clients.
However, our clients can typically terminate these contracts with or without cause and with short notice periods. We have a long selling cycle for our services and the budget and approval processes of prospective clients make it difficult to predict the timing of entering into definitive agreements with new clients.
The revolving credit facility carried an effective interest rate as shown below:- Year ended December 31, 2022 2021 Effective interest rate 2.9 % 1.7 % As of December 31, 2022 and 2021, we were in compliance with all financial and non-financial covenants listed under the applicable revolving credit facility.
The revolving credit facility carried an effective interest rate as shown below:- Fiscal 2023 2022 Effective interest rate 6.3 % 2.9 % As of December 31, 2023 and 2022, we were in compliance with all financial and non-financial covenants under the 2022 Credit Agreement.
If the carrying amount of the reporting unit exceeds its fair value, an impairment loss shall be recognized, in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
If, based on the quantitative impairment analysis, the carrying value of the goodwill of a reporting unit exceeds the fair value of such goodwill, an impairment loss is recognized in an amount equal to the excess, limited to the total amount of goodwill allocated to that reporting unit.
We serve clients mainly in the United States and the United Kingdom, with these two regions generating 85.9% and 9.5%, respectively, of our total revenues for the year ended December 31, 2022 and 85.9% and 9.4%, respectively, of our revenues for the year ended December 31, 2021.
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.
In connection with any tax assessment orders that have been issued, or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with the relevant authorities with respect to such assessment orders (see Note 25 - Commitments and Contingencies to our consolidated financial statements herein for further details).
In connection with any tax assessment orders that have been issued, or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with the relevant authorities with respect to such assessment orders.
Inception of interest rate swaps to hedge interest rate risk; • 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 environmental, social and governance-related goals and targets; In particular, you should consider the numerous risks outlined in Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K.
Inception of interest rate swaps to hedge interest rate risk; • 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 goals and targets.
Year ended December 31, Percentage change 2022 2021 Change (dollars in millions) Fair value changes of contingent consideration $ (8.3) $ — $ (8.3) (100.0) % Gain on sale and mark-to-market on investments 4.9 4.9 — — % Interest and dividend income 5.2 2.7 2.5 91.8 % Others, net (1.8) (0.8) (1.0) 124.6 % Other income/(loss), net $ — $ 6.8 $ (6.8) (100.0) % Other income/(loss), net decreased by $6.8 million, from a net income of $6.8 million for the year ended December 31, 2021 to $nil for the year ended December 31, 2022.
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.
Gross margin in Insurance decreased by 140 bps during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to lower margins associated with higher costs during ramp-ups in certain new clients during the year ended December 31, 2022, compared to the year ended December 31, 2021.
Gross margin in Insurance decreased by 40 bps during fiscal 2023, compared to fiscal 2022, primarily due to lower margins associated with higher costs during ramp-ups in certain existing and new clients during fiscal 2023, compared to fiscal 2022.
The increase in income tax expense was primarily as a result of higher profit during the year ended December 31, 2022, compared to the year ended December 31, 2021, an increase in state taxes and an increase in non-deductible expenses, partially offset by higher excess tax benefits related to stock-based compensation. Net Income .
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 .
We determine if a valuation allowance is required on the basis of an assessment of whether it is more likely than not that a deferred tax asset will be realized.
We determine if a valuation allowance is required on the basis of an assessment of whether it is more likely than not that a deferred tax asset will be realized. We currently benefit from corporate tax holidays in our qualified Philippines Economic Zone Authority operations centers in the Philippines.
Variable Consideration Variability in the transaction price arises primarily due to service level agreements and volume discounts. We consider our experience 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 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.
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. Our sales and client management teams operate primarily from the United States, Europe and Australia.
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 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).
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.
New risks and uncertainties may come up from time to time, and it is impossible for us to predict those events or how they may affect us. 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.
The forward-looking statements made by us in this Annual Report on Form 10-K, or elsewhere, speak only as of the date on which they were made. New risks and uncertainties may occur from time to time, and it is impossible for us to predict those events or how they may affect us.
Operating lease ROU assets are recognized at commencement date in an amount equal to lease liability, adjusted for any lease prepayments, initial direct costs and lease incentives.
Operating lease ROU assets are recognized at commencement date in an amount equal to lease liability, adjusted for any lease prepayments, initial direct costs and lease incentives. For leases in which the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate at commencement date.
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. Our Business We provide data analytics and digital operations and solutions to our clients.
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.
Operating Activities: Net cash provided by operating activities was $166.1 million for the year ended December 31, 2022, compared to $184.4 million for the year ended December 31, 2021, reflecting higher working capital needs, offset by higher cash earnings.
Operating Activities: Net cash provided by operating activities was $211.2 million for fiscal 2023, compared to $166.1 million for fiscal 2022, reflecting higher cash earnings, partially offset by higher working capital needs.
This was partially offset by a loss of $5.0 million mainly attributable to the depreciation of the U.K. pound sterling, the Australian dollar and the Indian rupee against the U.S. dollar during the year ended December 31, 2022, compared to the year ended December 31, 2021.
This was partially offset by a loss of $0.3 million, net mainly attributable to the depreciation of the Indian rupee against the U.S. dollar during fiscal 2023, compared to fiscal 2022.
The increase in cost of revenues in Insurance of $48.2 million for the year ended December 31, 2022 was primarily due to increases in employee-related costs of $47.3 million on account of higher headcount and wage inflation, higher technology costs of $7.3 million on account of increased leverage of the hybrid and remote working models and higher travel costs of $1.6 million, partially offset by foreign exchange gain, net of hedging of $7.3 million and lower other operating costs of $0.7 million.
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 decrease of $65.2 million was primarily due to lower purchases of treasury stock by $45.7 million under our share repurchase program and net repayment of $10.0 million under our revolving credit facility during the year ended December 31, 2022 as compared to net repayments of $29.0 million during the year ended December 31, 2021. 47 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 and purchase telecommunications equipment and computer hardware and software in connection with managing client operations.
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.
See Note 2 - Summary of Significant Accounting Policies - Business Combinations, Goodwill and Other Intangible Assets to our consolidated financial statements for more information. 38 Table of Contents Stock-based Compensation Under the fair value recognition provisions of ASC Topic 718, Compensation-Stock Compensation , cost is measured at the grant date based on the fair value of the award and is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
Stock-based Compensation Under the fair value recognition provisions of ASC Topic 718, Compensation-Stock Compensation , cost is measured at the grant date based on the fair value of the award and is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
As a percentage of revenues, net income decreased from 10.2% during the year ended December 31, 2021 to 10.1% during the year ended December 31, 2022. 46 Table of Contents Liquidity and Capital Resources Year ended December 31, 2022 2021 2020 (dollars in millions) Opening cash, cash equivalents and restricted cash $ 143.8 $ 225.5 $ 127.0 Net cash provided by operating activities 166.1 184.4 203.0 Net cash used for investing activities (96.5) (114.3) (18.3) Net cash used for financing activities (81.7) (146.9) (89.6) Effect of exchange rate changes (6.1) (4.9) 3.4 Closing cash, cash equivalents and restricted cash $ 125.6 $ 143.8 $ 225.5 As of December 31, 2022 and 2021, we had $297.7 million and $314.8 million, respectively, in cash, cash equivalents and short-term investments, of which $260.0 million and $278.3 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.
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.
This was partially offset by a loss of $6.6 million mainly attributable to the depreciation of the U.K. pound sterling and the Indian rupee against the U.S. dollar during the year ended December 31, 2022, compared to the year ended December 31, 2021.
This was partially offset by a loss of $2.7 million, mainly attributable to the depreciation of the Australian dollar, the Indian rupee and the South African rand against the U.S. dollar during fiscal 2023, compared to fiscal 2022.
The effective tax rate increased from 21.7% during the year ended December 31, 2021 to 25.0% during the year ended December 31, 2022. We recorded income tax expense of $47.5 million and $31.9 million for the years ended December 31, 2022 and 2021, respectively.
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 following table summarizes our revenues by reportable segments: Year ended December 31, Percentage change 2022 2021 Change (dollars in millions) Insurance $ 448.7 $ 382.0 $ 66.7 17.5 % Healthcare 97.4 112.4 (15.0) (13.4) % Emerging Business 218.6 167.2 51.4 30.7 % Analytics 647.3 460.7 186.6 40.5 % Total revenues, net $ 1,412.0 $ 1,122.3 $ 289.7 25.8 % Revenues for the year ended December 31, 2022 were $1,412.0 million, up $289.7 million, or 25.8%, compared to the year ended December 31, 2021, driven primarily by revenue growth from our new and existing clients in the Analytics, Emerging Business and Insurance reportable segments.
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 increase in cost of revenues in Healthcare of $1.2 million for the year ended December 31, 2022 was primarily due to increases in employee-related costs of $3.5 million on account of higher headcount and wage inflation, and higher technology costs of $0.6 million on account of increased leverage of the hybrid and remote working models, partially offset by lower facilities cost of $1.1 million and foreign exchange gain, net of hedging of $1.8 million.
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.
See Note 2 - Summary of Significant Accounting Policies and Note 17 - Derivatives and Hedge Accounting to our consolidated financial statements 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 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 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.
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 cash requirements over the next 12 months.
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.
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.
In assessing the likelihood of realization, we consider all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of tax planning strategies.
Deferred tax assets are recognized in full, subject to a valuation allowance that reduces the amount recognized to that which is more likely than not to be realized. In assessing the likelihood of realization, we consider all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of tax planning strategies.
Results of Operations 41 Table of Contents For a discussion of our results of operations for the year ended December 31, 2020, including a year-to-year comparison between 2021 and 2020, 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 the year ended December 31, 2021.
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.
However, a significant portion of our total revenues are earned in the U.K. pound sterling (8.6% for each of the years ended December 31, 2022 and 2021), while a significant portion of our expenses are incurred and paid in the Indian rupee, the Philippine peso and the U.K. pound sterling, representing 29.1%, 8.2% and 3.0%, respectively, of our total expenses in the year ended December 31, 2022, compared to 29.4%, 9.5% and 3.4%, respectively, of our total expenses in the year ended December 31, 2021.
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.
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. The 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.
The 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

22 edited+3 added−2 removed15 unchanged
Biggest changeOn April 18, 2022, we entered into an Amendment and Restatement Agreement with Citibank, N.A. as Administrative Agent and certain lenders (the “2022 Credit Agreement”), that provides for a $400.0 million revolving credit facility and a letter of credit sub-facility. We have an option to increase the commitments under the 2022 Credit Agreement by up to an additional $200.0 million.
Biggest changeWe 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.
Our exposure to market risk is a function of our expenses and revenue generating activities in foreign currencies. The objective of market risk management is to avoid excessive exposure of our earnings and equity to such market driven losses. We manage market risk through our treasury operations using financial instruments.
Our exposure to market risk is a function of our expenses and revenue generating activities in foreign currencies. The objective of market risk management is to avoid excessive exposure to our earnings and equity of such market driven losses. We manage market risk through our treasury operations using financial instruments.
The fair values of these financial instruments as of December 31, 2022 and 2021 were insignificant and are included in the “Foreign exchange gain, net” in our consolidated statements of income. As of December 31, 2022 and 2021, 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, 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.
These amounts were invested principally in a short-term investment portfolio primarily comprised of highly-rated debt mutual funds, money market funds and time deposits. The cash and cash equivalents are held for potential acquisitions of complementary businesses or assets, capital expenditures, working capital requirements and general corporate purposes. We do not enter into these investments for trading or speculative purposes.
These amounts were invested principally in a short-term investment portfolio primarily comprised of highly-rated debt mutual funds, money market funds and time deposits. We do not make such investments for trading or speculative purposes. The cash and cash equivalents are held for potential acquisitions of complementary businesses or assets, capital expenditures, working capital requirements and general corporate purposes.
The mark-to-market gain/(loss), net upon fair valuation of outstanding cash flow hedges as of December 31, 2022 and 2021 was $(14.2) million and $11.9 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, 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.
As of December 31, 2022 and 2021, we had outstanding interest rate swaps having a notional amount of $75.0 million and $nil, respectively. We had cash, cash equivalents and short-term investments totaling $297.7 million and $314.8 million as of December 31, 2022 and 2021, 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.
Our senior management and our board of directors approve our treasury operations’ objectives and policies. The responsibilities of our treasury operations include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies and ensuring compliance with market risk limits and policies. Components of Market Risk Foreign Currency Risk. We are exposed to foreign currency exchange rate risk.
Our senior management and our board of directors approve our treasury operations’ objectives and policies. The responsibilities of our treasury operations include management of cash resources, including borrowing strategies, implementing hedging strategies for foreign currency exposures, and ensuring compliance with market risk limits and policies. Components of Market Risk Foreign Currency Risk.
Based upon our level of operations during the year ended December 31, 2022 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 $6.9 million, $0.5 million and $6.5 million, respectively and increased/decreased our expenses incurred and paid by approximately $35.5 million, $10.0 million and $3.6 million, respectively in the year ended December 31, 2022.
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.
A 50 basis point increase or decrease in short term rates would have impacted our interest and dividend income for the year ended December 31, 2022 by approximately $1.0 million. Credit Risk. As of December 31, 2022 and 2021, we have accounts receivable, net of $259.2 million and $194.2 million, respectively.
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.
However, a significant portion of our total expenses are incurred and paid in the Indian rupee, the Philippine peso and the U.K. pound sterling, representing 29.1%, 8.2% and 3.0%, respectively, of our total expenses in the year ended December 31, 2022. We also incur expenses in the U.S. dollar and currencies of other countries in which we have operations.
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 50 basis point increase or decrease in interest rates would have impacted our interest expense for the year ended December 31, 2022 by approximately $1.4 million.
A 50 basis point increase or decrease in interest rates would have impacted our interest expense for fiscal 2023 by approximately $1.1 million.
The 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.
The 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.
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. 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 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 average exchange rate of the U.S dollar against the Indian rupee increased from 73.88 during the year ended December 31, 2021 to 78.81 during the year ended December 31, 2022, representing a depreciation of 6.7% against the U.S dollar.
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 Philippine peso increased from 49.36 during the year ended December 31, 2021 to 54.47 during the year ended December 31, 2022, representing a depreciation of 10.4% against the U.S dollar.
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.
We also enter into foreign currency forward contracts 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 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.
Further, some of our client contracts include protection against foreign currency exchange rate fluctuations which minimizes the impact of volatility in the exchange rates on our operating results. Cash flow hedges with notional amounts of $841.6 million and $514.6 million were outstanding as of December 31, 2022 and 2021, respectively, with the maximum outstanding term of approximately 45 months.
Further, some of our client contracts include protection against foreign currency exchange rate fluctuations which minimizes the impact of volatility in the exchange rates on our operating results.
We believe that our credit policies reflect normal industry terms and business risk. 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.
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
The exchange rates among the Indian rupee, the Philippine peso, the U.K. pound sterling and the U.S. dollar have changed substantially in recent years and may fluctuate substantially in the future. Our foreign currency exchange rate risk primarily arises from our foreign currency revenues, expenses incurred by our foreign subsidiaries and foreign currency accounts receivable and payable.
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 average exchange rate of the U.K. pound sterling against the U.S. dollar decreased from 1.38 during the year ended December 31, 2021 to 1.23 during the year ended December 31, 2022, representing a depreciation of 10.5% against the U.S dollar.
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.
Our revenues are primarily denominated in the U.S. dollar representing 88.2% of our total revenues and the U.K. pound sterling representing 8.6% of our total revenues in the year ended December 31, 2022.
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.
Foreign currency forward contracts with notional amounts of USD 164.0 million, GBP 8.4 million, EUR 2.0 million and AUD 2.0 million were outstanding as of December 31, 2022 compared to USD 134.6 million, GBP 6.8 million, EUR 1.3 million and COP 2,541.9 million outstanding as of December 31, 2021.
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.
Removed
During the year ended December 31, 2022 and 2021, we recognized $(4.3) million and $10.0 million, respectively, as foreign exchange 50 Table of Contents (loss)/gain from the maturing cash flow hedges, which was largely offset by the foreign exchange translation gain/(loss) on the related expenses.
Added
Our foreign currency exchange rate risk primarily arises from our foreign currency revenues, expenses incurred by our subsidiaries, including foreign subsidiaries in foreign currencies and foreign currency accounts receivable and payable.
Removed
No single client owed more than 10% of our accounts receivable, net as on December 31, 2022 and 2021. 51 Table of Contents
Added
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.
Added
Foreign currency forward contracts with notional amounts of the U.

Other EXLS 10-K year-over-year comparisons