Derivatives and Hedge Accounting

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedge Accounting

Derivatives and Hedge Accounting

The Company uses derivative instruments and hedging transactions to mitigate exposure to foreign currency fluctuation risks associated with forecasted transactions denominated in certain foreign currencies and to minimize earnings and cash flow volatility associated with changes in foreign currency exchanges rates. The Company’s derivative financial instruments are largely forward foreign exchange contracts that are designated effective and that qualify as cash flow hedges under ASC No. 815. The Company had outstanding cash flow hedges totaling $218,545 as of December 31, 2016 and $230,894 as of December 31, 2015. The changes in the fair value of these cash flow hedges is recognized in the other comprehensive income on the Company's consolidated balance sheet.

The Company also enters into foreign currency forward contracts to economically hedge its intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies. These derivatives do not qualify as fair value hedges under ASC No. 815. Changes in the fair value of these derivatives are recognized in the consolidated statements of income and are included in foreign exchange gain/loss. The Company’s primary exchange rate exposure is with the Indian Rupee, the U.K. pound sterling and the Philippine peso. The Company also has exposure to Colombian pesos, Czech Koruna, Euro, South African ZAR and other local currencies in which it operates. Outstanding foreign currency forward contracts amounted to $71,318 and GBP 11,153 as of December 31, 2016 and amounted to $61,641 and GBP 13,256 as of December 31, 2015.

The Company estimates that approximately $1,781 of net derivative losses included in accumulated other comprehensive loss (“AOCI”) could be reclassified into earnings within the next twelve months based on exchange rates prevailing as of December 31, 2016. At December 31, 2016, the maximum outstanding term of the cash flow hedges was forty-five months.

The Company evaluates hedge effectiveness at the time a contract is entered into as well as on an ongoing basis. If during this time a contract is deemed ineffective, the change in the fair value is recorded in the consolidated statements of income and is included in foreign exchange gain/(loss). For hedging positions that are discontinued because the forecasted transaction is not expected to occur by the end of the originally specified period, any related amounts recorded in equity are reclassified to earnings. There were no such significant amounts of gains or losses that were reclassified from AOCI into earnings during the years ended December 31, 2016 and 2015.

The following tables set forth the fair value of the foreign currency exchange contracts and their location on the consolidated financial statements:

Derivatives designated as hedging instruments:

	December 31, 2016		December 31, 2015
Other current assets:
Foreign currency exchange contracts	$	3,211	$	2,664
Other assets:
Foreign currency exchange contracts	$	2,994	$	1,175
Accrued expenses and other current liabilities:
Foreign currency exchange contracts	$	1,430	$	1,226
Other non-current liabilities:
Foreign currency exchange contracts	$	828	$	1,132

Derivatives not designated as hedging instruments:

	December 31, 2016		December 31, 2015
Other current assets:
Foreign currency exchange contracts	$	113	$	345

The following tables set forth the effect of foreign currency exchange contracts on the consolidated statements of income for the years ended December 31, 2016 and 2015:

Derivatives in Cash Flow Hedging Relationships	Amount of Gain/(Loss) Recognized in AOCI on Derivative (Effective Portion)					Location of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain/ (Loss) Reclassified from AOCI into Income (Effective Portion)					Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2016		2015				2016		2015				2016		2015
Foreign exchange contracts	$	3,895	$	(1,111	)	Foreign exchange gain/(loss)	$	1,434	$	(1,117	)	Foreign exchange gain/(loss)	$	—	$	—

Derivatives not designated as Hedging Instruments		Amount of Gain/(Loss) Recognized in Income on Derivatives
	Location of Gain or (Loss) Recognized in Income on Derivatives	2016		2015
Foreign exchange contracts	Foreign exchange gain	$	4,790	$	862