10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2017

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROMTO

COMMISSION FILE NUMBER 001-33089

_________________________________________________________

EXLSERVICE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

_________________________________________________________

DELAWARE	82-0572194
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
280 PARK AVENUE, 38 TH FLOOR, NEW YORK, NEW YORK	10017
(Address of principal executive offices)	(Zip code)

(212) 277-7100

(Registrant’s telephone number, including area code)

________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	ý	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨
Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

As of July 25, 2017, there were 33,742,121 shares of the registrant’s common stock outstanding, par value $0.001 per share.

TABLE OF CONTENTS

		PAGE
ITEM
	Part I. Financial Information	3
1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of June 30, 2017 (Unaudited) and December 31, 2016	3
	Consolidated Statements of Income (Unaudited) for the Three months and Six months ended June 30, 2017 and 2016	4
	Consolidated Statements of Comprehensive Income (Unaudited) for the Three months and Six months ended June 30, 2017 and 2016	5
	Consolidated Statements of Cash Flows (Unaudited) for the Six months ended June 30, 2017 and 2016	6
	Notes to Consolidated Financial Statements (Unaudited)	7
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
3.	Quantitative and Qualitative Disclosures About Market Risk	42
4.	Controls and Procedures	42
	Part II. Other Information	42
1.	Legal Proceedings	42
1A.	Risk Factors	42
2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
3.	Defaults Upon Senior Securities	43
4.	Mine Safety Disclosures	43
5.	Other Information	43
6.	Exhibits	43
Signatures		44

2

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	As of
	June 30, 2017			December 31, 2016
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	89,414		$	213,155
Short-term investments	147,915			13,491
Restricted cash	1,898			3,846
Accounts receivable, net	123,798			113,067
Prepaid expenses	9,454			7,855
Advance income tax, net	7,337			6,242
Other current assets	18,784			21,168
Total current assets	398,600			378,824
Property, plant and equipment, net	63,978			49,029
Restricted cash	3,692			3,393
Deferred taxes, net	13,959			14,799
Intangible assets, net	46,973			53,770
Goodwill	188,154			186,770
Other assets	32,075			19,943
Total assets	$	747,431		$	706,528
Liabilities and Equity
Current liabilities:
Accounts payable	$	11,661		$	3,288
Short-term borrowings	10,000			10,000
Deferred revenue	14,189			16,615
Accrued employee cost	39,135			50,832
Accrued expenses and other current liabilities	40,845			43,264
Current portion of capital lease obligations	203			232
Total current liabilities	116,033			124,231
Long term borrowings	35,000			35,000
Capital lease obligations, less current portion	310			300
Non-current liabilities	16,166			14,819
Total liabilities	167,509			174,350
Commitments and contingencies (See Note 21)
Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued	—			—
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized, 36,252,428 shares issued and 33,691,731 shares outstanding as of June 30, 2017 and 35,699,819 shares issued and 33,628,109 shares outstanding as of December 31, 2016	36			36
Additional paid-in capital	303,486			284,646
Retained earnings	415,342			382,722
Accumulated other comprehensive loss	(55,451		)	(75,057		)
Total including shares held in treasury	663,413			592,347
Less: 2,560,697 shares as of June 30, 2017 and 2,071,710 shares as of December 31, 2016, held in treasury, at cost	(83,694		)	(60,362		)
Stockholders' equity	$	579,719		$	531,985
Non-controlling interest	203			193
Total equity	$	579,922		$	532,178
Total liabilities and equity	$	747,431		$	706,528

See accompanying notes to unaudited consolidated financial statements.

3

EXLSERVICE HOLDINGS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share amounts)

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Revenues, net	$	189,057		$	170,478		$	372,090		$	337,514
Cost of revenues (exclusive of depreciation and amortization)	125,449			112,026			245,568			220,405
Gross profit	63,608			58,452			126,522			117,109
Operating expenses:
General and administrative expenses	24,715			21,148			48,939			41,766
Selling and marketing expenses	13,127			12,798			26,489			26,252
Depreciation and amortization	9,637			8,270			19,063			16,403
Total operating expenses	47,479			42,216			94,491			84,421
Income from operations	16,129			16,236			32,031			32,688
Foreign exchange gain, net	2,898			1,363			4,466			1,832
Interest expense	(465		)	(343		)	(897		)	(728		)
Other income, net	2,639			6,127			5,949			9,306
Income before income tax expense	21,201			23,383			41,549			43,098
Income tax expense	823			7,008			4,383			12,903
Net income	$	20,378		$	16,375		$	37,166		$	30,195
Earnings per share:
Basic	$	0.60		$	0.49		$	1.10		$	0.90
Diluted	$	0.58		$	0.47		$	1.06		$	0.88
Weighted-average number of shares used in computing earnings per share:
Basic	33,819,320			33,621,444			33,833,153			33,500,736
Diluted	34,993,226			34,510,400			35,051,767			34,431,028

See accompanying notes to unaudited consolidated financial statements.

4

EXLSERVICE HOLDINGS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Net income	$	20,378		$	16,375		$	37,166		$	30,195
Other comprehensive income:
Unrealized (loss)/gain on effective cash flow hedges, net of taxes $1,085, ($376), $3,036 and $27, respectively	(315		)	(1,508		)	6,457			526
Foreign currency translation adjustment	2,200			(5,401		)	13,843			(4,368		)
Retirement benefits, net of taxes nil, $15, nil and $20, respectively	—			123			—			305
Reclassification adjustments
Realized gain on cash flow hedges, net of taxes ($156), ($156), ($347) and ($181), respectively(1)	(354		)	(193		)	(787		)	(225		)
Retirement benefits, net of taxes $40, $1, $47 and $2, respectively(2)	31			21			93			42
Total other comprehensive income/(loss)	$	1,562		$	(6,958	)	$	19,606		$	(3,720	)
Total comprehensive income	$	21,940		$	9,417		$	56,772		$	26,475

(1) These are reclassified to net income and are included in the foreign exchange gain in the unaudited consolidated statements of income. See Note 13 to the unaudited consolidated financial statements.

(2) These are reclassified to net income and are included in the computation of net periodic pension costs in the unaudited consolidated statements of income. See Note 16 to the unaudited consolidated financial statements.

See accompanying notes to unaudited consolidated financial statements.

5

EXLSERVICE HOLDINGS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Six months ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	37,166		$	30,195
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,063			16,403
Stock-based compensation expense	11,063			10,259
Unrealized gain on short term investments	(2,246		)	(2,984		)
Change in fair value of earn-out consideration	—			(4,060		)
Unrealized foreign exchange loss/(gain)	1,643			(42		)
Deferred income tax (benefit)/expense	(3,118		)	3,607
Others, net	27			(67		)
Change in operating assets and liabilities:
Restricted cash	1,828			314
Accounts receivable	(9,775		)	(19,621		)
Prepaid expenses and other current assets	7,161			(1,177		)
Accounts payable	5,295			(1,427		)
Deferred revenue	(2,367		)	4,996
Accrued employee costs	(11,612		)	(10,282		)
Accrued expenses and other liabilities	(6,074		)	4,413
Advance income tax, net	(1,117		)	(3,179		)
Other assets	(36		)	(433		)
Net cash provided by operating activities	46,901			26,915
Cash flows from investing activities:
Purchase of property, plant and equipment	(20,447		)	(14,872		)
Purchase of investments	(169,422		)	(132,275		)
Proceeds from redemption of investments	39,475			41,179
Net cash used for investing activities	(150,394		)	(105,968		)
Cash flows from financing activities:
Principal payments on capital lease obligations	(94		)	(240		)
Repayments of borrowings	—			(25,000		)
Acquisition of treasury stock	(23,332		)	(9,704		)
Proceeds from exercise of stock options	1,778			4,195
Net cash used for financing activities	(21,648		)	(30,749		)
Effect of exchange rate changes on cash and cash equivalents	1,400			(2,408		)
Net decrease in cash and cash equivalents	(123,741		)	(112,210		)
Cash and cash equivalents, beginning of period	213,155			205,323
Cash and cash equivalents, end of period	$	89,414		$	93,113

See accompanying notes to unaudited consolidated financial statements.

6

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2017

(In thousands, except share and per share amounts)

1. Organization

ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the state of Delaware. ExlService Holdings, together with its subsidiaries (collectively, the “Company”), operates in the Business Process Management (“BPM”) industry providing operations management services and analytics services that help businesses enhance growth and profitability. Using its proprietary platforms, methodologies and tools, the Company looks deeper to help its clients improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. The Company’s clients are located principally in the U.S. and the U.K.

2. Summary of Significant Accounting Policies

(a) Basis of Preparation and Principles of Consolidation

The unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The unaudited interim consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to the parent and it represents the minority partner’s interest in the operations of ExlService Colombia S.A.S. Non-controlling interest consists of the amount of such interest at the date of obtaining control over the subsidiary, and the non-controlling interest's share of changes in equity since that date. The non-controlling interest in the operations for all the periods presented were insignificant and are included under general and administrative expenses in the unaudited consolidated statements of income.

(b) Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the unaudited consolidated statements of income during the reporting period. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates and assumptions that affect the financial statements include, but are not limited to, allowance for doubtful receivables, recoverability of service tax receivables, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, assumptions used to calculate stock-based compensation expense, depreciation and amortization periods, purchase price allocation, recoverability of long-term assets including goodwill and intangibles, and estimates to complete fixed price contracts.

(c) Share-Based Compensation

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718). ASU No. 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the Statement of Cash Flows. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company adopted this ASU effective January 1, 2017. The following summarizes the effects of the adoption on the Company's unaudited consolidated financial statements:

7

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

Income taxes - Upon adoption of this standard, all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. The Company also recognizes excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. As a result, the Company recognized discrete adjustments to income tax expense for the three months ended June 30, 2017 in the amount of $1,624 and for the six months ended June 30, 2017 in the amount of $3,681 related to excess tax benefits. No adjustment is recorded for any windfall benefits previously recorded in APIC.

Forfeitures - Prior to adoption, share-based compensation expense was recognized on a straight line basis, net of estimated forfeitures, such that expense was recognized only for share-based awards that are expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption, the Company will no longer apply a forfeiture rate and instead will account for forfeitures as they occur. The Company has applied the modified retrospective adoption approach as of January 1, 2017 and has recognized a cumulative-effect adjustment to reduce additional paid-in-capital of $5,999 and retained earnings of $4,546 (net of deferred tax effect of $1,453).

Statements of Cash Flows - The Company historically accounted for excess tax benefits on the Statement of Cash Flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. The Company has elected to adopt this portion of the standard on a prospective basis beginning in 2017 and accordingly prior periods have not been adjusted.

Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. The Company excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of diluted earnings per share.

Upon adoption, no other aspects of ASU 2016-09 had an effect on the Company's unaudited consolidated financial statements or related footnote disclosures.

(d) Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts with Customers”. The new standard is effective for reporting periods beginning after December 15, 2017 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions of the Company. ASU 2014-09 is effective for the Company in the first quarter of fiscal 2018 using either one of two methods: (i) retrospectively to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09.

The Company is evaluating the impact of the new standard. The ultimate impact on revenue resulting from the application of the new standard will be subject to assessments that are dependent on many variables, including, but not limited to, the terms of the contractual arrangements and the mix of business. Upon adoption, we expect there to be a change in the manner that variable consideration in certain revenue arrangements is recognized from the current practice of recognizing such revenue as the services are performed and the variable consideration is earned to estimating the achievability of the variable conditions when we begin delivering services and recognizing that amount over the contractual period. The Company also expects a change in the manner that it recognizes certain incremental and fulfillment costs from expensing them as incurred to deferring and recognizing them over the contractual period.

The Company continues to evaluate the available transition methods and its contractual arrangements. The Company's considerations include, but are not limited to, the comparability of its financial statements and the comparability within its industry from application of the new standard to its contractual arrangements. The Company plans to select a transition method by the second half of 2017. The Company has established an implementation team to implement the standard update related to the recognition of revenue from contracts with customers and continues to evaluate the changes to accounting system and processes, and additional disclosure requirements that may be necessary.

8

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a twelve month term, these arrangements must now be recognized as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and the implementation approach to be used.

In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is to be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendment should be applied through a modified retrospective approach. Early adoption as of the fiscal years beginning after December 15, 2018 is permitted. The adoption of ASU 2016-13 is not expected to have a material effect on the Company's consolidated financial statements.

In August 2016, FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments apply to all entities that are required to present a Statement of Cash Flows under Topic 230. The amendments are an improvement to GAAP because they provide guidance for each of eight issues identified therein, thereby reducing the current and potential future diversity in practice. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company does not expect the adoption of this ASU to have a material effect on its financial position or results of operations.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows - Restricted cash. The amendments apply to all entities that have restricted cash or restricted cash equivalents and are required to present a Statement of Cash Flows under Topic 230. The amendments in this update require that a Statement of Cash Flows should explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted with an adjustment reflected as of the beginning of the fiscal year in which the amendment is adoption. The Company does not expect the adoption of this ASU to have a material effect on its financial position or results of operations.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates Step 2 from the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.

In March, 2017, FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. The ASU amends ASC 715, Compensation — Retirement Benefits, to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic post-retirement benefit cost in operating expenses (together with other employee compensation costs). The

9

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in non-operating expenses. The update also stipulates that only the service cost component of net benefit cost is eligible for capitalization. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In May 2017, FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

10

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

3. Segment and Geographical Information

The Company operates in the BPM industry and is a provider of operations management and analytics services. The Company has eight operating segments, which are strategic business units that align its products and services with how it manages its business, approaches its key markets and interacts with its clients. Six of those operating segments provide BPM or “operations management” services, which the Company organizes into industry-focused operating segments (Insurance, Healthcare, Travel, Transportation and Logistics, Banking and Financial Services, and Utilities) and one “capability” operating segment (Finance and Accounting) that provides services to clients in industry-focused segments as well as clients across other industries. In each of these six operating segments, the Company provides operations management services, which typically involve transfer to the Company of select business operations of a client, after which it administers and manages those operations for its client on an ongoing basis. The remaining two operating segments are Consulting, which provides industry-specific transformational services related to operations management services, and the Analytics operating segment, which provides services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business.

In prior periods the Company presented two reportable segments: Operations Management (which included its Insurance, Healthcare, Travel, Transportation and Logistics, Finance and Accounting, Banking and Financial services, Utilities and Consulting operating segments) and Analytics. Effective for the quarter and year ended December 31, 2016, the Company presents information for the following reportable segments:

• Insurance

• Healthcare

• Travel, Transportation and Logistics (“TT&L”)

• Finance and Accounting (“F&A”), and

• Analytics

The remaining operating segments, which includes the banking and financial services, utilities and consulting operating segments have been included in a category called “All Other”. Segment information for all prior periods presented herein has been changed to conform to the current presentation. This change in segment presentation does not affect the Company's unaudited consolidated statements of income and comprehensive income, balance sheets or statements of cash flows.

The chief operating decision maker (“CODM”) generally reviews financial information such as revenues, cost of revenues and gross profit, disaggregated by the operating segments to allocate an overall budget among the operating segments.

The Company does not allocate and therefore the CODM does not evaluate other operating expenses, interest expense or income taxes by segment. Many of the Company’s assets are shared by multiple operating segments. The Company manages these assets on a total Company basis, not by operating segment, and therefore asset information and capital expenditures by operating segment are not presented.

11

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

Revenues and cost of revenues for the three months ended June 30, 2017 and 2016, respectively, for each of the reportable segments, are as follows:

	Three months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	58,255	$	18,923	$	17,835	$	21,038	$	21,447	$	51,559	$	189,057
Cost of revenues (exclusive of depreciation and amortization)	40,976		12,250		10,473		12,955		14,697		34,098		125,449
Gross profit	$	17,279	$	6,673	$	7,362	$	8,083	$	6,750	$	17,461	$	63,608
Operating expenses													47,479
Foreign exchange gain, interest expense and other income, net													5,072
Income tax expense													823
Net income													$	20,378

	Three months ended June 30, 2016
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	50,597	$	17,442	$	17,545	$	19,284	$	26,001	$	39,609	$	170,478
Cost of revenues (exclusive of depreciation and amortization)	36,451		11,008		10,801		11,929		16,293		25,544		112,026
Gross profit	$	14,146	$	6,434	$	6,744	$	7,355	$	9,708	$	14,065	$	58,452
Operating expenses													42,216
Foreign exchange gain, interest expense and other income, net													7,147
Income tax expense													7,008
Net income													$	16,375

12

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

Revenues and cost of revenues for the six months ended June 30, 2017 and 2016, respectively, for each of the reportable segments, are as follows:

	Six months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	114,176	$	37,855	$	34,878	$	42,052	$	42,563	$	100,566	$	372,090
Cost of revenues (exclusive of depreciation and amortization)	79,305		24,436		20,697		25,853		29,141		66,136		245,568
Gross profit	$	34,871	$	13,419	$	14,181	$	16,199	$	13,422	$	34,430	$	126,522
Operating expenses													94,491
Foreign exchange gain, interest expense and other income, net													9,518
Income tax expense													4,383
Net income													$	37,166

	Six months ended June 30, 2016
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	98,895	$	33,830	$	35,104	$	39,103	$	52,007	$	78,575	$	337,514
Cost of revenues (exclusive of depreciation and amortization)	70,719		21,553		21,264		23,373		33,181		50,315		220,405
Gross profit	$	28,176	$	12,277	$	13,840	$	15,730	$	18,826	$	28,260	$	117,109
Operating expenses													84,421
Foreign exchange gain, interest expense and other income, net													10,410
Income tax expense													12,903
Net income													$	30,195

Net revenues of the Company by service type, were as follows:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
BPM and related services (1)	$	137,498	$	130,869	$	271,524	$	258,939
Analytics services	51,559		39,609		100,566		78,575
Total	$	189,057	$	170,478	$	372,090	$	337,514

(1) BPM and related services include revenues of the Company's five industry-focused operating segments, one capability operating segment and consulting operating segment, which provides services related to operations management services. See reportable segment disclosure above.

13

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

The Company attributes the revenues to regions based upon the location of its customers.

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Revenues, net
United States	$	153,894	$	136,151	$	304,175	$	270,225
Non-United States
United Kingdom	28,951		28,863		55,033		56,291
Rest of World	6,212		5,464		12,882		10,998
Total Non-United States	35,163		34,327		67,915		67,289
	$	189,057	$	170,478	$	372,090	$	337,514

Property, plant and equipment by geographic area, were as follows:

	As of
	June 30, 2017		December 31, 2016
Property, plant and equipment, net
India	$	38,576	$	23,362
United States	12,890		10,809
Philippines	9,736		11,900
Rest of World	2,776		2,958
	$	63,978	$	49,029

4. Earnings Per Share

Basic earnings per share is computed by dividing net income to common stockholders by the weighted average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted average number of common shares plus the potentially dilutive effect of common stock equivalents issued and outstanding at the reporting date, using the treasury stock method. Stock options, restricted stock and restricted stock units that are anti-dilutive are excluded from the computation of weighted average shares outstanding.

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Numerators:
Net income	$	20,378	$	16,375	$	37,166	$	30,195
Denominators:
Basic weighted average common shares outstanding	33,819,320		33,621,444		33,833,153		33,500,736
Dilutive effect of share based awards	1,173,906		888,956		1,218,614		930,292
Diluted weighted average common shares outstanding	34,993,226		34,510,400		35,051,767		34,431,028
Earnings per share:
Basic	$	0.60	$	0.49	$	1.10	$	0.90
Diluted	$	0.58	$	0.47	$	1.06	$	0.88
Weighted average common shares considered anti-dilutive in computing diluted earnings per share	2,893		59,455		227,941		130,103

14

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

5. Other Income, net

Other income, net consists of the following:

	Three months ended June 30,					Six months ended June 30,
	2017			2016		2017		2016
Interest and dividend income	$	323		$	375	$	995	$	853
Gain on mutual fund investments	2,438			1,886		4,221		3,630
Change in fair value of earn-out consideration	—			3,810		—		4,060
Other, net	(122		)	56		733		763
Other income, net	$	2,639		$	6,127	$	5,949	$	9,306

6. Property, Plant and Equipment

Property, Plant and Equipment consist of the following:

	Estimated useful lives	As of
	(Years)	June 30, 2017			December 31, 2016
Owned Assets:
Network equipment and computers	3-5	$	73,158		$	65,381
Software	3-5	56,513			44,617
Leasehold improvements	3-8	36,176			31,192
Office furniture and equipment	3-8	17,241			15,426
Motor vehicles	2-5	695			580
Buildings	30	1,232			1,171
Land	—	806			766
Capital work in progress	—	9,141			4,964
		194,962			164,097
Less: Accumulated depreciation and amortization		(131,519		)	(115,568		)
		$	63,443		$	48,529
Assets under capital leases:
Leasehold improvements		$	898		$	854
Office furniture and equipment		140			133
Motor vehicles		775			810
		1,813			1,797
Less: Accumulated depreciation and amortization		(1,278		)	(1,297		)
		$	535		$	500
Property, Plant and Equipment, net		$	63,978		$	49,029

Depreciation and amortization expense excluding amortization of acquisition-related intangibles for the three months ended June 30, 2017 and 2016 was $6,130, and $5,552, respectively and for the six months ended June 30, 2017 and 2016 was $12,058 and $10,970 respectively. Internally generated software development costs, both as of June 30, 2017 and December 31, 2016, were $2,242 and is included under Software. Accumulated amortization expense for these capitalized software development costs as of June 30, 2017 and December 31, 2016 were $635 and $336, respectively.

15

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

Capital work in progress represents advances paid towards acquisition of property, plant and equipment and cost of property, plant and equipment and internally generated software costs not yet ready to be placed in service.

7. Goodwill and Intangible Assets

Goodwill

The following table sets forth details of the Company’s goodwill balance as of June 30, 2017:

	Insurance			Healthcare		TT&L			F&A			All Other		Analytics		Total
Balance as at January 1, 2016	$	35,824		$	19,276	$	13,278		$	47,891		$	5,326	$	49,940	$	171,535
Acquisitions	2,510			—		—			—			—		13,598		16,108
Currency translation adjustments	(224		)	—		(295		)	(354		)	—		—		(873		)
Balance as at December 31, 2016	$	38,110		$	19,276	$	12,983		$	47,537		$	5,326	$	63,538	$	186,770
Acquisitions	—			—		—			—			—		—		—
Currency translation adjustments	130			—		570			684			—		—		1,384
Balance as at June 30, 2017	$	38,240		$	19,276	$	13,553		$	48,221		$	5,326	$	63,538	$	188,154

Intangible Assets

Information regarding the Company’s intangible assets is set forth below:

	As of June 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	75,324	$	(38,316	)	$	37,008
Leasehold benefits	2,857		(2,466		)	391
Developed technology	14,267		(7,605		)	6,662
Non-compete agreements	2,045		(1,693		)	352
Trade names and trademarks	5,372		(3,712		)	1,660
	$	99,865	$	(53,792	)	$	46,073
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	100,765	$	(53,792	)	$	46,973

16

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

	As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	75,181	$	(32,968	)	$	42,213
Leasehold benefits	2,715		(2,247		)	468
Developed technology	14,186		(6,468		)	7,718
Non-compete agreements	2,045		(1,612		)	433
Trade names and trademarks	5,360		(3,322		)	2,038
	$	99,487	$	(46,617	)	$	52,870
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	100,387	$	(46,617	)	$	53,770

Amortization expense for the three months ended June 30, 2017 and 2016 was $3,507 and $2,718, respectively, and for the six months ended June 30, 2017 and 2016 was $7,005 and $5,433, respectively. The remaining weighted average life of intangible assets was 5.5 years for customer relationships, 1.9 years for leasehold benefits, 4.5 years for developed technology, 2.0 years for non-compete agreements and 5.3 years for trade names and trademarks excluding indefinite life trade names and trademarks.

Estimated amortization of intangible assets during the next twelve months ending June 30,
2018	$	13,113
2019	12,050
2020	7,775
2021	3,288
2022 and thereafter	9,847
Total	$	46,073

8. Other current assets

Other current assets consists of the following:

	As of
	June 30, 2017		December 31, 2016
Derivative instruments	$	8,826	$	3,324
Advances to suppliers	1,601		1,091
Receivables from statutory authorities	4,787		11,870
Others	3,570		4,883
Other current assets	$	18,784	$	21,168

17

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

9. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consists of the following:

	As of
	June 30, 2017		December 31, 2016
Accrued expenses	$	30,560	$	30,690
Derivative instruments	1,315		1,430
Client liability account	2,031		4,005
Others	6,939		7,139
Accrued expenses and other current liabilities	$	40,845	$	43,264

10. Non-current liabilities

Non-current liabilities consists of the following:

	As of
	June 30, 2017		December 31, 2016
Derivative instruments	$	1,421	$	828
Unrecognized tax benefits	692		3,640
Deferred rent	7,855		7,237
Retirement benefits	2,779		1,977
Others	3,419		1,137
Non-current liabilities	$	16,166	$	14,819

11. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of amortization of actuarial gain/(loss) on retirement benefits and changes in the cumulative foreign currency translation adjustments. In addition, the Company enters into foreign currency exchange contracts, which are designated as cash flow hedges in accordance with ASC topic 815 “Derivatives and Hedging” (“ASC No. 815”). Changes in the fair values of contracts that are deemed effective are recorded as a component of accumulated other comprehensive loss until the settlement of those contracts. The balances as of June 30, 2017 and December 31, 2016 are as follows:

	As of
	June 30, 2017			December 31, 2016
Cumulative currency translation adjustments	$	(63,456	)	$	(77,299	)
Unrealized gain on cash flow hedges, net of taxes of $3,896 and $1,207	8,410			2,740
Retirement benefits, net of taxes of ($295) and ($342)	(405		)	(498		)
Accumulated other comprehensive loss	$	(55,451	)	$	(75,057	)

12. Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets and liabilities that were accounted for at fair value as of June 30, 2017 and December 31, 2016. The table excludes accounts receivable, accounts payable and accrued expenses for which fair values approximate their carrying amounts.

18

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

As of June 30, 2017	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds*	$	132,725	$	—	$	—	$	132,725
Derivative financial instruments	—		15,731		—		15,731
Total	$	132,725	$	15,731	$	—	$	148,456
Liabilities
Derivative financial instruments	$	—	$	2,736	$	—	$	2,736
Total	$	—	$	2,736	$	—	$	2,736
As of December 31, 2016	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds	$	—	$	—	$	—	$	—
Derivative financial instruments	—		6,318		—		6,318
Total	$	—	$	6,318	$	—	$	6,318
Liabilities
Derivative financial instruments	$	—	$	2,258	$	—	$	2,258
Total	$	—	$	2,258	$	—	$	2,258

* Represents short-term investments carried on fair value option under ASC 825 "Financial Instruments" as of June 30, 2017.

Derivative Financial Instruments: The Company’s derivative financial instruments consist of foreign currency forward exchange contracts. Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. See Note 13 to our unaudited consolidated financial statements contained herein for further details on Derivatives and Hedge Accounting.

13. 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 exchange rates. The Company’s derivative financial instruments are largely foreign exchange forward contracts that are designated effective and that qualify as cash flow hedges under ASC 815. The Company had outstanding cash flow hedges totaling $308,046 as of June 30, 2017 and $218,545 as of December 31, 2016. The fair value of these cash flow hedges is included in the other comprehensive loss on the Company's unaudited 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 815. Changes in the fair value of these derivatives are recognized in the unaudited 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 $86,766 and GBP 17,125 as of June 30, 2017 and amounted to $64,497 and GBP 17,974 as of December 31, 2016.

The Company estimates that approximately $7,293 of net derivative gains included in accumulated other comprehensive loss (“AOCL”) could be reclassified into earnings within the next twelve months based on exchange rates prevailing as of June 30, 2017. At June 30, 2017, the maximum outstanding term of the cash flow hedges was 45 months.

19

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

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 unaudited 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 derivative amounts recorded in equity are reclassified to earnings. There were no such significant amounts of gains or losses that were reclassified from AOCL into earnings during the three months ended June 30, 2017 and 2016.

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

Derivatives designated as hedging instruments:

	As of
	June 30, 2017		December 31, 2016
Other current assets:
Foreign currency exchange contracts	$	8,608	$	3,211
Other assets:
Foreign currency exchange contracts	$	6,905	$	2,994
Accrued expenses and other current liabilities:
Foreign currency exchange contracts	$	1,315	$	1,430
Non-current liabilities:
Foreign currency exchange contracts	$	1,421	$	828

Derivatives not designated as hedging instruments:

	As of
	June 30, 2017		December 31, 2016
Other current assets:
Foreign currency exchange contracts	$	218	$	113

The following tables set forth the effect of foreign currency exchange contracts on the unaudited consolidated statements of income for the three and six months ended June 30, 2017 and 2016:

	Three months ended June 30,					Six months ended June 30,
	2017		2016			2017		2016
Derivatives in Cash flow hedging relationship
Gain/(loss) recognized in AOCL on derivative - Effective portion	$	770	$	(1,884	)	$	9,493	$	553
Gain/(loss) reclassified from AOCL to foreign exchange gain/(loss) - Effective portion	$	510	$	349		$	1,134	$	406
Gain/(loss) recognized in foreign exchange gain/(loss) - Ineffective portion	$	—	$	—		$	—	$	—
Derivatives not designated as hedging instruments
Gain/(loss) recognized in foreign exchange gain/(loss)	$	151	$	999		$	2,773	$	2,728

20

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

14. Borrowings

The Company has a revolving credit facility (the “Credit Facility”), including a letter of credit sub-facility, in the amount of $100,000. The Credit Facility has a maturity date of October 24, 2019 and is voluntarily pre-payable from time to time without premium or penalty.

Borrowings under the Credit Facility may be used for working capital, general corporate purposes and for acquisitions. The amount outstanding as of June 30, 2017 is $45,000, of which $10,000 is expected to be repaid within the next twelve months and is included under “short-term borrowings” in the unaudited consolidated balance sheets. The Credit Facility carried an effective interest rate of 2.7% per annum and 2.0% per annum, during the three months ended June 30, 2017 and 2016, respectively, and for the six months ended June 30, 2017 and 2016 was 2.6% per annum and 2.1% per annum, respectively.

In connection with the financing, the Company incurred certain debt issuance costs, which are deferred and amortized as an adjustment to interest expense over the term of the Credit Facility. The unamortized debt issuance costs as of June 30, 2017 and December 31, 2016 was $224 and $272, respectively, and is included under "other current assets" and "other assets" in the unaudited consolidated balance sheets.

The Credit Facility is guaranteed by the Company's domestic subsidiaries and material foreign subsidiaries and is secured by all or substantially all of the assets of the Company and its material domestic subsidiaries. The Credit Agreement contains certain covenants including a restriction on our indebtedness, and a covenant to not permit the interest coverage ratio (the ratio of EBIT to cash interest expense) or the leverage ratio (total funded indebtedness to EBITDA), for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.5 to 1.0 or 2.5 to 1.0, respectively. As of June 30, 2017, the Company was in compliance with the financial covenants listed above.

15. Capital Structure

Common Stock

The Company has one class of common stock outstanding.

During the three months ended June 30, 2017 and 2016, the Company acquired 2,219 and 1,479 shares of common stock, respectively, from employees in connection with withholding tax payments related to the vesting of restricted stock for a total consideration of $103 and $76, respectively. The weighted average purchase price per share of $46.51 and $51.39, respectively, was the average of the high and low price of the Company’s share of common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.

During the six months ended June 30, 2017 and 2016, the Company acquired 65,003 and 16,027 shares of common stock, respectively, from employees in connection with withholding tax payments related to the vesting of restricted stock for a total consideration of $3,016 and $728, respectively. The weighted average purchase price per share of $46.40 and $45.44, respectively, was the average of the high and low price of the Company’s share of common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.

On December 30, 2014, the Company’s Board of Directors authorized a common stock repurchase program (the “2014 Repurchase Program”), under which shares were authorized to be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2015 through 2017 up to an annual amount of $20,000.

On February 28, 2017, the Company’s Board of Directors authorized an additional common stock repurchase program (the “2017 Repurchase Program”), under which shares may be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2017 through 2019 up to an aggregate amount of $100,000. The approval increases the 2017 authorization from $20,000 to $40,000 and authorizes stock repurchases of up to $40,000 in each of 2018 and 2019.

During the three and six months ended June 30, 2017, the Company purchased 230,022 and 423,984 shares of its common stock, respectively, for an aggregate purchase price of approximately $11,316 and $20,316, respectively, including commissions, representing an average purchase price per share of $49.20 and $47.92, respectively, under the 2014 and 2017 Repurchase Program.

21

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

During the three and six months ended June 30, 2016, the Company purchased 56,172 and 194,810 shares of its common stock, respectively, for an aggregate purchase price of approximately $2,773 and $8,975, respectively, including commissions, representing an average purchase price per share of $49.37 and $46.07, respectively, under the 2014 Repurchase Program.

Repurchased shares have been recorded as treasury shares and will be held until the Board of Directors designates that these shares be retired or used for other purposes.

16. Employee Benefit Plans

The Company’s Gratuity Plans in India ("Gratuity Plan") provide for lump sum payment to vested employees on retirement or upon termination of employment in an amount based on the respective employee’s salary and years of employment with the Company. Liabilities with regard to the Gratuity Plans are determined by actuarial valuation using the projected unit credit method. Current service costs for the Gratuity Plan are accrued in the year to which they relate. Actuarial gains or losses or prior service costs, if any, resulting from amendments to the plans are recognized and amortized over the remaining period of service of the employees.

In addition, the Company’s subsidiary operating in the Philippines conforms to the minimum regulatory benefit which provide for lump sum payment to vested employees on retirement from employment in an amount based on the respective employee’s salary and years of employment with the Company (the "Philippines Plan"). The benefit costs of the Philippines Plan for the year are calculated on an actuarial basis.    

Net gratuity cost includes the following components:

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Service cost	$	494		$	401		$	978		$	801
Interest cost	166			150			328			299
Expected return on plan assets	(111		)	(104		)	(218		)	(208		)
Amortization of Actuarial loss	71			22			140			44
Net gratuity cost	$	620		$	469		$	1,228		$	936

The Gratuity Plan in India is partially funded and the Philippines plan is unfunded. The Company makes annual contributions to the employees' gratuity fund established with Life Insurance Corporation of India and HDFC Standard Life Insurance Company. They calculate the annual contribution required to be made by the Company and manage the Gratuity Plans, including any required payouts. Fund managers manage these funds on a cash accumulation basis and declare interest retrospectively on March 31 of each year. The Company earned a return of approximately 8.0% on these Gratuity Plans for the period ended June 30, 2017.

Change in Plan Assets
Plan assets at January 1, 2017	$	5,640
Actual return	206
Employer contribution	1,685
Benefits paid	(604		)
Effect of exchange rate changes	312
Plan assets at June 30, 2017	$	7,239

The Company maintains several 401(k) plans under Section 401(k) of the Internal Revenue Code of 1986 (the “Code”), covering all eligible employees, as defined in the Code as a defined contribution plan. The Company may make discretionary contributions of up to a maximum of 4% of employee compensation within certain limits. Contributions to the 401(k) plans amounting to $496 and $475 were made during the three months ended June 30, 2017 and 2016, respectively, and $1,564 and $1,391 during the six months ended June 30, 2017 and 2016, respectively.

22

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

During the three months ended June 30, 2017 and 2016, the Company contributed $1,792 and $1,566, respectively, and during the six months ended June 30, 2017 and 2016, the Company contributed $3,505 and $3,048, respectively, for various defined contribution plans on behalf of its employees in India, the Philippines, Bulgaria, Romania, the Czech Republic, South Africa, Colombia, and Singapore.

17. Leases

The Company finances its use of certain motor vehicles under various lease arrangements provided by financial institutions. Future minimum lease payments under these capital leases as of June 30, 2017 are as follows:

During the next twelve months ending June 30,
2018	$	259
2019	180
2020	134
2021	49
Total minimum lease payments	622
Less: amount representing interest	109
Present value of minimum lease payments	513
Less: current portion	203
Long term capital lease obligation	$	310

The Company conducts its operations using facilities leased under non-cancelable operating lease agreements that expire at various dates. Future minimum lease payments under non-cancelable agreements expiring after June 30, 2017 are set forth below:

During the next twelve months ending June 30,
2018	$	10,834
2019	9,301
2020	5,055
2021	3,403
2022	1,119
2023 and thereafter	1,105
	$	30,817

The operating leases are subject to renewal periodically and have scheduled rent increases. The Company recognizes rent on such leases on a straight-line basis over the non-cancelable lease period determined under ASC topic 840, “Leases”. Rent expense under both cancelable and non-cancelable operating leases was $6,139 and $5,278 for the three months ended June 30, 2017 and 2016, respectively and $11,806 and $10,426, respectively for the six months ended June 30, 2017 and 2016. Deferred rent as of June 30, 2017 and December 31, 2016 was $8,785 and $7,915, respectively, and is included under “Accrued expenses and other current liabilities” and “Non-current liabilities” in the unaudited consolidated balance sheets.

18. Income Taxes

The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates its estimate of annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

23

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

The Company recorded income tax expense of $823 and $7,008 for the three months ended June 30, 2017 and 2016, respectively. The effective tax rate decreased from 30.0% during the three months ended June 30, 2016 to 3.9% as a result of (i) excess tax benefit related to stock awards of $1,624 recognized on adoption of ASU No. 2016-09 during the three months ended June 30, 2017, (ii) conclusion of an uncertain tax position of $3,153 (including interest of $1,433), (iii) the impact of reversal of earn-out liability of $3,810 in other income during the three months ended June 30, 2016 related to the Company's acquisition of RPM Direct LLC and RPM Data Solutions LLC (collectively, "RPM") in 2015, and (iv) higher earnings from foreign subsidiaries and lower domestic profit in the U.S.

The Company recorded income tax expense of $4,383 and $12,903 for the six months ended June 30, 2017 and 2016, respectively. The effective tax rate decreased from 29.9% during the six months ended June 30, 2016 to 10.5% as a result of (i) excess tax benefit related to stock awards of $3,681 recognized on adoption of ASU No. 2016-09 during the six months ended June 30, 2017, (ii) conclusion of an uncertain tax position of $3,153 (including interest of $1,433), (iii) the impact of reversal of earn-out liability of $4,060 in other income during the six months ended June 30, 2016 related to the Company's RPM acquisition in 2015, and (iv) higher earnings from foreign subsidiaries and lower domestic profit in the U.S.

The following table summarizes the activity related to the gross unrecognized tax benefits from January 1, 2017 through June 30, 2017:

Balance as of January 1, 2017	$	3,087
Increases related to prior year tax positions	—
Decreases related to prior year tax positions	(1,720		)
Increases related to current year tax positions	—
Decreases related to current year tax positions	—
Effect of exchange rate changes	85
Balance as of June 30, 2017	$	1,452

The unrecognized tax benefits as of June 30, 2017 of $1,452, if recognized, would impact the effective tax rate.

During the three months ended June 30, 2017 and 2016, the Company has recognized interest of nil and $49, respectively, which are included in the income tax expense in the unaudited consolidated statements of income. As of June 30, 2017 and December 31, 2016, the Company has accrued interest and penalties of $240 and $1,553, relating to unrecognized tax benefits.

19. Stock-Based Compensation

The following costs related to the Company’s stock-based compensation plan are included in the unaudited consolidated statements of income:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Cost of revenue	$	1,129	$	788	$	2,339	$	2,053
General and administrative expenses	2,344		1,964		4,940		4,336
Selling and marketing expenses	1,634		1,698		3,784		3,870
Total	$	5,107	$	4,450	$	11,063	$	10,259

As of June 30, 2017, the Company had 1,464,838 shares available for grant under the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan.

24

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

Stock Options

Stock option activity under the Company’s stock plans is shown below:

	Number of Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Life (Years)
Outstanding at December 31, 2016	811,902		$	16.31	$	27,718	2.96
Granted	—		—
Exercised	(136,920	)	12.99
Forfeited	—		—
Outstanding at June 30, 2017	674,982		$	16.98	$	26,060	2.67
Vested and exercisable at June 30, 2017	674,982		$	16.98	$	26,060	2.67

The unrecognized compensation cost for outstanding options as of June 30, 2017 is nil. The Company did not grant any options during the three and six months ended June 30, 2017 and 2016. The total grant date fair value of options vested during the three and six months ended June 30, 2017 was nil and $706, respectively.

Restricted Stock and Restricted Stock Units

Restricted stock and restricted stock unit activity under the Company’s stock plans is shown below:

	Restricted Stock				Restricted Stock Units
	Number		Weighted- Average Fair Value		Number		Weighted- Average Fair Value
Outstanding at December 31, 2016*	246,940		$	42.42	1,256,288		$	37.38
Granted	—		—		387,977		47.94
Vested	(28,694	)	34.89		(397,746	)	35.00
Forfeited	—		—		(68,201	)	40.17
Outstanding at June 30, 2017*	218,246		$	43.41	1,178,318		$	41.50

*     As of June 30, 2017 and December 31, 2016 restricted stock units vested for which the underlying common stock is yet to be issued are 146,112 and 135,054, respectively.

As of June 30, 2017, unrecognized compensation cost of $45,029 is expected to be expensed over a weighted average period of 2.85 years.

25

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

Performance Based Stock Awards

Performance restricted stock unit (the "PRSUs") activity under the Company’s stock plans is shown below:

	Revenue Based PRSUs				Market Condition Based PRSUs
	Number		Weighted Avg Fair Value		Number		Weighted Avg Fair Value
Outstanding at December 31, 2016	115,174		$	41.70	215,171		$	47.42
Granted	62,113		47.73		62,100		54.10
Vested	—		—		—		—
Forfeited	(6,960	)	42.97		(6,960	)	58.90
Outstanding at June 30, 2017	170,327		$	43.85	270,311		$	48.66

As of June 30, 2017, unrecognized compensation cost of $10,252 is expected to be expensed over a weighted average period of 1.88 years.

20. Related Party Disclosures

The Company provides consulting services to PharmaCord, LLC.  One of the Company’s directors, Nitin Sahney, is the member-manager and chief executive officer of PharmaCord, LLC. The Company recognized revenue of approximately $328 and $805 in the three months and six months ended June 30, 2017, respectively, for services provided.

At June 30, 2017 and December 31, 2016, the Company had an account receivable of $305 and nil, respectively, related to these services.

21. Commitments and Contingencies

Fixed Asset Commitments

At June 30, 2017, the Company has committed to spend approximately $5,920 under agreements to purchase fixed assets. This amount is net of capital advances paid in respect of these purchases.

Other Commitments

Certain units of the Company’s Indian subsidiaries were established as 100% Export-Oriented units or under the Software Technology Parks of India (“STPI”) scheme promulgated by the Government of India. These units are exempt from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. The Company has undertaken to pay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. The Company’s management believes, however, that these units have in the past satisfied and will continue to satisfy the required conditions.

The Company’s operations centers in the Philippines are registered with the Philippine Economic Zone Authority (“PEZA”). The registration provides the Company with certain fiscal incentives on the import of capital goods and requires ExlService Philippines, Inc. to meet certain performance and investment criteria. The Company’s management believes that these centers have in the past satisfied and will continue to satisfy the required criteria.

Contingencies

U.S. and Indian transfer pricing regulations require that any international transaction involving associated enterprises be at an arm’s-length price. Accordingly, the Company determines the appropriate pricing for the international transactions among its associated enterprises on the basis of a detailed functional and economic analysis involving benchmarking against transactions among entities that are not under common control. The tax authorities have jurisdiction to review this arrangement and in the event that they determine that the transfer price applied was not appropriate, the Company may incur increased tax liability, including accrued interest and penalties. The Company is currently involved in disputes with the Indian tax authorities over the application

26

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2017

(In thousands, except share and per share amounts)

of some of its transfer pricing policies for some of its subsidiaries. Further, the Company and a U.S. subsidiary are engaged in tax litigation with the income-tax authorities in India on the issue of permanent establishment.

The aggregate disputed amount demanded by Indian tax authorities from the Company primarily related to its transfer pricing issues for years ranging from tax years 2003 to 2014 and its permanent establishment issues ranging from tax years 2003 to 2007 as of June 30, 2017 and December 31, 2016 is $17,099 and $17,963, respectively, of which the Company has made payments or provided bank guarantee to the extent $8,501 and $8,640, respectively. Amounts paid as deposits in respect of such assessments aggregating to $6,449 and $6,690 as of June 30, 2017 and December 31, 2016, respectively, are included in “Other assets” and amounts deposited for bank guarantees aggregating to $2,052 and $1,950 as of June 30, 2017 and December 31, 2016, respectively, are included in “Restricted cash” in the non-current assets section of the Company’s consolidated balance sheets as of June 30, 2017 and December 31, 2016.

Based on advice from its Indian tax advisors, the facts underlying the Company’s position and its experience with these types of assessments, the Company believes that the probability that it will ultimately be found liable for these assessments is remote and accordingly has not accrued any amount with respect to these matters in its consolidated financial statements. The Company does not expect any impact from these assessments on its future income tax expense. It is possible that the Company might receive similar orders or assessments from tax authorities for subsequent years. Accordingly even if these disputes are resolved, the Indian tax authorities may still serve additional orders or assessments.

27

ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in connection with our unaudited consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Some of the statements in the following discussion are forward looking statements. Dollar amounts within Item 2 are presented as actual, approximated, dollar amounts.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. You should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include but are not limited to:

• our dependence on a limited number of clients in a limited number of industries;

• worldwide political, economic or business conditions;

• negative public reaction in the U.S. or elsewhere to offshore outsourcing;

• fluctuations in our earnings;

• our ability to attract and retain clients including in a timely manner;

• our ability to successfully consummate or integrate strategic acquisitions;

• restrictions on immigration;

• our ability to hire and retain enough sufficiently trained employees to support our operations;

• our ability to grow our business or effectively manage growth and international operations;

• any changes in the senior management team;

• increasing competition in our industry;

• telecommunications or technology disruptions;

• our ability to withstand the loss of a significant customer ;

• regulatory, legislative and judicial developments, including changes to or the withdrawal of governmental fiscal incentives;

• changes in tax laws or decisions regarding repatriation of funds held abroad;

• ability to service debt or obtain additional financing on favorable terms;

• legal liability arising out of customer contracts;

• technological innovation;

• political or economic instability in the geographies in which we operate;

• unauthorized disclosure of sensitive or confidential client and customer data; and

• adverse outcome of our disputes with the Indian tax authorities.

These and other factors are more fully discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. These and other risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report on Form 10-Q.

The forward-looking statements made by us in this Quarterly Report on Form 10-Q, or elsewhere, speak only as of the date on which they were made. New risks and uncertainties 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 Quarterly Report on Form 10-Q after the date of this Quarterly Report on Form 10-Q, except as required by federal securities laws.

28

Executive Overview

We operate in the business process management (“BPM”) industry and we provide operations management and analytics

services that help the business enhance growth and profitability. Using our proprietary platforms, methodologies and tools we look deeper to help our clients improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. Our eight operating segments are strategic business units that align our products and services with how we manage our business, approach our key markets and interact with our clients. Six of those operating segments provide BPM or “operations management” services, which we organize into industry-focused operating segments (Insurance, Healthcare, Travel, Transportation and Logistics, Banking and Financial Services, and Utilities) and one “capability” operating segment (Finance and Accounting) that provides services to clients in our industry-focused segments as well as clients across other industries. In each of these six operating segments we provide operations management services, which typically involve transfer to the Company of select business operations of a client, after which we administer and manage those operations for our client on an ongoing basis. Our remaining two operating segments are Consulting, which provides industry-specific transformational services related to operations management services, and our Analytics operating segment, which provides services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business.

In prior periods we presented two reportable segments: Operations Management (which included our Insurance, Healthcare, Travel, Transportation and Logistics, Finance and Accounting, Banking and Financial Services, Utilities and Consulting operating segments) and Analytics. Effective for the quarter and year ended December 31, 2016, we present information for the following reportable segments:

• Insurance

• Healthcare

• Travel, Transportation and Logistics

• Finance and Accounting, and

• Analytics

The remaining operating segments which includes our Banking and Financial Services, Utilities and Consulting operating segments have been included in a category called “All Other”. This change in segment presentation does not affect our consolidated statements of income, balance sheets or statements of cash flows. For further descriptions of our operating segments, see Note 3 to the unaudited consolidated financial statements contained herein.

Our global delivery network, which include 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. We have operations centers in India, the U.S., the Philippines, Bulgaria, Colombia, South Africa, Romania and the Czech Republic.

Revenues

For the three months ended June 30, 2017, we had revenues of $189.1 million compared to revenues of $170.5 million for the three months ended June 30, 2016, an increase of $18.6 million, or 10.9%. For the six months ended June 30, 2017, we had revenues of $372.1 million compared to revenues of $337.5 million for the six months ended June 30, 2016, an increase of $34.6 million, or 10.2%.

We serve clients mainly in the U.S. and the U.K., with these two regions generating approximately 81.4% and 15.3%, respectively, of our total revenues for the three months ended June 30, 2017 and approximately 79.9% and 16.9%, respectively, of our revenues for the three months ended June 30, 2016. For the six months ended June 30, 2017, these two regions generated

81.7% and 14.8%, respectively, of our total revenues and 80.1% and 16.7%, respectively, of our total revenues for the six months ended June 30, 2016.

For the three months ended June 30, 2017 and 2016, our total revenues from our top ten clients accounted for 39.1% and 40.2% of our total revenues, respectively. For the six months ended June 30, 2017 and 2016, our total revenues from our top ten clients accounted for 39.0% and 40.4% of our total revenues, respectively. None of our clients accounted for more than 10% of our total revenues during the three and six months ended June 30, 2017 and 2016. Although we intend to continue increasing and diversifying our customer base, we expect in the near future that a significant portion of our revenue will continue to be contributed by a limited number of large clients.

29

Our Business

We provide operations management and analytics services. 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 from the U.S., Europe and Australia.

Operations Management Services: We provide our clients with a range of operations management services principally in the Insurance, Healthcare, Travel, Transportation and Logistics, Banking and Financial Services and Utilities sectors, among others, as well as cross-industry operations management services, such as Finance and Accounting Services. We also provide services related to operations management, through our Consulting services that provide advice regarding transformational initiatives.

Our operations management solutions typically involve the transfer to the Company of select business operations of a client such as claims processing, clinical operations, or financial transaction processing, after which we administer and manage the operations for our client on an ongoing basis. As part of this transfer, we hire and train employees to work at our operations centers on the relevant business operations, implement a process migration to these operations centers and then provide services either to the client or directly to the client’s customers. Each client contract has different terms based on the scope, deliverables and complexity of the engagement.

We have been observing a shift in industry pricing models toward transaction-based pricing, outcome-based pricing and other pricing models. We believe this trend will continue and we have begun to use such alternative pricing models with some of our current clients and are seeking to move certain other clients from a billing rate model to a transaction-based or other pricing model. These pricing models place the focus on operating efficiency in order to maintain our gross margins. In addition, we have also observed that prospective larger clients are entering into multi-vendor relationships with regard to their outsourcing needs. We believe that the trend toward multi-vendor relationships will continue. A multi-vendor relationship allows a client to seek more favorable pricing and other contract terms from each vendor, which can result in significantly reduced gross margins from the provision of services to such client for each vendor. 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.

Our existing agreements with original terms of three or more years provide us with a relatively predictable revenue base for a substantial portion of our operations management business, however, 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. Similarly, new license sales and implementation projects for our technology service platforms and other software-based services have a long selling cycle, however ongoing annual maintenance and support contracts for existing arrangements provide us with a relatively predictable revenue base.

Analytics: Our Analytics services focus on driving improved business outcomes for our customers by generating data-driven insights across all parts of our customers’ business. Our teams deliver predictive and prescriptive analytics in the areas of customer acquisition and lifecycle management, risk underwriting and pricing, operational effectiveness, credit and operational risk monitoring and governance, regulatory reporting, and data management. We actively cross-sell and, where appropriate, integrate our Analytics services with other operations management services as part of a comprehensive offering set for our clients.

We anticipate that revenues from our Analytics services will grow as we expand our service offerings and client base, both organically and through acquisitions.

Critical Accounting Policies and Estimates

For a description of our critical accounting policies and estimates, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” and Note 2 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

30

Results of Operations

The following table summarizes our results of operations for the three and six months ended June 30, 2017 and 2016:

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
	(dollars in millions)						(dollars in millions)
Revenues, net	$	189.1		$	170.5		$	372.1		$	337.5
Cost of revenues (exclusive of depreciation and amortization)	125.5			112.0			245.6			220.4
Gross profit	63.6			58.5			126.5			117.1
Operating expenses:
General and administrative expenses	24.7			21.2			48.9			41.8
Selling and marketing expenses	13.1			12.8			26.5			26.2
Depreciation and amortization	9.7			8.3			19.1			16.4
Total operating expenses	47.5			42.3			94.5			84.4
Income from operations	16.1			16.2			32.0			32.7
Foreign exchange gain, net	2.9			1.4			4.5			1.8
Interest expense	(0.4		)	(0.3		)	(0.9		)	(0.7		)
Other income, net	2.6			6.1			5.9			9.3
Income before income tax expense	21.2			23.4			41.5			43.1
Income tax expense	0.8			7.0			4.3			12.9
Net income	$	20.4		$	16.4		$	37.2		$	30.2

31

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Revenues.

The following table summarizes our revenues by reportable segment for the three months ended June 30, 2017 and 2016:

	Three months ended June 30,							Percentage change
	2017		2016		Change
	(dollars in millions)
Insurance	$	58.3	$	50.6	$	7.7		15.1	%
Healthcare	18.9		17.4		1.5			8.5	%
Travel, Transportation and Logistics	17.8		17.6		0.2			1.7	%
Finance and Accounting	21.0		19.3		1.7			9.1	%
All Other	21.5		26.0		(4.5		)	(17.5	)%
Analytics	51.6		39.6		12.0			30.2	%
Total revenues, net	$	189.1	$	170.5	$	18.6		10.9	%

Revenues for the three months ended June 30, 2017 were $189.1 million, up $18.6 million or 10.9% compared to the three months ended June 30, 2016.

Revenue growth in Insurance of $7.7 million was driven by expansion of business from our new and existing clients of $7.4 million, including $1.7 million related to the July 2016 acquisition of Liss Systems Limited ("Liss"). The remaining increase of $0.3 million is attributable to a net impact of appreciation of the South African Rand and Indian rupee and depreciation of the U.K. pound sterling against the U.S. dollar during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Insurance revenues were 30.8% and 29.7% of our total revenues in the three months ended June 30, 2017 and June 30, 2016, respectively.

Revenue growth in Healthcare of $1.5 million was driven by expansion of business from our new and existing clients. Healthcare revenues were 10.0% and 10.2% of our total revenues in the three months ended June 30, 2017 and June 30, 2016, respectively.

Revenue growth in Travel, Transportation and Logistics ("TT&L") of $0.2 million was primarily driven by net volume increase from our new and existing clients of $0.5 million, which was partially offset by $0.3 million impact due to depreciation of the Philippine Peso against the U.S. dollar during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. TT&L revenues were 9.4% and 10.3% of our total revenues in the three months ended June 30, 2017 and June 30, 2016, respectively.

Revenue growth in Finance and Accounting ("F&A") of $1.7 million was driven by expansion of business from our new and existing clients. F&A revenues were 11.1% and 11.3% of our total revenues in the three months ended June 30, 2017 and June 30, 2016, respectively.

Revenue decline in All Other of $4.5 million was driven primarily by lower revenue in our Consulting and Utilities operating segments, partially offset by higher revenue in our Banking and Financial Services operating segment, aggregating to $4.7 million. This was partially offset by a net increase of $0.2 million impact due to appreciation of the Indian rupee and depreciation of the U.K. pound sterling against the U.S. dollar during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. All Other revenues were 11.3% and 15.3% of our total revenues in the three months ended June 30, 2017 and June 30, 2016, respectively.

Revenue growth in Analytics of $12.0 million was driven by our recurring and project based engagements from our new and existing clients of $12.2 million, including $6.0 million from our IQR Consulting Inc. and Datasource Consulting, LLC acquisitions in 2016. The increase was partially offset by a decrease of $0.2 million due to the depreciation of the U.K. pound sterling against the U.S. dollar during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Analytics revenues were 27.3% and 23.2% of our total revenues in the three months ended June 30, 2017 and June 30, 2016, respectively.

32

Cost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments.

	Cost of Revenues									Gross Margin
	Three months ended June 30,							Percentage change		Three months ended June 30,				Change
	2017		2016		Change					2017		2016
	(dollars in millions)
Insurance	$	41.0	$	36.5	$	4.5		12.4	%	29.7	%	28.0	%	1.7	%
Healthcare	12.2		11.0		1.2			11.3	%	35.3	%	36.9	%	(1.6	)%
TT&L	10.5		10.8		(0.3		)	(3.0	)%	41.3	%	38.4	%	2.9	%
F & A	13.0		11.9		1.1			8.6	%	38.4	%	38.1	%	0.3	%
All Other	14.7		16.3		(1.6		)	(9.8	)%	31.5	%	37.3	%	(5.8	)%
Analytics	34.1		25.5		8.6			33.5	%	33.9	%	35.5	%	(1.6	)%
Total	$	125.5	$	112.0	$	13.5		12.0	%	33.6	%	34.3	%	(0.7	)%

For the three months ended June 30, 2017, cost of revenues was $125.5 million compared to $112.0 million for the three months ended June 30, 2016, an increase of $13.5 million, or 12.0%. Our gross margin for the three months ended June 30, 2017 was 33.6% compared to 34.3% for three months ended June 30, 2016, a decrease of 70 basis points (“bps”).

The increase in cost of revenues in Insurance of $4.5 million was primarily due to an increase in employee-related costs of $3.2 million (including $0.7 million related to the Liss acquisition) on account of higher headcount and wage inflation and technology and infrastructure costs of $0.9 million. There was a net increase of $0.4 million due to the appreciation of the Indian rupee and depreciation of the Philippine peso against the U.S. dollar during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Gross margin increased by 170 bps during the three months ended June 30, 2017 compared to the three months ended June 30, 2016, primarily due to higher revenues and margin expansion in existing clients.

The increase in cost of revenues in Healthcare of $1.2 million was primarily due to an increase in employee-related costs of $1.1 million on account of higher headcount and wage inflation, and technology and infrastructure costs of $0.4 million. This was partially offset by $0.3 million due to the depreciation of the Philippine peso against the U.S. dollar during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Gross margin decreased by 160 bps during the three months ended June 30, 2017 compared to the three months ended June 30, 2016, primarily due to higher operating costs.

The decrease in cost of revenues in TT&L of $0.3 million was primarily due to a decrease in infrastructure and travel costs of $0.2 million and depreciation of the Philippine peso against the U.S. dollar of $0.1 million during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Gross margin increased by 290 bps during the three months ended June 30, 2017 as compared to the three months ended June 30, 2016 due to margin expansion in existing clients and lower operating costs.

The increase in cost of revenues in F&A of $1.1 million was primarily due to an increase in employee-related costs of $0.9 million on account of higher headcount and wage inflation, infrastructure costs of $0.3 million and technology costs of $0.1 million. This was partially offset by decrease in travel related costs of $0.4 million. There was an increase of $0.3 million due to the appreciation of the Indian rupee against the U.S. dollar during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Gross margin increased by 30 bps during the three months ended June 30, 2017 compared to the three months ended June 30, 2016.

The decline in cost of revenues in All Other of $1.6 million was primarily due to a decrease in employee-related costs of $0.7 million on account of lower headcount, partially offset by wage inflation. There was also a decrease in travel related costs of $0.6 million, and technology, infrastructure costs and other operating costs aggregating to $0.3 million in the three months ended June 30, 2016 due to lower revenues. Gross margin decreased by 580 bps during the three months ended June 30, 2017 compared to the three months ended June 30, 2016, primarily due to lower revenues in our consulting and utilities operating segments.

The increase in cost of revenues in Analytics of $8.6 million was primarily due to an increase in employee-related costs of $7.8 million (including $5.1 million of incremental employee-related costs related to our 2016 acquisitions) on account of higher headcount and wage inflation, and an increase in technology costs of $0.3 million, infrastructure costs of $0.4 million and travel costs of $0.1 million. This was partially offset by a reduction in our other operating expenses of $0.3 million. There was a net increase of $0.2 million due to the appreciation of the Indian rupee against the U.S. dollar during the three months

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ended June 30, 2017 compared to the three months ended June 30, 2016. Gross margin decreased by 160 bps during the three months ended June 30, 2017 compared to the three months ended June 30, 2016, primarily due to higher employee costs and lower gross margin from our 2016 acquisitions.

Selling, General and Administrative (“SG&A”) Expenses.

	Three months ended June 30,								Percentage change
	2017			2016			Change
	(dollars in millions)
General and administrative expenses	$	24.7		$	21.2		$	3.5	16.9	%
Selling and marketing expenses	13.1			12.8			0.3		2.6	%
Selling, general and administrative expenses	$	37.8		$	34.0		$	3.8	11.5	%
As a percentage of revenues	20.0		%	19.9		%

The increase in SG&A expenses was primarily due to an increase in employee-related costs of $2.6 million (including $1.6 million of incremental employee-related costs related to our 2016 acquisitions) as a result of annual wage increments and an increase in our average headcount to support the increased business volumes. There was an increase of $0.7 million of infrastructure costs related to our new operating centers, with travel and other operating expenses increasing by $0.3 million. There was a net increase of $0.2 million due to the appreciation of the Indian rupee and depreciation of the Philippine peso against the U.S. dollar during the three months ended June 30, 2017 compared to the three months ended June 30, 2016.

Depreciation and Amortization.

	Three months ended June 30,								Percentage change
	2017			2016			Change
	(dollars in millions)
Depreciation expense	$	6.2		$	5.6		$	0.6	10.4	%
Intangible amortization expense	3.5			2.7			0.8		29.0	%
Depreciation and amortization expense	$	9.7		$	8.3		$	1.4	16.5	%
As a percentage of revenues	5.1		%	4.9		%

Depreciation and amortization expense increased by $1.4 million, or 16.5%, from $8.3 million for the three months ended June 30, 2016 to $9.7 million for the three months ended June 30, 2017. The increase in intangibles amortization expense of $0.8 million was primarily due to amortization of intangibles associated with our 2016 acquisitions. Further, there was an increase in our depreciation expense of $0.6 million, due to depreciation related to our new operating centers in India and the Philippines to support our business growth.

Income from Operations. Income from operations decreased $0.1 million, or 0.7%, from $16.2 million for the three months ended June 30, 2016 to $16.1 million for the three months ended June 30, 2017. As a percentage of revenues, income from operations decreased from 9.5% for the three months ended June 30, 2016 to 8.5% for the three months ended June 30, 2017.

Foreign Exchange Gain/(Loss). Net foreign exchange gains and losses are primarily attributable to movement of the U.S. dollar against the Indian rupee, the U.K. pound sterling and the Philippine peso during the three months ended June 30, 2017. The average exchange rate of the U.S. dollar against the Indian rupee decreased from 67.06 during the three months ended June 30, 2016 to 64.45 during the three months ended June 30, 2017. The average exchange rate of the U.K. pound sterling against the U.S. dollar decreased from 1.42 during the three months ended June 30, 2016 to 1.29 during the three months ended June 30, 2017. The average exchange rate of the U.S. dollar against the Philippine peso increased from 46.90 during the three months ended June 30, 2016 to 50.06 during the three months ended June 30, 2017.

We recorded a net foreign exchange gain of $2.9 million for the three months ended June 30, 2017 compared to $1.4 million for the three months ended June 30, 2016.

Interest expense. Interest expense increased $0.1 million, or 35.6% from $0.3 million for the three months ended June 30, 2016 to $0.4 million for the three months ended June 30, 2017.

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Other Income, net

	Three months ended June 30,								Percentage change
	2017			2016		Change
	(dollars in millions)
Interest and dividend income	$	0.3		$	0.4	$	(0.1	)	(13.9	)%
Gain on mutual fund investments	2.4			1.9		0.5			29.3	%
Change in fair value of earn-out consideration	—			3.8		(3.8		)	(100.0	)%
Other, net	(0.1		)	—		(0.1		)	(317.9	)%
Other income, net	$	2.6		$	6.1	$	(3.5	)	(56.9	)%

Increase in gain on mutual fund investments of $0.5 million was primarily due to higher investment balances as of June 30, 2017 compared to June as of 30, 2016 in certain of our foreign subsidiaries. We also recorded $3.8 million during the three months ended June 30, 2016 due to the reversal of earn-out liability related to our RPM acquisition in 2015.

Income Tax Expense. The effective tax rate decreased from 30.0% during the three months ended June 30, 2016 to 3.9% as a result of (i) excess tax benefit related to stock awards of $1.6 million recognized on adoption of ASU No. 2016-09 during the three months ended June 30, 2017, (ii) conclusion of an uncertain tax position of $3.2 million (including interest of $1.4 million), (iii) the impact of reversal of earn-out liability of $3.8 million in other income during the three months ended June 30, 2016 related to our RPM acquisition in 2015, and (iv) higher earnings from foreign subsidiaries and lower domestic profit in the U.S.

Net Income. Net income increased from $16.4 million for the three months ended June 30, 2016 to $20.4 million for the three months ended June 30, 2017, primarily due to lower income tax expense of $6.2 million, higher foreign exchange gain of $1.5 million, partially offset by lower other income of $3.5 million and lower income from operations of $0.1 million. As a percentage of revenues, net income increased from 9.6% for the three months ended June 30, 2016 to 10.8% for the three months ended June 30, 2017.

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Revenues.

The following table summarizes our revenues by reportable segment for the six months ended June 30, 2017 and 2016:

	Six months ended June 30,							Percentage change
	2017		2016		Change
	(dollars in millions)
Insurance	$	114.2	$	98.9	$	15.3		15.5	%
Healthcare	37.8		33.8		4.0			11.9	%
Travel, Transportation and Logistics	34.9		35.1		(0.2		)	(0.6	)%
Finance and Accounting	42.0		39.1		2.9			7.5	%
All Other	42.6		52.0		(9.4		)	(18.2	)%
Analytics	100.6		78.6		22.0			28.0	%
Total revenues, net	$	372.1	$	337.5	$	34.6		10.2	%

Revenues for the six months ended June 30, 2017 were $372.1 million, up $34.6 million or 10.2% compared to the six months ended June 30, 2016.

Revenue growth in Insurance of $15.3 million was driven by expansion of business from our new and existing clients of $14.7 million, including $2.6 million related to the July 2016 Liss acquisition. The remaining increase of $0.6 million is attributable to a net impact of appreciation of the South African Rand and Indian rupee and depreciation of the U.K. pound sterling against the U.S. dollar during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Insurance revenues were 30.7% and 29.3% of our total revenues in the six months ended June 30, 2017 and June 30, 2016, respectively.

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Revenue growth in Healthcare of $4.0 million was driven by expansion of business from our existing and new clients. Healthcare revenues were 10.2% and 10.0% of our total revenues in the six months ended June 30, 2017 and June 30, 2016, respectively.

Revenue decline in TT&L of $0.2 million was primarily driven by an impact of $0.6 million due to the depreciation of the Philippine Peso against the U.S. dollar during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. This was partially offset by net volume increases from our existing clients of $0.4 million. TT&L revenues were 9.4% and 10.4% of our total revenues in the six months ended June 30, 2017 and June 30, 2016, respectively.

Revenue growth in F&A of $2.9 million was driven by expansion of business from our new and existing clients. F&A revenues were 11.3% and 11.6% of our total revenues in the six months ended June 30, 2017 and June 30, 2016, respectively.

Revenue decline in All Other of $9.4 million was driven primarily by lower revenue in our Consulting and Utilities operating segments, partially offset by higher revenue in our Banking and Financial Services operating segment, aggregating to $9.3 million and $0.1 million impact due to the depreciation of the U.K. pound sterling against the U.S. dollar during the six months ended June 30, 2017 compared to the six months ended June 30, 2016 in our Consulting operating segment. All Other revenues were 11.4% and 15.4% of our total revenues in the six months ended June 30, 2017 and June 30, 2016, respectively.

Revenue growth in Analytics of $22.0 million was driven by our recurring and project based engagements from our new and existing clients of $22.5 million, including $12.5 million from our IQR Consulting Inc. and Datasource Consulting, LLC acquisitions in 2016. The increase was partially offset by a decrease of $0.5 million due to the depreciation of the U.K. pound sterling against the U.S. dollar during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Analytics revenues were 27.0% and 23.3% of our total revenues in the six months ended June 30, 2017 and June 30, 2016, respectively.

Cost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments.

	Cost of Revenues									Gross Margin
	Six months ended June 30,							Percentage change		Six months ended June 30,				Change
	2017		2016		Change					2017		2016
	(dollars in millions)
Insurance	$	79.3	$	70.7	$	8.6		12.1	%	30.5	%	28.5	%	2.0	%
Healthcare	24.4		21.5		2.9			13.4	%	35.4	%	36.3	%	(0.9	)%
TT&L	20.7		21.3		(0.6		)	(2.7	)%	40.7	%	39.4	%	1.3	%
F & A	25.9		23.4		2.5			10.6	%	38.5	%	40.2	%	(1.7	)%
All Other	29.2		33.2		(4.0		)	(12.2	)%	31.5	%	36.2	%	(4.7	)%
Analytics	66.1		50.3		15.8			31.4	%	34.2	%	36.0	%	(1.8	)%
Total	$	245.6	$	220.4	$	25.2		11.4	%	34.0	%	34.7	%	(0.7	)%

For the six months ended June 30, 2017, cost of revenues was $245.6 million compared to $220.4 million for the six months ended June 30, 2016, an increase of $25.2 million, or 11.4%. Our gross margin for the six months ended June 30, 2017 was 34.0% compared to 34.7% for six months ended June 30, 2016, a decrease of 70 basis points (bps).

The increase in cost of revenues in Insurance of $8.6 million was primarily due to an increase in employee-related costs of $6.6 million (including $1.3 million related to the Liss acquisition) on account of higher headcount and wage inflation, and technology and infrastructure costs of $2.2 million. This was partially offset by a decrease in travel related costs of $0.5 million and other operating costs of $0.3 million. There was a net increase of $0.5 million due to the appreciation of the Indian rupee and depreciation of the Philippine peso against the U.S. dollar during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Gross margin increased by 200 bps during the six months ended June 30, 2017 compared to the six months ended June 30, 2016, primarily due to higher revenues and lower operating costs.

The increase in cost of revenues in Healthcare of $2.9 million was primarily due to an increase in employee-related costs of $2.7 million on account of higher headcount and wage inflation, technology costs of $0.4 million, infrastructure costs of $0.3 million and travel costs of $0.2 million. This was partially offset by a decrease in other operating costs of $0.1 million and $0.6 million due to the depreciation of the Philippine peso against the U.S. dollar during the six months ended June 30,

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2017 compared to the six months ended June 30, 2016. Gross margin decreased by 90 bps during the six months ended June 30, 2017 compared to the six months ended June 30, 2016, primarily due to higher employee costs.

The decrease in cost of revenues in TT&L of $0.6 million was primarily due to decrease in infrastructure, travel, and other operating costs of $0.4 million. This was partially offset by increase in employee-related costs of $0.1 million on account of higher headcount and wage inflation. The cost of revenue also decreased due to depreciation of the Philippine peso against the U.S. dollar of $0.3 million during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Gross margin increased by 130 bps during the six months ended June 30, 2017 as compared to the six months ended June 30, 2016 due to lower operating costs.

The increase in cost of revenues in F&A of $2.5 million was primarily due to an increase in employee-related costs of $1.7 million on account of higher headcount and wage inflation, infrastructure costs of $0.6 million and technology costs of $0.2 million. This was partially offset by a decrease in travel and other operating costs of $0.4 million. There was an increase of $0.4 million due to the appreciation of the Indian rupee against the U.S. dollar during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Gross margin decreased by 170 bps during the six months ended June 30, 2017 compared to the six months ended June 30, 2016, primarily due to migration costs associated with our new client wins and higher reimbursable travel related costs with lower gross margin.

The decline in cost of revenues in All Other of $4.0 million was primarily due to a decrease in employee-related costs of $2.2 million on account of lower headcount, partially offset by wage inflation. There was also a decrease in travel related costs of $1.3 million and other operating expenses of $0.3 million in the six months ended June 30, 2016 due to lower revenues. The cost of revenues also decreased by $0.2 million due to the depreciation of the Philippine peso and the U.K. pound sterling against the U.S. dollar during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Gross margin decreased by 470 bps during the six months ended June 30, 2017 compared to the six months ended June 30, 2016, primarily due to lower revenues in our consulting and utilities operating segments.

The increase in cost of revenues in Analytics of $15.8 million was primarily due to an increase in employee-related costs of $15.8 million (including $9.8 million of incremental employee-related costs related to our 2016 acquisitions) on account of higher headcount and wage inflation, an increase in technology costs of $0.4 million and infrastructure costs of $0.4 million. This was partially offset by reduction in our other operating costs of $0.8 million. Gross margin decreased by 180 bps during the six months ended June 30, 2017 compared to the six months ended June 30, 2016, primarily due to higher employee costs and lower gross margin from our 2016 acquisitions.

Selling, General and Administrative (“SG&A”) Expenses.

	Six months ended June 30,								Percentage change
	2017			2016			Change
	(dollars in millions)
General and administrative expenses	$	48.9		$	41.8		$	7.1	17.2	%
Selling and marketing expenses	26.5			26.2			0.3		0.9	%
Selling, general and administrative expenses	$	75.4		$	68.0		$	7.4	10.9	%
As a percentage of revenues	20.3		%	20.2		%

The increase in SG&A expenses was primarily due to an increase in employee-related costs of $6.0 million (including $2.5 million of incremental employee-related costs related to our 2016 acquisitions) as a result of annual wage increments and an increase in our average headcount to support the increased business volumes. There was an increase of $1.1 million of infrastructure costs related to our new operating centers and technology costs of $0.2 million.

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Depreciation and Amortization.

	Six months ended June 30,								Percentage change
	2017			2016			Change
	(dollars in millions)
Depreciation expense	$	12.1		$	11.0		$	1.1	9.9	%
Intangible amortization expense	7.0			5.4			1.6		28.9	%
Depreciation and amortization expense	$	19.1		$	16.4		$	2.7	16.2	%
As a percentage of revenues	5.1		%	4.9		%

Depreciation and amortization expense increased by $2.7 million, or 16.2%, from $16.4 million for the six months ended June 30, 2016 to $19.1 million for the six months ended June 30, 2017. The increase in intangibles amortization expense of $1.6 million was primarily due to amortization of intangibles associated with our 2016 acquisitions. Further, there was an increase in our depreciation expense of $1.1 million related to our new operating centers in India and the Philippines to support our business growth.

Income from Operations. Income from operations decreased $0.7 million, or 2.0%, from $32.7 million for the six months ended June 30, 2016 to $32.0 million for the six months ended June 30, 2017. As a percentage of revenues, income from operations decreased from 9.7% for the six months ended June 30, 2016 to 8.6% for the six months ended June 30, 2017.

Foreign Exchange Gain/(Loss). Net foreign exchange gains and losses are primarily attributable to movement of the U.S. dollar against the Indian rupee, the U.K. pound sterling and the Philippine peso during the six months ended June 30, 2017. The average exchange rate of the U.S. dollar against the Indian rupee decreased from 67.29 during the six months ended June 30, 2016 to 65.46 during the six months ended June 30, 2017. The average exchange rate of the U.K. pound sterling against the U.S. dollar decreased from 1.42 during the six months ended June 30, 2016 to 1.27 during the six months ended June 30, 2017. The average exchange rate of the U.S. dollar against the Philippine peso increased from 47.00 during the six months ended June 30, 2016 to 50.05 during the six months ended June 30, 2017.

We recorded a net foreign exchange gain of $4.5 million for the six months ended June 30, 2017 compared to $1.8 million for the six months ended June 30, 2016.

Interest expense. Interest expense increased by $0.2 million from $0.7 million for the six months ended June 30, 2016 to $0.9 million for the six months ended June 30, 2017, due to financing cost associated with purchase of software.

Other Income, net

	Six months ended June 30,							Percentage change
	2017		2016		Change
	(dollars in millions)
Interest and dividend income	$	1.0	$	0.9	$	0.1		16.6	%
Gain on mutual fund investments	4.2		3.6		0.6			16.3	%
Change in fair value of earn-out consideration	—		4.1		(4.1		)	(100.0	)%
Other, net	0.7		0.7		—			—
Other income, net	$	5.9	$	9.3	$	(3.4	)	(36.1	)%

Increase in interest and dividend income of $0.1 million and increase in gain on mutual fund investments of $0.6 million was primarily due to higher cash balances in certain of our foreign subsidiaries and higher gain on sale of investment during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. We also recorded $4.1 million during the six months ended June 30, 2016 due to the reversal of earn-out liability related to our RPM acquisition in 2015.

Income Tax Expense. The effective tax rate decreased from 29.9% during the six months ended June 30, 2016 to 10.5% as a result of (i) excess tax benefit related to stock awards of $3.7 million recognized on adoption of ASU No. 2016-09 during the six months ended June 30, 2017, (ii) conclusion of an uncertain tax position of $3.2 million (including interest of $1.4 million), (iii) the impact of reversal of earn-out liability of $4.1 million in other income during the six months ended June 30, 2016 related to our RPM acquisition in 2015, and (iv) higher earnings from foreign subsidiaries and lower domestic profit in the U.S.

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Net Income. Net income increased from $30.2 million for the six months ended June 30, 2016 to $37.2 million for the six months ended June 30, 2017, primarily due to lower income tax expense of $8.6 million, higher foreign exchange gain of $2.7 million, partially offset by lower other income of $3.4 million and lower income from operations of $0.7 million.

As a percentage of revenues, net income increased from 8.9% for the six months ended June 30, 2016 to 10.0% for the six months ended June 30, 2017.

Liquidity and Capital Resources

	Six months ended June 30,
	2017			2016
	(dollars in millions)
Opening cash and cash equivalents	$	213.2		$	205.3
Net cash provided by operating activities	46.9			26.9
Net cash used for investing activities	(150.4		)	(106.0		)
Net cash used for financing activities	(21.7		)	(30.7		)
Effect of exchange rate changes	1.4			(2.4		)
Closing cash and cash equivalents	$	89.4		$	93.1

As of June 30, 2017 and December 31, 2016, we had $237.3 million and $226.6 million, respectively, in cash, cash equivalents and short-term investments (including $191.2 million and $170.1 million, respectively, held by our foreign subsidiaries). We do not intend to repatriate funds held by our foreign subsidiaries since our future growth partially depends upon continued infrastructure and technology investments, geographical expansions and acquisitions outside of the U.S. Therefore, we anticipate that we will indefinitely reinvest the earnings generated outside of the U.S. If we were to repatriate our overseas funds, we would accrue and pay applicable taxes.

Operating Activities: Cash flows from operating activities increased by $20.0 million from $26.9 million for the six months ended June 30, 2016 to $46.9 million for the six months ended June 30, 2017. The increase in cash flows from operations for the six months ended June 30, 2017 compared to the six months ended June 30, 2016 was due to an increase in net income by $7.0 million, increase in non-cash adjustment of $3.3 million and decrease in working capital of $9.7 million from $26.4 million during the six months ended June 30, 2016 to $16.7 million during the six months ended June 30, 2017. The decrease in working capital was primarily due to a change in accounts receivables, prepaid expense and other current assets, accrued expenses and other current liabilities, offset by change in account payables.

Investing Activities: Cash flows used for investing activities increased by $44.4 million from $106.0 million for the six months ended June 30, 2016 to $150.4 million for the six months ended June 30, 2017. The increase was primarily due to an increase in short-term investments of $38.8 million (net of redemption) during the six months ended June 30, 2017 compared to the six months ended June 30, 2016 and due to an increase in capital expenditures of $5.6 million.

Financing Activities: Cash flows used for financing activities was $21.7 million during the six months ended June 30, 2017 compared to $30.7 million during the six months ended June 30, 2016. The decrease in cash flow used for financing activities between periods is primarily due to repayment of borrowings of $25.0 million under the Credit Agreement (as described below in “Financing Arrangements”) during the six months ended June 30, 2016. This was partially offset by higher purchases of treasury stock of $13.6 million and lower proceeds from exercise of stock options of $2.4 million during the six months ended June 30, 2017 compared to the six months ended June 30, 2016.

We expect to use cash from operating activities to maintain and expand our business. As we have focused on expanding our cash flow from operating activities we continue to make capital investments, primarily related to new facilities and capital expenditures associated with leasehold improvements to build our facilities and the purchase of telecommunications equipment and computer hardware and software in connection with managing client operations. We incurred $20.5 million of capital expenditures in the six months ended June 30, 2017. We expect to incur capital expenditures of between $30.0 million to $35.0 million in 2017, primarily to meet our growth requirements, including additions to our facilities as well as investments in technology applications and infrastructure, but the actual amount may vary based on economic conditions or other factors.

39

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 respect to such assessment orders (refer to Note 21 to our unaudited consolidated financial statements for further details). We anticipate that we will continue to rely upon cash from operating activities to finance our smaller acquisitions, capital expenditures and working capital needs. If we have significant growth through acquisitions, we may need to obtain additional financing.

Financing Arrangements (Debt Facility)

On October 24, 2014 we entered into a Credit Agreement that provides for a $50.0 million revolving credit facility (“Credit Facility”). We had an option to increase the commitments under the Credit Facility by up to an additional $50.0 million, which we exercised on February 23, 2015, pursuant to an amendment to the Credit Agreement providing the same terms and conditions which were available in the Credit Agreement. The Credit Facility has a maturity date of October 24, 2019 and is voluntarily pre-payable from time to time without premium or penalty. As of June 30, 2017, we had outstanding indebtedness of $45.0 million, of which $10.0 million is expected to be repaid within the next twelve months and is included under "short-term borrowings" and the balance of which $35.0 million is included under "long term borrowings" in the unaudited consolidated balance sheets.

Borrowings under the Credit Facility may be used for working capital and general corporate purposes of the Company and its subsidiaries and for acquisitions.

Depending on the type of borrowing, loans under the Credit Agreement bear interest at a rate equal to the specified prime rate (alternate base rate) or adjusted LIBO rate, plus, in each case, an applicable margin. The applicable margin is tied to the Company’s leverage ratio and ranges from 0.3% to 0.8% per annum with respect to loans pegged to the specified prime rate, and 1.3% to 1.8% per annum on loans pegged to the adjusted LIBO rate. The revolving credit commitments under the Credit Agreement are subject to a commitment fee. The commitment fee is also tied to the Company’s leverage ratio, and ranges from 0.2% to 0.3% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations. The Credit Facility carried an effective interest rate per annum of 2.7% and 2.6% during the three and six months ended June 30, 2017, respectively.

Off-Balance Sheet Arrangements

As of June 30, 2017 and December 31, 2016, we had no off-balance sheet arrangements or obligations.

Contractual Obligations

The following table sets forth our contractual obligations as of June 30, 2017:

	Payment Due by Period
	Less than		1-3		4-5		After
	1 year		years		years		5 years		Total
	(dollars in millions)
Capital leases	$	0.3	$	0.3	$	—	$	—	$	0.6
Operating leases	10.8		14.4		4.5		1.1		30.8
Purchase obligations	5.8		0.1		—		—		5.9
Other obligations(a)	2.8		4.6		3.7		5.2		16.3
Borrowings
Principal payments	10.0		35.0		—		—		45.0
Interest Payments(b)	1.3		1.4		—		—		2.7
Total contractual cash obligations(c)	$	31.0	$	55.8	$	8.2	$	6.3	$	101.3

(a) Represents estimated payments under the Gratuity Plan.

(b) Interest on borrowings is calculated based on the effective interest rate on the outstanding borrowings as of June 30, 2017.

(c) Excludes $1.5 million related to uncertain tax positions, since the extent of the amount and timing of payment is currently not reliably estimable or determinable.

40

Certain units of our Indian subsidiaries were established as 100% Export-Oriented units under the “STPI” scheme promulgated by the Government of India. These units are exempt from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. We have undertaken to pay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores, and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. We believe, however, that these units have in the past satisfied and will continue to satisfy the required conditions.

Our operations centers in the Philippines are registered with the “PEZA.” The registration provides us with certain fiscal incentives on the import of capital goods and requires that ExlService Philippines, Inc. meet certain performance and investment criteria. We believe that these centers have in the past satisfied and will continue to satisfy the required criteria.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, see Note 2—“Recent Accounting Pronouncements” to our unaudited consolidated financial statements contained herein.

41

ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk

During the three months ended June 30, 2017, there were no material changes in our market risk exposure. For a discussion of our market risk associated with exchange rate risk and interest rate risk, see Item 7A “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

ITEM 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosure. In connection with the preparation of this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of the CEO and CFO, of the effectiveness and operation of our disclosure controls and procedures as of June 30, 2017. Based upon that evaluation, the CEO and CFO have concluded that, as of June 30, 2017, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2017, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.     Other Information

ITEM 1.    Legal Proceedings

In the course of our normal business activities, various lawsuits, claims and proceedings may be instituted or asserted against us. We believe that the disposition of matters currently instituted or asserted will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. Please see Note 21 to our unaudited consolidated financial statements contained herein for details regarding our tax proceedings.

ITEM 1A.    Risk Factors

We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 a number of risks which may materially affect our business, financial condition or results of operations. You should carefully consider the “Risk Factors” set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us may also materially adversely affect our business, financial condition and/or results of operations.

ITEM 2.     Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Use of Proceeds

None.

42

Purchases of Equity Securities by the Issuer

During the three months ended June 30, 2017, purchases of common stock were as follows:

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(2)
April 1, 2017 through April 30, 2017(1)	109,524	46.59	107,305	26,000,064
May 1, 2017 through May 31, 2017	75,001	50.66	75,001	22,200,429
June 1, 2017 through June 30, 2017	47,716	52.74	47,716	19,684,088
Total	232,241	49.17	230,022	—

(1) Includes 2,219 shares of the Company’s common stock acquired by the Company at an average price per share of $46.51 in connection with satisfaction of tax withholding obligations on vested restricted stock. The price paid per share for the restricted stock was the average of high and low price of common stock on the trading day prior to the vesting date of the restricted stock units.

(2) On February 28, 2017, the Company’s Board of Directors authorized an additional common stock repurchase program (the “2017 Repurchase Program”), under which shares may be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2017 through 2019 up to an aggregate of $100 million. The approval increases the 2017 authorization from $20 million to $40 million and authorizes stock repurchases of up to $40 million in each of 2018 and 2019.

ITEM 3.     Defaults Upon Senior Securities

None.

ITEM 4.    Mine Safety Disclosures

Not applicable.

ITEM 5.    Other Information

None.

ITEM 6.Exhibits

See Exhibit Index immediately following the signature page hereto, which Exhibit Index is incorporated herein by reference.

43

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 27, 2017	EXLSERVICE HOLDINGS, INC.
	By:	/S/ VISHAL CHHIBBAR
		Vishal Chhibbar Chief Financial Officer (Duly Authorized Signatory, Principal Financial and Accounting Officer)

44

EXHIBITS

The following exhibits are being filed as part of this Quarterly Report on Form 10-Q:

3.1	Amended and Restated Certificate of Incorporation of the Company, as in effect on the date hereof (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on October 25, 2006).
3.2	Fourth Amended and Restated By-Laws of ExlService Holdings, Inc., as in effect on the date hereof (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on February 28, 2017).
31.1	Certification of the Chief Executive Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Scheme
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Extension Presentation Linkbase

45

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Rohit Kapoor, certify that:

1. I have reviewed this Quarterly Report of ExlService Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 27, 2017	/s/ Rohit Kapoor
	Rohit Kapoor
	Vice-Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Vishal Chhibbar, certify that:

1. I have reviewed this Quarterly Report of ExlService Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 27, 2017	/s/ Vishal Chhibbar
	Vishal Chhibbar
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ExlService Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rohit Kapoor, Vice-Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Rohit Kapoor

Rohit Kapoor

Vice-Chairman and Chief Executive Officer

July 27, 2017

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ExlService Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Vishal Chhibbar, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Vishal Chhibbar

Vishal Chhibbar

Chief Financial Officer

July 27, 2017

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 25, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	ExlService Holdings, Inc.
Entity Central Index Key	0001297989
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Trading Symbol	EXLS
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		33,742,121

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 89,414	$ 213,155
Short-term investments	147,915	13,491
Restricted cash	1,898	3,846
Accounts receivable, net	123,798	113,067
Prepaid expenses	9,454	7,855
Advance income tax, net	7,337	6,242
Other current assets	18,784	21,168
Total current assets	398,600	378,824
Property, plant and equipment, net	63,978	49,029
Restricted cash	3,692	3,393
Deferred taxes, net	13,959	14,799
Intangible assets, net	46,973	53,770
Goodwill	188,154	186,770
Other assets	32,075	19,943
Total assets	747,431	706,528
Current liabilities:
Accounts payable	11,661	3,288
Short-term borrowings	10,000	10,000
Deferred revenue	14,189	16,615
Accrued employee cost	39,135	50,832
Accrued expenses and other current liabilities	40,845	43,264
Current portion of capital lease obligations	203	232
Total current liabilities	116,033	124,231
Long term borrowings	35,000	35,000
Capital lease obligations, less current portion	310	300
Non-current liabilities	16,166	14,819
Total liabilities	167,509	174,350
Commitments and contingencies (See Note 21)
Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued	0	0
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized, 36,252,428 shares issued and 33,691,731 shares outstanding as of June 30, 2017 and 35,699,819 shares issued and 33,628,109 shares outstanding as of December 31, 2016	36	36
Additional paid-in capital	303,486	284,646
Retained earnings	415,342	382,722
Accumulated other comprehensive loss	(55,451)	(75,057)
Total including shares held in treasury	663,413	592,347
Less: 2,560,697 shares as of June 30, 2017 and 2,071,710 shares as of December 31, 2016, held in treasury, at cost	(83,694)	(60,362)
Stockholders' equity	579,719	531,985
Non-controlling interest	203	193
Total equity	579,922	532,178
Total liabilities and equity	$ 747,431	$ 706,528

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	15,000,000	15,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	36,252,428	35,699,819
Common stock, shares outstanding	33,691,731	33,628,109
Treasury stock (in shares)	2,560,697	2,071,710

XML

Unaudited Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Revenues, net	$ 189,057	$ 170,478	$ 372,090	$ 337,514
Cost of revenues (exclusive of depreciation and amortization)	125,449	112,026	245,568	220,405
Gross profit	63,608	58,452	126,522	117,109
Operating expenses:
General and administrative expenses	24,715	21,148	48,939	41,766
Selling and marketing expenses	13,127	12,798	26,489	26,252
Depreciation and amortization	9,637	8,270	19,063	16,403
Total operating expenses	47,479	42,216	94,491	84,421
Income from operations	16,129	16,236	32,031	32,688
Foreign exchange gain, net	2,898	1,363	4,466	1,832
Interest expense	(465)	(343)	(897)	(728)
Other income, net	2,639	6,127	5,949	9,306
Income before income tax expense	21,201	23,383	41,549	43,098
Income tax expense	823	7,008	4,383	12,903
Net income	$ 20,378	$ 16,375	$ 37,166	$ 30,195
Earnings per share:
Basic (in dollars per share)	$ 0.60	$ 0.49	$ 1.10	$ 0.90
Diluted (in dollars per share)	$ 0.58	$ 0.47	$ 1.06	$ 0.88
Weighted-average number of shares used in computing earnings per share:
Basic (in shares)	33,819,320	33,621,444	33,833,153	33,500,736
Diluted (in shares)	34,993,226	34,510,400	35,051,767	34,431,028

XML

Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income		$ 20,378	$ 16,375	$ 37,166	$ 30,195
Other comprehensive income:
Unrealized (loss)/gain on effective cash flow hedges, net of taxes $1,085, ($376), $3,036 and $27, respectively		(315)	(1,508)	6,457	526
Foreign currency translation adjustment		2,200	(5,401)	13,843	(4,368)
Retirement benefits, net of taxes nil, $15, nil and $20, respectively		0	123	0	305
Reclassification adjustments
Realized gain on cash flow hedges, net of taxes ($156), ($156), ($347) and ($181), respectively(1)	[1]	(354)	(193)	(787)	(225)
Retirement benefits, net of taxes $40, $1, $47 and $2, respectively(2)	[2]	31	21	93	42
Total other comprehensive income/(loss)		1,562	(6,958)	19,606	(3,720)
Total comprehensive income		$ 21,940	$ 9,417	$ 56,772	$ 26,475

[1] These are reclassified to net income and are included in the foreign exchange gain in the unaudited consolidated statements of income. See Note 13 to the unaudited consolidated financial statements.

[2] These are reclassified to net income and are included in the computation of net periodic pension costs in the unaudited consolidated statements of income. See Note 16 to the unaudited consolidated financial statements

XML

Unaudited Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Unrealized (loss)/gain on effective cash flow hedges, taxes	$ 1,085	$ (376)	$ 3,036	$ 27
Retirement benefits, taxes	0	15	0	20
Realized loss/(gain) on cash flow hedges, taxes	(156)	(156)	(347)	(181)
Retirement benefits, taxes	$ 40	$ 1	$ 47	$ 2

XML

Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income	$ 37,166	$ 30,195
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,063	16,403
Stock-based compensation expense	11,063	10,259
Unrealized gain on short term investments	(2,246)	(2,984)
Change in fair value of earn-out consideration	0	(4,060)
Unrealized foreign exchange loss/(gain)	1,643	(42)
Deferred income tax (benefit)/expense	(3,118)	3,607
Others, net	27	(67)
Change in operating assets and liabilities:
Restricted cash	1,828	314
Accounts receivable	(9,775)	(19,621)
Prepaid expenses and other current assets	7,161	(1,177)
Accounts payable	5,295	(1,427)
Deferred revenue	(2,367)	4,996
Accrued employee costs	(11,612)	(10,282)
Accrued expenses and other liabilities	(6,074)	4,413
Advance income tax, net	(1,117)	(3,179)
Other assets	(36)	(433)
Net cash provided by operating activities	46,901	26,915
Cash flows from investing activities:
Purchase of property, plant and equipment	(20,447)	(14,872)
Purchase of investments	(169,422)	(132,275)
Proceeds from redemption of investments	39,475	41,179
Net cash used for investing activities	(150,394)	(105,968)
Cash flows from financing activities:
Principal payments on capital lease obligations	(94)	(240)
Repayments of borrowings	0	(25,000)
Acquisition of treasury stock	(23,332)	(9,704)
Proceeds from exercise of stock options	1,778	4,195
Net cash used for financing activities	(21,648)	(30,749)
Effect of exchange rate changes on cash and cash equivalents	1,400	(2,408)
Net decrease in cash and cash equivalents	(123,741)	(112,210)
Cash and cash equivalents, beginning of period	213,155	205,323
Cash and cash equivalents, end of period	$ 89,414	$ 93,113

XML

Organization

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the state of Delaware. ExlService Holdings, together with its subsidiaries (collectively, the “Company”), operates in the Business Process Management (“BPM”) industry providing operations management services and analytics services that help businesses enhance growth and profitability. Using its proprietary platforms, methodologies and tools, the Company looks deeper to help its clients improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. The Company’s clients are located principally in the U.S. and the U.K.

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(a) Basis of Preparation and Principles of Consolidation

The unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The unaudited interim consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to the parent and it represents the minority partner’s interest in the operations of ExlService Colombia S.A.S. Non-controlling interest consists of the amount of such interest at the date of obtaining control over the subsidiary, and the non-controlling interest's share of changes in equity since that date. The non-controlling interest in the operations for all the periods presented were insignificant and are included under general and administrative expenses in the unaudited consolidated statements of income.

(b) Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the unaudited consolidated statements of income during the reporting period. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates and assumptions that affect the financial statements include, but are not limited to, allowance for doubtful receivables, recoverability of service tax receivables, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, assumptions used to calculate stock-based compensation expense, depreciation and amortization periods, purchase price allocation, recoverability of long-term assets including goodwill and intangibles, and estimates to complete fixed price contracts.

(c) Share-Based Compensation

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718). ASU No. 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the Statement of Cash Flows. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company adopted this ASU effective January 1, 2017. The following summarizes the effects of the adoption on the Company's unaudited consolidated financial statements:

Income taxes - Upon adoption of this standard, all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. The Company also recognizes excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. As a result, the Company recognized discrete adjustments to income tax expense for the three months ended June 30, 2017 in the amount of $1,624 and for the six months ended June 30, 2017 in the amount of $3,681 related to excess tax benefits. No adjustment is recorded for any windfall benefits previously recorded in APIC.

Forfeitures - Prior to adoption, share-based compensation expense was recognized on a straight line basis, net of estimated forfeitures, such that expense was recognized only for share-based awards that are expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption, the Company will no longer apply a forfeiture rate and instead will account for forfeitures as they occur. The Company has applied the modified retrospective adoption approach as of January 1, 2017 and has recognized a cumulative-effect adjustment to reduce additional paid-in-capital of $5,999 and retained earnings of $4,546 (net of deferred tax effect of $1,453).

Statements of Cash Flows - The Company historically accounted for excess tax benefits on the Statement of Cash Flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. The Company has elected to adopt this portion of the standard on a prospective basis beginning in 2017 and accordingly prior periods have not been adjusted.

Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. The Company excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of diluted earnings per share.

Upon adoption, no other aspects of ASU 2016-09 had an effect on the Company's unaudited consolidated financial statements or related footnote disclosures.

(d) Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts with Customers”. The new standard is effective for reporting periods beginning after December 15, 2017 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions of the Company. ASU 2014-09 is effective for the Company in the first quarter of fiscal 2018 using either one of two methods: (i) retrospectively to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09.

The Company is evaluating the impact of the new standard. The ultimate impact on revenue resulting from the application of the new standard will be subject to assessments that are dependent on many variables, including, but not limited to, the terms of the contractual arrangements and the mix of business. Upon adoption, we expect there to be a change in the manner that variable consideration in certain revenue arrangements is recognized from the current practice of recognizing such revenue as the services are performed and the variable consideration is earned to estimating the achievability of the variable conditions when we begin delivering services and recognizing that amount over the contractual period. The Company also expects a change in the manner that it recognizes certain incremental and fulfillment costs from expensing them as incurred to deferring and recognizing them over the contractual period.

The Company continues to evaluate the available transition methods and its contractual arrangements. The Company's considerations include, but are not limited to, the comparability of its financial statements and the comparability within its industry from application of the new standard to its contractual arrangements. The Company plans to select a transition method by the second half of 2017. The Company has established an implementation team to implement the standard update related to the recognition of revenue from contracts with customers and continues to evaluate the changes to accounting system and processes, and additional disclosure requirements that may be necessary.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a twelve month term, these arrangements must now be recognized as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and the implementation approach to be used.

In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is to be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendment should be applied through a modified retrospective approach. Early adoption as of the fiscal years beginning after December 15, 2018 is permitted. The adoption of ASU 2016-13 is not expected to have a material effect on the Company's consolidated financial statements.

In August 2016, FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments apply to all entities that are required to present a Statement of Cash Flows under Topic 230. The amendments are an improvement to GAAP because they provide guidance for each of eight issues identified therein, thereby reducing the current and potential future diversity in practice. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company does not expect the adoption of this ASU to have a material effect on its financial position or results of operations.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows - Restricted cash. The amendments apply to all entities that have restricted cash or restricted cash equivalents and are required to present a Statement of Cash Flows under Topic 230. The amendments in this update require that a Statement of Cash Flows should explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted with an adjustment reflected as of the beginning of the fiscal year in which the amendment is adoption. The Company does not expect the adoption of this ASU to have a material effect on its financial position or results of operations.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates Step 2 from the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.

In March, 2017, FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. The ASU amends ASC 715, Compensation — Retirement Benefits, to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic post-retirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in non-operating expenses. The update also stipulates that only the service cost component of net benefit cost is eligible for capitalization. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In May 2017, FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

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Segment and Geographical Information

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment and Geographical Information

Segment and Geographical Information

The Company operates in the BPM industry and is a provider of operations management and analytics services. The Company has eight operating segments, which are strategic business units that align its products and services with how it manages its business, approaches its key markets and interacts with its clients. Six of those operating segments provide BPM or “operations management” services, which the Company organizes into industry-focused operating segments (Insurance, Healthcare, Travel, Transportation and Logistics, Banking and Financial Services, and Utilities) and one “capability” operating segment (Finance and Accounting) that provides services to clients in industry-focused segments as well as clients across other industries. In each of these six operating segments, the Company provides operations management services, which typically involve transfer to the Company of select business operations of a client, after which it administers and manages those operations for its client on an ongoing basis. The remaining two operating segments are Consulting, which provides industry-specific transformational services related to operations management services, and the Analytics operating segment, which provides services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business.

In prior periods the Company presented two reportable segments: Operations Management (which included its Insurance, Healthcare, Travel, Transportation and Logistics, Finance and Accounting, Banking and Financial services, Utilities and Consulting operating segments) and Analytics. Effective for the quarter and year ended December 31, 2016, the Company presents information for the following reportable segments:

• Insurance

• Healthcare

• Travel, Transportation and Logistics (“TT&L”)

• Finance and Accounting (“F&A”), and

• Analytics

The remaining operating segments, which includes the banking and financial services, utilities and consulting operating segments have been included in a category called “All Other”. Segment information for all prior periods presented herein has been changed to conform to the current presentation. This change in segment presentation does not affect the Company's unaudited consolidated statements of income and comprehensive income, balance sheets or statements of cash flows.

The chief operating decision maker (“CODM”) generally reviews financial information such as revenues, cost of revenues and gross profit, disaggregated by the operating segments to allocate an overall budget among the operating segments.

The Company does not allocate and therefore the CODM does not evaluate other operating expenses, interest expense or income taxes by segment. Many of the Company’s assets are shared by multiple operating segments. The Company manages these assets on a total Company basis, not by operating segment, and therefore asset information and capital expenditures by operating segment are not presented.

Revenues and cost of revenues for the three months ended June 30, 2017 and 2016, respectively, for each of the reportable segments, are as follows:

	Three months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	58,255	$	18,923	$	17,835	$	21,038	$	21,447	$	51,559	$	189,057
Cost of revenues (exclusive of depreciation and amortization)	40,976		12,250		10,473		12,955		14,697		34,098		125,449
Gross profit	$	17,279	$	6,673	$	7,362	$	8,083	$	6,750	$	17,461	$	63,608
Operating expenses													47,479
Foreign exchange gain, interest expense and other income, net													5,072
Income tax expense													823
Net income													$	20,378

	Three months ended June 30, 2016
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	50,597	$	17,442	$	17,545	$	19,284	$	26,001	$	39,609	$	170,478
Cost of revenues (exclusive of depreciation and amortization)	36,451		11,008		10,801		11,929		16,293		25,544		112,026
Gross profit	$	14,146	$	6,434	$	6,744	$	7,355	$	9,708	$	14,065	$	58,452
Operating expenses													42,216
Foreign exchange gain, interest expense and other income, net													7,147
Income tax expense													7,008
Net income													$	16,375

Revenues and cost of revenues for the six months ended June 30, 2017 and 2016, respectively, for each of the reportable segments, are as follows:

	Six months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	114,176	$	37,855	$	34,878	$	42,052	$	42,563	$	100,566	$	372,090
Cost of revenues (exclusive of depreciation and amortization)	79,305		24,436		20,697		25,853		29,141		66,136		245,568
Gross profit	$	34,871	$	13,419	$	14,181	$	16,199	$	13,422	$	34,430	$	126,522
Operating expenses													94,491
Foreign exchange gain, interest expense and other income, net													9,518
Income tax expense													4,383
Net income													$	37,166

	Six months ended June 30, 2016
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	98,895	$	33,830	$	35,104	$	39,103	$	52,007	$	78,575	$	337,514
Cost of revenues (exclusive of depreciation and amortization)	70,719		21,553		21,264		23,373		33,181		50,315		220,405
Gross profit	$	28,176	$	12,277	$	13,840	$	15,730	$	18,826	$	28,260	$	117,109
Operating expenses													84,421
Foreign exchange gain, interest expense and other income, net													10,410
Income tax expense													12,903
Net income													$	30,195

Net revenues of the Company by service type, were as follows:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
BPM and related services (1)	$	137,498	$	130,869	$	271,524	$	258,939
Analytics services	51,559		39,609		100,566		78,575
Total	$	189,057	$	170,478	$	372,090	$	337,514

(1) BPM and related services include revenues of the Company's five industry-focused operating segments, one capability operating segment and consulting operating segment, which provides services related to operations management services. See reportable segment disclosure above.

The Company attributes the revenues to regions based upon the location of its customers.

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Revenues, net
United States	$	153,894	$	136,151	$	304,175	$	270,225
Non-United States
United Kingdom	28,951		28,863		55,033		56,291
Rest of World	6,212		5,464		12,882		10,998
Total Non-United States	35,163		34,327		67,915		67,289
	$	189,057	$	170,478	$	372,090	$	337,514

Property, plant and equipment by geographic area, were as follows:

	As of
	June 30, 2017		December 31, 2016
Property, plant and equipment, net
India	$	38,576	$	23,362
United States	12,890		10,809
Philippines	9,736		11,900
Rest of World	2,776		2,958
	$	63,978	$	49,029

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Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing net income to common stockholders by the weighted average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted average number of common shares plus the potentially dilutive effect of common stock equivalents issued and outstanding at the reporting date, using the treasury stock method. Stock options, restricted stock and restricted stock units that are anti-dilutive are excluded from the computation of weighted average shares outstanding.

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Numerators:
Net income	$	20,378	$	16,375	$	37,166	$	30,195
Denominators:
Basic weighted average common shares outstanding	33,819,320		33,621,444		33,833,153		33,500,736
Dilutive effect of share based awards	1,173,906		888,956		1,218,614		930,292
Diluted weighted average common shares outstanding	34,993,226		34,510,400		35,051,767		34,431,028
Earnings per share:
Basic	$	0.60	$	0.49	$	1.10	$	0.90
Diluted	$	0.58	$	0.47	$	1.06	$	0.88
Weighted average common shares considered anti-dilutive in computing diluted earnings per share	2,893		59,455		227,941		130,103

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Other Income, net

6 Months Ended

Jun. 30, 2017

Other Income and Expenses [Abstract]

Other Income, net

Other Income, net

Other income, net consists of the following:

	Three months ended June 30,					Six months ended June 30,
	2017			2016		2017		2016
Interest and dividend income	$	323		$	375	$	995	$	853
Gain on mutual fund investments	2,438			1,886		4,221		3,630
Change in fair value of earn-out consideration	—			3,810		—		4,060
Other, net	(122		)	56		733		763
Other income, net	$	2,639		$	6,127	$	5,949	$	9,306

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Property, Plant and Equipment

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Property, Plant and Equipment consist of the following:

	Estimated useful lives	As of
	(Years)	June 30, 2017			December 31, 2016
Owned Assets:
Network equipment and computers	3-5	$	73,158		$	65,381
Software	3-5	56,513			44,617
Leasehold improvements	3-8	36,176			31,192
Office furniture and equipment	3-8	17,241			15,426
Motor vehicles	2-5	695			580
Buildings	30	1,232			1,171
Land	—	806			766
Capital work in progress	—	9,141			4,964
		194,962			164,097
Less: Accumulated depreciation and amortization		(131,519		)	(115,568		)
		$	63,443		$	48,529
Assets under capital leases:
Leasehold improvements		$	898		$	854
Office furniture and equipment		140			133
Motor vehicles		775			810
		1,813			1,797
Less: Accumulated depreciation and amortization		(1,278		)	(1,297		)
		$	535		$	500
Property, Plant and Equipment, net		$	63,978		$	49,029

Depreciation and amortization expense excluding amortization of acquisition-related intangibles for the three months ended June 30, 2017 and 2016 was $6,130, and $5,552, respectively and for the six months ended June 30, 2017 and 2016 was $12,058 and $10,970 respectively. Internally generated software development costs, both as of June 30, 2017 and December 31, 2016, were $2,242 and is included under Software. Accumulated amortization expense for these capitalized software development costs as of June 30, 2017 and December 31, 2016 were $635 and $336, respectively.

Capital work in progress represents advances paid towards acquisition of property, plant and equipment and cost of property, plant and equipment and internally generated software costs not yet ready to be placed in service.

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

The following table sets forth details of the Company’s goodwill balance as of June 30, 2017:

	Insurance			Healthcare		TT&L			F&A			All Other		Analytics		Total
Balance as at January 1, 2016	$	35,824		$	19,276	$	13,278		$	47,891		$	5,326	$	49,940	$	171,535
Acquisitions	2,510			—		—			—			—		13,598		16,108
Currency translation adjustments	(224		)	—		(295		)	(354		)	—		—		(873		)
Balance as at December 31, 2016	$	38,110		$	19,276	$	12,983		$	47,537		$	5,326	$	63,538	$	186,770
Acquisitions	—			—		—			—			—		—		—
Currency translation adjustments	130			—		570			684			—		—		1,384
Balance as at June 30, 2017	$	38,240		$	19,276	$	13,553		$	48,221		$	5,326	$	63,538	$	188,154

Intangible Assets

Information regarding the Company’s intangible assets is set forth below:

	As of June 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	75,324	$	(38,316	)	$	37,008
Leasehold benefits	2,857		(2,466		)	391
Developed technology	14,267		(7,605		)	6,662
Non-compete agreements	2,045		(1,693		)	352
Trade names and trademarks	5,372		(3,712		)	1,660
	$	99,865	$	(53,792	)	$	46,073
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	100,765	$	(53,792	)	$	46,973

	As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	75,181	$	(32,968	)	$	42,213
Leasehold benefits	2,715		(2,247		)	468
Developed technology	14,186		(6,468		)	7,718
Non-compete agreements	2,045		(1,612		)	433
Trade names and trademarks	5,360		(3,322		)	2,038
	$	99,487	$	(46,617	)	$	52,870
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	100,387	$	(46,617	)	$	53,770

Amortization expense for the three months ended June 30, 2017 and 2016 was $3,507 and $2,718, respectively, and for the six months ended June 30, 2017 and 2016 was $7,005 and $5,433, respectively. The remaining weighted average life of intangible assets was 5.5 years for customer relationships, 1.9 years for leasehold benefits, 4.5 years for developed technology, 2.0 years for non-compete agreements and 5.3 years for trade names and trademarks excluding indefinite life trade names and trademarks.

Estimated amortization of intangible assets during the next twelve months ending June 30,
2018	$	13,113
2019	12,050
2020	7,775
2021	3,288
2022 and thereafter	9,847
Total	$	46,073

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Other current assets

6 Months Ended

Jun. 30, 2017

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other current assets

Other current assets

Other current assets consists of the following:

	As of
	June 30, 2017		December 31, 2016
Derivative instruments	$	8,826	$	3,324
Advances to suppliers	1,601		1,091
Receivables from statutory authorities	4,787		11,870
Others	3,570		4,883
Other current assets	$	18,784	$	21,168

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Accrued expenses and other current liabilities

6 Months Ended

Jun. 30, 2017

Payables and Accruals [Abstract]

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consists of the following:

	As of
	June 30, 2017		December 31, 2016
Accrued expenses	$	30,560	$	30,690
Derivative instruments	1,315		1,430
Client liability account	2,031		4,005
Others	6,939		7,139
Accrued expenses and other current liabilities	$	40,845	$	43,264

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Non-current liabilities

6 Months Ended

Jun. 30, 2017

Liabilities, Noncurrent [Abstract]

Non-current liabilities

Non-current liabilities

Non-current liabilities consists of the following:

	As of
	June 30, 2017		December 31, 2016
Derivative instruments	$	1,421	$	828
Unrecognized tax benefits	692		3,640
Deferred rent	7,855		7,237
Retirement benefits	2,779		1,977
Others	3,419		1,137
Non-current liabilities	$	16,166	$	14,819

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of amortization of actuarial gain/(loss) on retirement benefits and changes in the cumulative foreign currency translation adjustments. In addition, the Company enters into foreign currency exchange contracts, which are designated as cash flow hedges in accordance with ASC topic 815 “Derivatives and Hedging” (“ASC No. 815”). Changes in the fair values of contracts that are deemed effective are recorded as a component of accumulated other comprehensive loss until the settlement of those contracts. The balances as of June 30, 2017 and December 31, 2016 are as follows:

	As of
	June 30, 2017			December 31, 2016
Cumulative currency translation adjustments	$	(63,456	)	$	(77,299	)
Unrealized gain on cash flow hedges, net of taxes of $3,896 and $1,207	8,410			2,740
Retirement benefits, net of taxes of ($295) and ($342)	(405		)	(498		)
Accumulated other comprehensive loss	$	(55,451	)	$	(75,057	)

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Fair Value Measurements

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets and liabilities that were accounted for at fair value as of June 30, 2017 and December 31, 2016. The table excludes accounts receivable, accounts payable and accrued expenses for which fair values approximate their carrying amounts.

As of June 30, 2017	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds*	$	132,725	$	—	$	—	$	132,725
Derivative financial instruments	—		15,731		—		15,731
Total	$	132,725	$	15,731	$	—	$	148,456
Liabilities
Derivative financial instruments	$	—	$	2,736	$	—	$	2,736
Total	$	—	$	2,736	$	—	$	2,736
As of December 31, 2016	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds	$	—	$	—	$	—	$	—
Derivative financial instruments	—		6,318		—		6,318
Total	$	—	$	6,318	$	—	$	6,318
Liabilities
Derivative financial instruments	$	—	$	2,258	$	—	$	2,258
Total	$	—	$	2,258	$	—	$	2,258

* Represents short-term investments carried on fair value option under ASC 825 "Financial Instruments" as of June 30, 2017.

Derivative Financial Instruments: The Company’s derivative financial instruments consist of foreign currency forward exchange contracts. Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. See Note 13 to our unaudited consolidated financial statements contained herein for further details on Derivatives and Hedge Accounting.

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Derivatives and Hedge Accounting

6 Months Ended

Jun. 30, 2017

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 exchange rates. The Company’s derivative financial instruments are largely foreign exchange forward contracts that are designated effective and that qualify as cash flow hedges under ASC 815. The Company had outstanding cash flow hedges totaling $308,046 as of June 30, 2017 and $218,545 as of December 31, 2016. The fair value of these cash flow hedges is included in the other comprehensive loss on the Company's unaudited 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 815. Changes in the fair value of these derivatives are recognized in the unaudited 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 $86,766 and GBP 17,125 as of June 30, 2017 and amounted to $64,497 and GBP 17,974 as of December 31, 2016.

The Company estimates that approximately $7,293 of net derivative gains included in accumulated other comprehensive loss (“AOCL”) could be reclassified into earnings within the next twelve months based on exchange rates prevailing as of June 30, 2017. At June 30, 2017, the maximum outstanding term of the cash flow hedges was 45 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 unaudited 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 derivative amounts recorded in equity are reclassified to earnings. There were no such significant amounts of gains or losses that were reclassified from AOCL into earnings during the three months ended June 30, 2017 and 2016.

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

Derivatives designated as hedging instruments:

	As of
	June 30, 2017		December 31, 2016
Other current assets:
Foreign currency exchange contracts	$	8,608	$	3,211
Other assets:
Foreign currency exchange contracts	$	6,905	$	2,994
Accrued expenses and other current liabilities:
Foreign currency exchange contracts	$	1,315	$	1,430
Non-current liabilities:
Foreign currency exchange contracts	$	1,421	$	828

Derivatives not designated as hedging instruments:

	As of
	June 30, 2017		December 31, 2016
Other current assets:
Foreign currency exchange contracts	$	218	$	113

The following tables set forth the effect of foreign currency exchange contracts on the unaudited consolidated statements of income for the three and six months ended June 30, 2017 and 2016:

	Three months ended June 30,					Six months ended June 30,
	2017		2016			2017		2016
Derivatives in Cash flow hedging relationship
Gain/(loss) recognized in AOCL on derivative - Effective portion	$	770	$	(1,884	)	$	9,493	$	553
Gain/(loss) reclassified from AOCL to foreign exchange gain/(loss) - Effective portion	$	510	$	349		$	1,134	$	406
Gain/(loss) recognized in foreign exchange gain/(loss) - Ineffective portion	$	—	$	—		$	—	$	—
Derivatives not designated as hedging instruments
Gain/(loss) recognized in foreign exchange gain/(loss)	$	151	$	999		$	2,773	$	2,728

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Borrowings

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Borrowings

Borrowings

The Company has a revolving credit facility (the “Credit Facility”), including a letter of credit sub-facility, in the amount of $100,000. The Credit Facility has a maturity date of October 24, 2019 and is voluntarily pre-payable from time to time without premium or penalty.

Borrowings under the Credit Facility may be used for working capital, general corporate purposes and for acquisitions. The amount outstanding as of June 30, 2017 is $45,000, of which $10,000 is expected to be repaid within the next twelve months and is included under “short-term borrowings” in the unaudited consolidated balance sheets. The Credit Facility carried an effective interest rate of 2.7% per annum and 2.0% per annum, during the three months ended June 30, 2017 and 2016, respectively, and for the six months ended June 30, 2017 and 2016 was 2.6% per annum and 2.1% per annum, respectively.

In connection with the financing, the Company incurred certain debt issuance costs, which are deferred and amortized as an adjustment to interest expense over the term of the Credit Facility. The unamortized debt issuance costs as of June 30, 2017 and December 31, 2016 was $224 and $272, respectively, and is included under "other current assets" and "other assets" in the unaudited consolidated balance sheets.

The Credit Facility is guaranteed by the Company's domestic subsidiaries and material foreign subsidiaries and is secured by all or substantially all of the assets of the Company and its material domestic subsidiaries. The Credit Agreement contains certain covenants including a restriction on our indebtedness, and a covenant to not permit the interest coverage ratio (the ratio of EBIT to cash interest expense) or the leverage ratio (total funded indebtedness to EBITDA), for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.5 to 1.0 or 2.5 to 1.0, respectively. As of June 30, 2017, the Company was in compliance with the financial covenants listed above.

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Capital Structure

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Capital Structure

Capital Structure

Common Stock

The Company has one class of common stock outstanding.

During the three months ended June 30, 2017 and 2016, the Company acquired 2,219 and 1,479 shares of common stock, respectively, from employees in connection with withholding tax payments related to the vesting of restricted stock for a total consideration of $103 and $76, respectively. The weighted average purchase price per share of $46.51 and $51.39, respectively, was the average of the high and low price of the Company’s share of common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.

During the six months ended June 30, 2017 and 2016, the Company acquired 65,003 and 16,027 shares of common stock, respectively, from employees in connection with withholding tax payments related to the vesting of restricted stock for a total consideration of $3,016 and $728, respectively. The weighted average purchase price per share of $46.40 and $45.44, respectively, was the average of the high and low price of the Company’s share of common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.

On December 30, 2014, the Company’s Board of Directors authorized a common stock repurchase program (the “2014 Repurchase Program”), under which shares were authorized to be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2015 through 2017 up to an annual amount of $20,000.

On February 28, 2017, the Company’s Board of Directors authorized an additional common stock repurchase program (the “2017 Repurchase Program”), under which shares may be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2017 through 2019 up to an aggregate amount of $100,000. The approval increases the 2017 authorization from $20,000 to $40,000 and authorizes stock repurchases of up to $40,000 in each of 2018 and 2019.

During the three and six months ended June 30, 2017, the Company purchased 230,022 and 423,984 shares of its common stock, respectively, for an aggregate purchase price of approximately $11,316 and $20,316, respectively, including commissions, representing an average purchase price per share of $49.20 and $47.92, respectively, under the 2014 and 2017 Repurchase Program.

During the three and six months ended June 30, 2016, the Company purchased 56,172 and 194,810 shares of its common stock, respectively, for an aggregate purchase price of approximately $2,773 and $8,975, respectively, including commissions, representing an average purchase price per share of $49.37 and $46.07, respectively, under the 2014 Repurchase Program.

Repurchased shares have been recorded as treasury shares and will be held until the Board of Directors designates that these shares be retired or used for other purposes.

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2017

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

The Company’s Gratuity Plans in India ("Gratuity Plan") provide for lump sum payment to vested employees on retirement or upon termination of employment in an amount based on the respective employee’s salary and years of employment with the Company. Liabilities with regard to the Gratuity Plans are determined by actuarial valuation using the projected unit credit method. Current service costs for the Gratuity Plan are accrued in the year to which they relate. Actuarial gains or losses or prior service costs, if any, resulting from amendments to the plans are recognized and amortized over the remaining period of service of the employees.

In addition, the Company’s subsidiary operating in the Philippines conforms to the minimum regulatory benefit which provide for lump sum payment to vested employees on retirement from employment in an amount based on the respective employee’s salary and years of employment with the Company (the "Philippines Plan"). The benefit costs of the Philippines Plan for the year are calculated on an actuarial basis.    

Net gratuity cost includes the following components:

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Service cost	$	494		$	401		$	978		$	801
Interest cost	166			150			328			299
Expected return on plan assets	(111		)	(104		)	(218		)	(208		)
Amortization of Actuarial loss	71			22			140			44
Net gratuity cost	$	620		$	469		$	1,228		$	936

The Gratuity Plan in India is partially funded and the Philippines plan is unfunded. The Company makes annual contributions to the employees' gratuity fund established with Life Insurance Corporation of India and HDFC Standard Life Insurance Company. They calculate the annual contribution required to be made by the Company and manage the Gratuity Plans, including any required payouts. Fund managers manage these funds on a cash accumulation basis and declare interest retrospectively on March 31 of each year. The Company earned a return of approximately 8.0% on these Gratuity Plans for the period ended June 30, 2017.

Change in Plan Assets
Plan assets at January 1, 2017	$	5,640
Actual return	206
Employer contribution	1,685
Benefits paid	(604		)
Effect of exchange rate changes	312
Plan assets at June 30, 2017	$	7,239

The Company maintains several 401(k) plans under Section 401(k) of the Internal Revenue Code of 1986 (the “Code”), covering all eligible employees, as defined in the Code as a defined contribution plan. The Company may make discretionary contributions of up to a maximum of 4% of employee compensation within certain limits. Contributions to the 401(k) plans amounting to $496 and $475 were made during the three months ended June 30, 2017 and 2016, respectively, and $1,564 and $1,391 during the six months ended June 30, 2017 and 2016, respectively.

During the three months ended June 30, 2017 and 2016, the Company contributed $1,792 and $1,566, respectively, and during the six months ended June 30, 2017 and 2016, the Company contributed $3,505 and $3,048, respectively, for various defined contribution plans on behalf of its employees in India, the Philippines, Bulgaria, Romania, the Czech Republic, South Africa, Colombia, and Singapore.

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Leases

6 Months Ended

Jun. 30, 2017

Leases [Abstract]

Leases

Leases

The Company finances its use of certain motor vehicles under various lease arrangements provided by financial institutions. Future minimum lease payments under these capital leases as of June 30, 2017 are as follows:

During the next twelve months ending June 30,
2018	$	259
2019	180
2020	134
2021	49
Total minimum lease payments	622
Less: amount representing interest	109
Present value of minimum lease payments	513
Less: current portion	203
Long term capital lease obligation	$	310

The Company conducts its operations using facilities leased under non-cancelable operating lease agreements that expire at various dates. Future minimum lease payments under non-cancelable agreements expiring after June 30, 2017 are set forth below:

During the next twelve months ending June 30,
2018	$	10,834
2019	9,301
2020	5,055
2021	3,403
2022	1,119
2023 and thereafter	1,105
	$	30,817

The operating leases are subject to renewal periodically and have scheduled rent increases. The Company recognizes rent on such leases on a straight-line basis over the non-cancelable lease period determined under ASC topic 840, “Leases”. Rent expense under both cancelable and non-cancelable operating leases was $6,139 and $5,278 for the three months ended June 30, 2017 and 2016, respectively and $11,806 and $10,426, respectively for the six months ended June 30, 2017 and 2016. Deferred rent as of June 30, 2017 and December 31, 2016 was $8,785 and $7,915, respectively, and is included under “Accrued expenses and other current liabilities” and “Non-current liabilities” in the unaudited consolidated balance sheets.

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates its estimate of annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

The Company recorded income tax expense of $823 and $7,008 for the three months ended June 30, 2017 and 2016, respectively. The effective tax rate decreased from 30.0% during the three months ended June 30, 2016 to 3.9% as a result of (i) excess tax benefit related to stock awards of $1,624 recognized on adoption of ASU No. 2016-09 during the three months ended June 30, 2017, (ii) conclusion of an uncertain tax position of $3,153 (including interest of $1,433), (iii) the impact of reversal of earn-out liability of $3,810 in other income during the three months ended June 30, 2016 related to the Company's acquisition of RPM Direct LLC and RPM Data Solutions LLC (collectively, "RPM") in 2015, and (iv) higher earnings from foreign subsidiaries and lower domestic profit in the U.S.

The Company recorded income tax expense of $4,383 and $12,903 for the six months ended June 30, 2017 and 2016, respectively. The effective tax rate decreased from 29.9% during the six months ended June 30, 2016 to 10.5% as a result of (i) excess tax benefit related to stock awards of $3,681 recognized on adoption of ASU No. 2016-09 during the six months ended June 30, 2017, (ii) conclusion of an uncertain tax position of $3,153 (including interest of $1,433), (iii) the impact of reversal of earn-out liability of $4,060 in other income during the six months ended June 30, 2016 related to the Company's RPM acquisition in 2015, and (iv) higher earnings from foreign subsidiaries and lower domestic profit in the U.S.

The following table summarizes the activity related to the gross unrecognized tax benefits from January 1, 2017 through June 30, 2017:

Balance as of January 1, 2017	$	3,087
Increases related to prior year tax positions	—
Decreases related to prior year tax positions	(1,720		)
Increases related to current year tax positions	—
Decreases related to current year tax positions	—
Effect of exchange rate changes	85
Balance as of June 30, 2017	$	1,452

The unrecognized tax benefits as of June 30, 2017 of $1,452, if recognized, would impact the effective tax rate.

During the three months ended June 30, 2017 and 2016, the Company has recognized interest of nil and $49, respectively, which are included in the income tax expense in the unaudited consolidated statements of income. As of June 30, 2017 and December 31, 2016, the Company has accrued interest and penalties of $240 and $1,553, relating to unrecognized tax benefits.

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Stock Based Compensation

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

Stock-Based Compensation

The following costs related to the Company’s stock-based compensation plan are included in the unaudited consolidated statements of income:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Cost of revenue	$	1,129	$	788	$	2,339	$	2,053
General and administrative expenses	2,344		1,964		4,940		4,336
Selling and marketing expenses	1,634		1,698		3,784		3,870
Total	$	5,107	$	4,450	$	11,063	$	10,259

As of June 30, 2017, the Company had 1,464,838 shares available for grant under the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan.

Stock Options

Stock option activity under the Company’s stock plans is shown below:

	Number of Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Life (Years)
Outstanding at December 31, 2016	811,902		$	16.31	$	27,718	2.96
Granted	—		—
Exercised	(136,920	)	12.99
Forfeited	—		—
Outstanding at June 30, 2017	674,982		$	16.98	$	26,060	2.67
Vested and exercisable at June 30, 2017	674,982		$	16.98	$	26,060	2.67

The unrecognized compensation cost for outstanding options as of June 30, 2017 is nil. The Company did not grant any options during the three and six months ended June 30, 2017 and 2016. The total grant date fair value of options vested during the three and six months ended June 30, 2017 was nil and $706, respectively.

Restricted Stock and Restricted Stock Units

Restricted stock and restricted stock unit activity under the Company’s stock plans is shown below:

	Restricted Stock				Restricted Stock Units
	Number		Weighted- Average Fair Value		Number		Weighted- Average Fair Value
Outstanding at December 31, 2016*	246,940		$	42.42	1,256,288		$	37.38
Granted	—		—		387,977		47.94
Vested	(28,694	)	34.89		(397,746	)	35.00
Forfeited	—		—		(68,201	)	40.17
Outstanding at June 30, 2017*	218,246		$	43.41	1,178,318		$	41.50

*     As of June 30, 2017 and December 31, 2016 restricted stock units vested for which the underlying common stock is yet to be issued are 146,112 and 135,054, respectively.

As of June 30, 2017, unrecognized compensation cost of $45,029 is expected to be expensed over a weighted average period of 2.85 years.

Performance Based Stock Awards

Performance restricted stock unit (the "PRSUs") activity under the Company’s stock plans is shown below:

	Revenue Based PRSUs				Market Condition Based PRSUs
	Number		Weighted Avg Fair Value		Number		Weighted Avg Fair Value
Outstanding at December 31, 2016	115,174		$	41.70	215,171		$	47.42
Granted	62,113		47.73		62,100		54.10
Vested	—		—		—		—
Forfeited	(6,960	)	42.97		(6,960	)	58.90
Outstanding at June 30, 2017	170,327		$	43.85	270,311		$	48.66

As of June 30, 2017, unrecognized compensation cost of $10,252 is expected to be expensed over a weighted average period of 1.88 years.

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Related Party Disclosures

6 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Related Party Disclosures

Related Party Disclosures

The Company provides consulting services to PharmaCord, LLC.  One of the Company’s directors, Nitin Sahney, is the member-manager and chief executive officer of PharmaCord, LLC. The Company recognized revenue of approximately $328 and $805 in the three months and six months ended June 30, 2017, respectively, for services provided.

At June 30, 2017 and December 31, 2016, the Company had an account receivable of $305 and nil, respectively, related to these services.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Fixed Asset Commitments

At June 30, 2017, the Company has committed to spend approximately $5,920 under agreements to purchase fixed assets. This amount is net of capital advances paid in respect of these purchases.

Other Commitments

Certain units of the Company’s Indian subsidiaries were established as 100% Export-Oriented units or under the Software Technology Parks of India (“STPI”) scheme promulgated by the Government of India. These units are exempt from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. The Company has undertaken to pay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. The Company’s management believes, however, that these units have in the past satisfied and will continue to satisfy the required conditions.

The Company’s operations centers in the Philippines are registered with the Philippine Economic Zone Authority (“PEZA”). The registration provides the Company with certain fiscal incentives on the import of capital goods and requires ExlService Philippines, Inc. to meet certain performance and investment criteria. The Company’s management believes that these centers have in the past satisfied and will continue to satisfy the required criteria.

Contingencies

U.S. and Indian transfer pricing regulations require that any international transaction involving associated enterprises be at an arm’s-length price. Accordingly, the Company determines the appropriate pricing for the international transactions among its associated enterprises on the basis of a detailed functional and economic analysis involving benchmarking against transactions among entities that are not under common control. The tax authorities have jurisdiction to review this arrangement and in the event that they determine that the transfer price applied was not appropriate, the Company may incur increased tax liability, including accrued interest and penalties. The Company is currently involved in disputes with the Indian tax authorities over the application of some of its transfer pricing policies for some of its subsidiaries. Further, the Company and a U.S. subsidiary are engaged in tax litigation with the income-tax authorities in India on the issue of permanent establishment.

The aggregate disputed amount demanded by Indian tax authorities from the Company primarily related to its transfer pricing issues for years ranging from tax years 2003 to 2014 and its permanent establishment issues ranging from tax years 2003 to 2007 as of June 30, 2017 and December 31, 2016 is $17,099 and $17,963, respectively, of which the Company has made payments or provided bank guarantee to the extent $8,501 and $8,640, respectively. Amounts paid as deposits in respect of such assessments aggregating to $6,449 and $6,690 as of June 30, 2017 and December 31, 2016, respectively, are included in “Other assets” and amounts deposited for bank guarantees aggregating to $2,052 and $1,950 as of June 30, 2017 and December 31, 2016, respectively, are included in “Restricted cash” in the non-current assets section of the Company’s consolidated balance sheets as of June 30, 2017 and December 31, 2016.

Based on advice from its Indian tax advisors, the facts underlying the Company’s position and its experience with these types of assessments, the Company believes that the probability that it will ultimately be found liable for these assessments is remote and accordingly has not accrued any amount with respect to these matters in its consolidated financial statements. The Company does not expect any impact from these assessments on its future income tax expense. It is possible that the Company might receive similar orders or assessments from tax authorities for subsequent years. Accordingly even if these disputes are resolved, the Indian tax authorities may still serve additional orders or assessments.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Preparation

The unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The unaudited interim consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

Principles of Consolidation

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to the parent and it represents the minority partner’s interest in the operations of ExlService Colombia S.A.S. Non-controlling interest consists of the amount of such interest at the date of obtaining control over the subsidiary, and the non-controlling interest's share of changes in equity since that date. The non-controlling interest in the operations for all the periods presented were insignificant and are included under general and administrative expenses in the unaudited consolidated statements of income.

Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the unaudited consolidated statements of income during the reporting period. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates and assumptions that affect the financial statements include, but are not limited to, allowance for doubtful receivables, recoverability of service tax receivables, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, assumptions used to calculate stock-based compensation expense, depreciation and amortization periods, purchase price allocation, recoverability of long-term assets including goodwill and intangibles, and estimates to complete fixed price contracts.

Recent Accounting Pronouncements

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718). ASU No. 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the Statement of Cash Flows. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company adopted this ASU effective January 1, 2017. The following summarizes the effects of the adoption on the Company's unaudited consolidated financial statements:

Income taxes - Upon adoption of this standard, all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. The Company also recognizes excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. As a result, the Company recognized discrete adjustments to income tax expense for the three months ended June 30, 2017 in the amount of $1,624 and for the six months ended June 30, 2017 in the amount of $3,681 related to excess tax benefits. No adjustment is recorded for any windfall benefits previously recorded in APIC.

Forfeitures - Prior to adoption, share-based compensation expense was recognized on a straight line basis, net of estimated forfeitures, such that expense was recognized only for share-based awards that are expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption, the Company will no longer apply a forfeiture rate and instead will account for forfeitures as they occur. The Company has applied the modified retrospective adoption approach as of January 1, 2017 and has recognized a cumulative-effect adjustment to reduce additional paid-in-capital of $5,999 and retained earnings of $4,546 (net of deferred tax effect of $1,453).

Statements of Cash Flows - The Company historically accounted for excess tax benefits on the Statement of Cash Flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. The Company has elected to adopt this portion of the standard on a prospective basis beginning in 2017 and accordingly prior periods have not been adjusted.

Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. The Company excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of diluted earnings per share.

Upon adoption, no other aspects of ASU 2016-09 had an effect on the Company's unaudited consolidated financial statements or related footnote disclosures.

(d) Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts with Customers”. The new standard is effective for reporting periods beginning after December 15, 2017 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions of the Company. ASU 2014-09 is effective for the Company in the first quarter of fiscal 2018 using either one of two methods: (i) retrospectively to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09.

The Company is evaluating the impact of the new standard. The ultimate impact on revenue resulting from the application of the new standard will be subject to assessments that are dependent on many variables, including, but not limited to, the terms of the contractual arrangements and the mix of business. Upon adoption, we expect there to be a change in the manner that variable consideration in certain revenue arrangements is recognized from the current practice of recognizing such revenue as the services are performed and the variable consideration is earned to estimating the achievability of the variable conditions when we begin delivering services and recognizing that amount over the contractual period. The Company also expects a change in the manner that it recognizes certain incremental and fulfillment costs from expensing them as incurred to deferring and recognizing them over the contractual period.

The Company continues to evaluate the available transition methods and its contractual arrangements. The Company's considerations include, but are not limited to, the comparability of its financial statements and the comparability within its industry from application of the new standard to its contractual arrangements. The Company plans to select a transition method by the second half of 2017. The Company has established an implementation team to implement the standard update related to the recognition of revenue from contracts with customers and continues to evaluate the changes to accounting system and processes, and additional disclosure requirements that may be necessary.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a twelve month term, these arrangements must now be recognized as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and the implementation approach to be used.

In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is to be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendment should be applied through a modified retrospective approach. Early adoption as of the fiscal years beginning after December 15, 2018 is permitted. The adoption of ASU 2016-13 is not expected to have a material effect on the Company's consolidated financial statements.

In August 2016, FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments apply to all entities that are required to present a Statement of Cash Flows under Topic 230. The amendments are an improvement to GAAP because they provide guidance for each of eight issues identified therein, thereby reducing the current and potential future diversity in practice. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company does not expect the adoption of this ASU to have a material effect on its financial position or results of operations.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows - Restricted cash. The amendments apply to all entities that have restricted cash or restricted cash equivalents and are required to present a Statement of Cash Flows under Topic 230. The amendments in this update require that a Statement of Cash Flows should explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted with an adjustment reflected as of the beginning of the fiscal year in which the amendment is adoption. The Company does not expect the adoption of this ASU to have a material effect on its financial position or results of operations.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates Step 2 from the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.

In March, 2017, FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. The ASU amends ASC 715, Compensation — Retirement Benefits, to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic post-retirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in non-operating expenses. The update also stipulates that only the service cost component of net benefit cost is eligible for capitalization. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In May 2017, FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

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Segment and Geographical Information (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Revenues and Cost of Revenues for Company's Reportable Segments

Revenues and cost of revenues for the three months ended June 30, 2017 and 2016, respectively, for each of the reportable segments, are as follows:

	Three months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	58,255	$	18,923	$	17,835	$	21,038	$	21,447	$	51,559	$	189,057
Cost of revenues (exclusive of depreciation and amortization)	40,976		12,250		10,473		12,955		14,697		34,098		125,449
Gross profit	$	17,279	$	6,673	$	7,362	$	8,083	$	6,750	$	17,461	$	63,608
Operating expenses													47,479
Foreign exchange gain, interest expense and other income, net													5,072
Income tax expense													823
Net income													$	20,378

	Three months ended June 30, 2016
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	50,597	$	17,442	$	17,545	$	19,284	$	26,001	$	39,609	$	170,478
Cost of revenues (exclusive of depreciation and amortization)	36,451		11,008		10,801		11,929		16,293		25,544		112,026
Gross profit	$	14,146	$	6,434	$	6,744	$	7,355	$	9,708	$	14,065	$	58,452
Operating expenses													42,216
Foreign exchange gain, interest expense and other income, net													7,147
Income tax expense													7,008
Net income													$	16,375

Revenues and cost of revenues for the six months ended June 30, 2017 and 2016, respectively, for each of the reportable segments, are as follows:

	Six months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	114,176	$	37,855	$	34,878	$	42,052	$	42,563	$	100,566	$	372,090
Cost of revenues (exclusive of depreciation and amortization)	79,305		24,436		20,697		25,853		29,141		66,136		245,568
Gross profit	$	34,871	$	13,419	$	14,181	$	16,199	$	13,422	$	34,430	$	126,522
Operating expenses													94,491
Foreign exchange gain, interest expense and other income, net													9,518
Income tax expense													4,383
Net income													$	37,166

	Six months ended June 30, 2016
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	98,895	$	33,830	$	35,104	$	39,103	$	52,007	$	78,575	$	337,514
Cost of revenues (exclusive of depreciation and amortization)	70,719		21,553		21,264		23,373		33,181		50,315		220,405
Gross profit	$	28,176	$	12,277	$	13,840	$	15,730	$	18,826	$	28,260	$	117,109
Operating expenses													84,421
Foreign exchange gain, interest expense and other income, net													10,410
Income tax expense													12,903
Net income													$	30,195

Net revenues of the Company by service type, were as follows:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
BPM and related services (1)	$	137,498	$	130,869	$	271,524	$	258,939
Analytics services	51,559		39,609		100,566		78,575
Total	$	189,057	$	170,478	$	372,090	$	337,514

(1) BPM and related services include revenues of the Company's five industry-focused operating segments, one capability operating segment and consulting operating segment, which provides services related to operations management services. See reportable segment disclosure above.

Revenues Based on Geographical Information

The Company attributes the revenues to regions based upon the location of its customers.

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Revenues, net
United States	$	153,894	$	136,151	$	304,175	$	270,225
Non-United States
United Kingdom	28,951		28,863		55,033		56,291
Rest of World	6,212		5,464		12,882		10,998
Total Non-United States	35,163		34,327		67,915		67,289
	$	189,057	$	170,478	$	372,090	$	337,514

Property, Plant and Equipment based on Geographical Information

Property, plant and equipment by geographic area, were as follows:

	As of
	June 30, 2017		December 31, 2016
Property, plant and equipment, net
India	$	38,576	$	23,362
United States	12,890		10,809
Philippines	9,736		11,900
Rest of World	2,776		2,958
	$	63,978	$	49,029

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Numerators:
Net income	$	20,378	$	16,375	$	37,166	$	30,195
Denominators:
Basic weighted average common shares outstanding	33,819,320		33,621,444		33,833,153		33,500,736
Dilutive effect of share based awards	1,173,906		888,956		1,218,614		930,292
Diluted weighted average common shares outstanding	34,993,226		34,510,400		35,051,767		34,431,028
Earnings per share:
Basic	$	0.60	$	0.49	$	1.10	$	0.90
Diluted	$	0.58	$	0.47	$	1.06	$	0.88
Weighted average common shares considered anti-dilutive in computing diluted earnings per share	2,893		59,455		227,941		130,103

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Other Income, net (Tables)

6 Months Ended

Jun. 30, 2017

Other Income and Expenses [Abstract]

Summary of Other Income, net

Other income, net consists of the following:

	Three months ended June 30,					Six months ended June 30,
	2017			2016		2017		2016
Interest and dividend income	$	323		$	375	$	995	$	853
Gain on mutual fund investments	2,438			1,886		4,221		3,630
Change in fair value of earn-out consideration	—			3,810		—		4,060
Other, net	(122		)	56		733		763
Other income, net	$	2,639		$	6,127	$	5,949	$	9,306

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Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Property, Plant and Equipment consist of the following:

	Estimated useful lives	As of
	(Years)	June 30, 2017			December 31, 2016
Owned Assets:
Network equipment and computers	3-5	$	73,158		$	65,381
Software	3-5	56,513			44,617
Leasehold improvements	3-8	36,176			31,192
Office furniture and equipment	3-8	17,241			15,426
Motor vehicles	2-5	695			580
Buildings	30	1,232			1,171
Land	—	806			766
Capital work in progress	—	9,141			4,964
		194,962			164,097
Less: Accumulated depreciation and amortization		(131,519		)	(115,568		)
		$	63,443		$	48,529
Assets under capital leases:
Leasehold improvements		$	898		$	854
Office furniture and equipment		140			133
Motor vehicles		775			810
		1,813			1,797
Less: Accumulated depreciation and amortization		(1,278		)	(1,297		)
		$	535		$	500
Property, Plant and Equipment, net		$	63,978		$	49,029

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Company's Goodwill

The following table sets forth details of the Company’s goodwill balance as of June 30, 2017:

	Insurance			Healthcare		TT&L			F&A			All Other		Analytics		Total
Balance as at January 1, 2016	$	35,824		$	19,276	$	13,278		$	47,891		$	5,326	$	49,940	$	171,535
Acquisitions	2,510			—		—			—			—		13,598		16,108
Currency translation adjustments	(224		)	—		(295		)	(354		)	—		—		(873		)
Balance as at December 31, 2016	$	38,110		$	19,276	$	12,983		$	47,537		$	5,326	$	63,538	$	186,770
Acquisitions	—			—		—			—			—		—		—
Currency translation adjustments	130			—		570			684			—		—		1,384
Balance as at June 30, 2017	$	38,240		$	19,276	$	13,553		$	48,221		$	5,326	$	63,538	$	188,154

Summary of Company's Intangible Assets

Information regarding the Company’s intangible assets is set forth below:

	As of June 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	75,324	$	(38,316	)	$	37,008
Leasehold benefits	2,857		(2,466		)	391
Developed technology	14,267		(7,605		)	6,662
Non-compete agreements	2,045		(1,693		)	352
Trade names and trademarks	5,372		(3,712		)	1,660
	$	99,865	$	(53,792	)	$	46,073
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	100,765	$	(53,792	)	$	46,973

	As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	75,181	$	(32,968	)	$	42,213
Leasehold benefits	2,715		(2,247		)	468
Developed technology	14,186		(6,468		)	7,718
Non-compete agreements	2,045		(1,612		)	433
Trade names and trademarks	5,360		(3,322		)	2,038
	$	99,487	$	(46,617	)	$	52,870
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	100,387	$	(46,617	)	$	53,770

Estimated Amortization of Intangible Assets

Estimated amortization of intangible assets during the next twelve months ending June 30,
2018	$	13,113
2019	12,050
2020	7,775
2021	3,288
2022 and thereafter	9,847
Total	$	46,073

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Other current assets (Tables)

6 Months Ended

Jun. 30, 2017

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Current Assets

Other current assets consists of the following:

	As of
	June 30, 2017		December 31, 2016
Derivative instruments	$	8,826	$	3,324
Advances to suppliers	1,601		1,091
Receivables from statutory authorities	4,787		11,870
Others	3,570		4,883
Other current assets	$	18,784	$	21,168

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Accrued expenses and other current liabilities (Tables)

6 Months Ended

Jun. 30, 2017

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consists of the following:

	As of
	June 30, 2017		December 31, 2016
Accrued expenses	$	30,560	$	30,690
Derivative instruments	1,315		1,430
Client liability account	2,031		4,005
Others	6,939		7,139
Accrued expenses and other current liabilities	$	40,845	$	43,264

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Non-current liabilities (Tables)

6 Months Ended

Jun. 30, 2017

Liabilities, Noncurrent [Abstract]

Summary of Non-Current Liabilities

Non-current liabilities consists of the following:

	As of
	June 30, 2017		December 31, 2016
Derivative instruments	$	1,421	$	828
Unrecognized tax benefits	692		3,640
Deferred rent	7,855		7,237
Retirement benefits	2,779		1,977
Others	3,419		1,137
Non-current liabilities	$	16,166	$	14,819

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Loss

The balances as of June 30, 2017 and December 31, 2016 are as follows:

	As of
	June 30, 2017			December 31, 2016
Cumulative currency translation adjustments	$	(63,456	)	$	(77,299	)
Unrealized gain on cash flow hedges, net of taxes of $3,896 and $1,207	8,410			2,740
Retirement benefits, net of taxes of ($295) and ($342)	(405		)	(498		)
Accumulated other comprehensive loss	$	(55,451	)	$	(75,057	)

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets and liabilities that were accounted for at fair value as of June 30, 2017 and December 31, 2016. The table excludes accounts receivable, accounts payable and accrued expenses for which fair values approximate their carrying amounts.

As of June 30, 2017	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds*	$	132,725	$	—	$	—	$	132,725
Derivative financial instruments	—		15,731		—		15,731
Total	$	132,725	$	15,731	$	—	$	148,456
Liabilities
Derivative financial instruments	$	—	$	2,736	$	—	$	2,736
Total	$	—	$	2,736	$	—	$	2,736
As of December 31, 2016	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds	$	—	$	—	$	—	$	—
Derivative financial instruments	—		6,318		—		6,318
Total	$	—	$	6,318	$	—	$	6,318
Liabilities
Derivative financial instruments	$	—	$	2,258	$	—	$	2,258
Total	$	—	$	2,258	$	—	$	2,258

* Represents short-term investments carried on fair value option under ASC 825 "Financial Instruments" as of June 30, 2017.

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Derivatives and Hedge Accounting (Tables)

6 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Fair Value of Foreign Currency Exchange Contracts

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

Derivatives designated as hedging instruments:

	As of
	June 30, 2017		December 31, 2016
Other current assets:
Foreign currency exchange contracts	$	8,608	$	3,211
Other assets:
Foreign currency exchange contracts	$	6,905	$	2,994
Accrued expenses and other current liabilities:
Foreign currency exchange contracts	$	1,315	$	1,430
Non-current liabilities:
Foreign currency exchange contracts	$	1,421	$	828

Derivatives not designated as hedging instruments:

	As of
	June 30, 2017		December 31, 2016
Other current assets:
Foreign currency exchange contracts	$	218	$	113

Summary of Effect of Foreign Currency Exchange Contracts on Consolidated Statements of Income

The following tables set forth the effect of foreign currency exchange contracts on the unaudited consolidated statements of income for the three and six months ended June 30, 2017 and 2016:

	Three months ended June 30,					Six months ended June 30,
	2017		2016			2017		2016
Derivatives in Cash flow hedging relationship
Gain/(loss) recognized in AOCL on derivative - Effective portion	$	770	$	(1,884	)	$	9,493	$	553
Gain/(loss) reclassified from AOCL to foreign exchange gain/(loss) - Effective portion	$	510	$	349		$	1,134	$	406
Gain/(loss) recognized in foreign exchange gain/(loss) - Ineffective portion	$	—	$	—		$	—	$	—
Derivatives not designated as hedging instruments
Gain/(loss) recognized in foreign exchange gain/(loss)	$	151	$	999		$	2,773	$	2,728

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2017

Compensation and Retirement Disclosure [Abstract]

Net Gratuity Cost

Net gratuity cost includes the following components:

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Service cost	$	494		$	401		$	978		$	801
Interest cost	166			150			328			299
Expected return on plan assets	(111		)	(104		)	(218		)	(208		)
Amortization of Actuarial loss	71			22			140			44
Net gratuity cost	$	620		$	469		$	1,228		$	936

Change in Plan Assets

Change in Plan Assets
Plan assets at January 1, 2017	$	5,640
Actual return	206
Employer contribution	1,685
Benefits paid	(604		)
Effect of exchange rate changes	312
Plan assets at June 30, 2017	$	7,239

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Leases (Tables)

6 Months Ended

Jun. 30, 2017

Leases [Abstract]

Future Minimum Lease Payments under Capital Leases

Future minimum lease payments under these capital leases as of June 30, 2017 are as follows:

During the next twelve months ending June 30,
2018	$	259
2019	180
2020	134
2021	49
Total minimum lease payments	622
Less: amount representing interest	109
Present value of minimum lease payments	513
Less: current portion	203
Long term capital lease obligation	$	310

Future Minimum Lease Payments under Non-Cancelable Operating Lease Agreements

Future minimum lease payments under non-cancelable agreements expiring after June 30, 2017 are set forth below:

During the next twelve months ending June 30,
2018	$	10,834
2019	9,301
2020	5,055
2021	3,403
2022	1,119
2023 and thereafter	1,105
	$	30,817

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Summary of Activity Related to Gross Unrecognized Tax Benefits

The following table summarizes the activity related to the gross unrecognized tax benefits from January 1, 2017 through June 30, 2017:

Balance as of January 1, 2017	$	3,087
Increases related to prior year tax positions	—
Decreases related to prior year tax positions	(1,720		)
Increases related to current year tax positions	—
Decreases related to current year tax positions	—
Effect of exchange rate changes	85
Balance as of June 30, 2017	$	1,452

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Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2017

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Costs Related to Company's Stock-Based Compensation Plan

The following costs related to the Company’s stock-based compensation plan are included in the unaudited consolidated statements of income:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Cost of revenue	$	1,129	$	788	$	2,339	$	2,053
General and administrative expenses	2,344		1,964		4,940		4,336
Selling and marketing expenses	1,634		1,698		3,784		3,870
Total	$	5,107	$	4,450	$	11,063	$	10,259

Stock Based Compensation Stock Option Activity

Stock option activity under the Company’s stock plans is shown below:

	Number of Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Life (Years)
Outstanding at December 31, 2016	811,902		$	16.31	$	27,718	2.96
Granted	—		—
Exercised	(136,920	)	12.99
Forfeited	—		—
Outstanding at June 30, 2017	674,982		$	16.98	$	26,060	2.67
Vested and exercisable at June 30, 2017	674,982		$	16.98	$	26,060	2.67

Restricted Stock Units

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Restricted Stock Activity Under Company's Stock Plans

Restricted stock and restricted stock unit activity under the Company’s stock plans is shown below:

	Restricted Stock				Restricted Stock Units
	Number		Weighted- Average Fair Value		Number		Weighted- Average Fair Value
Outstanding at December 31, 2016*	246,940		$	42.42	1,256,288		$	37.38
Granted	—		—		387,977		47.94
Vested	(28,694	)	34.89		(397,746	)	35.00
Forfeited	—		—		(68,201	)	40.17
Outstanding at June 30, 2017*	218,246		$	43.41	1,178,318		$	41.50

*     As of June 30, 2017 and December 31, 2016 restricted stock units vested for which the underlying common stock is yet to be issued are 146,112 and 135,054, respectively.

Performance Based Stock Awards

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Restricted Stock Activity Under Company's Stock Plans

Performance restricted stock unit (the "PRSUs") activity under the Company’s stock plans is shown below:

	Revenue Based PRSUs				Market Condition Based PRSUs
	Number		Weighted Avg Fair Value		Number		Weighted Avg Fair Value
Outstanding at December 31, 2016	115,174		$	41.70	215,171		$	47.42
Granted	62,113		47.73		62,100		54.10
Vested	—		—		—		—
Forfeited	(6,960	)	42.97		(6,960	)	58.90
Outstanding at June 30, 2017	170,327		$	43.85	270,311		$	48.66

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Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Excess tax benefit	$ 1,624	$ 3,681
Accounting Standards Update 2016-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred tax effect			$ 1,453
Accounting Standards Update 2016-09 | Additional Paid-in Capital
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment			5,999
Accounting Standards Update 2016-09 | Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment			$ 4,546

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Segment and Geographical Information - Additional Information (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2017 operating_segment	Dec. 31, 2015 Segment
Segment Reporting [Abstract]
Number of operating segments	8
Number of operating segments, operations management	6
Number of operating segments, finance and accounting	1
Number of operating segments, company provides operations management services	6
Number of non-operations management services	2
Number of reportable segments | Segment		2

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Segment and Geographical Information - Revenues and Cost of Revenues for Company's Reportable Segments (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) operating_segment	Jun. 30, 2016 USD ($)
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net	$ 189,057	$ 170,478	$ 372,090	$ 337,514
Cost of revenues (exclusive of depreciation and amortization)	125,449	112,026	245,568	220,405
Gross profit	63,608	58,452	126,522	117,109
Operating expenses	47,479	42,216	94,491	84,421
Foreign exchange gain, interest expense and other income, net	5,072	7,147	9,518	10,410
Income tax expense	823	7,008	4,383	12,903
Net income	20,378	16,375	$ 37,166	30,195
Number of operating segments, industry focused | operating_segment			5
Number of capability operating segments | operating_segment			1
Insurance
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net	58,255	50,597	$ 114,176	98,895
Cost of revenues (exclusive of depreciation and amortization)	40,976	36,451	79,305	70,719
Gross profit	17,279	14,146	34,871	28,176
Healthcare
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net	18,923	17,442	37,855	33,830
Cost of revenues (exclusive of depreciation and amortization)	12,250	11,008	24,436	21,553
Gross profit	6,673	6,434	13,419	12,277
Travel, Transportation and Logistics
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net	17,835	17,545	34,878	35,104
Cost of revenues (exclusive of depreciation and amortization)	10,473	10,801	20,697	21,264
Gross profit	7,362	6,744	14,181	13,840
Finance and Accounting
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net	21,038	19,284	42,052	39,103
Cost of revenues (exclusive of depreciation and amortization)	12,955	11,929	25,853	23,373
Gross profit	8,083	7,355	16,199	15,730
All Other
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net	21,447	26,001	42,563	52,007
Cost of revenues (exclusive of depreciation and amortization)	14,697	16,293	29,141	33,181
Gross profit	6,750	9,708	13,422	18,826
Analytics
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net	51,559	39,609	100,566	78,575
Cost of revenues (exclusive of depreciation and amortization)	34,098	25,544	66,136	50,315
Gross profit	17,461	14,065	34,430	28,260
BPM and Related Services
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net	137,498	130,869	271,524	258,939
Analytics Services
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net	$ 51,559	$ 39,609	$ 100,566	$ 78,575

XML

Segment and Geographical Information - Revenues based on Geographical Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	$ 189,057	$ 170,478	$ 372,090	$ 337,514
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	153,894	136,151	304,175	270,225
United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	28,951	28,863	55,033	56,291
Rest of World
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	6,212	5,464	12,882	10,998
Non-US
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	$ 35,163	$ 34,327	$ 67,915	$ 67,289

XML

Segment and Geographical Information - Property, Plant and Equipment, Net Based On Geographical Information (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	$ 63,978	$ 49,029
India
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	38,576	23,362
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	12,890	10,809
Philippines
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	9,736	11,900
Rest of World
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	$ 2,776	$ 2,958

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Earnings Per Share - Computation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Numerators:
Net income	$ 20,378	$ 16,375	$ 37,166	$ 30,195
Denominators:
Basic weighted average common shares outstanding	33,819,320	33,621,444	33,833,153	33,500,736
Dilutive effect of share based awards (in shares)	1,173,906	888,956	1,218,614	930,292
Diluted weighted average common shares outstanding	34,993,226	34,510,400	35,051,767	34,431,028
Earnings Per Share:
Basic (in dollars per share)	$ 0.60	$ 0.49	$ 1.10	$ 0.90
Diluted (in dollars per share)	$ 0.58	$ 0.47	$ 1.06	$ 0.88
Weighted average common shares considered anti-dilutive in computing diluted earnings per share	2,893	59,455	227,941	130,103

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Other Income, net - Summary of Other Income, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Other Income and Expenses [Abstract]
Interest and dividend income	$ 323	$ 375	$ 995	$ 853
Gain on mutual fund investments	2,438	1,886	4,221	3,630
Change in fair value of earn-out consideration	0	3,810	0	4,060
Other, net	(122)	56	733	763
Other income, net	$ 2,639	$ 6,127	$ 5,949	$ 9,306

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Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Owned Assets:
Owned assets, gross	$ 194,962	$ 164,097
Less: Accumulated depreciation and amortization	(131,519)	(115,568)
Owned Assets, net	63,443	48,529
Assets under capital leases:
Capital leased assets, gross	1,813	1,797
Less: Accumulated depreciation and amortization	(1,278)	(1,297)
Assets under capital leases, net	535	500
Property, Plant and Equipment, net	63,978	49,029
Network equipment and computers
Owned Assets:
Owned assets, gross	73,158	65,381
Software
Owned Assets:
Owned assets, gross	56,513	44,617
Leasehold improvements
Owned Assets:
Owned assets, gross	36,176	31,192
Assets under capital leases:
Capital leased assets, gross	898	854
Office furniture and equipment
Owned Assets:
Owned assets, gross	17,241	15,426
Assets under capital leases:
Capital leased assets, gross	140	133
Motor vehicles
Owned Assets:
Owned assets, gross	695	580
Assets under capital leases:
Capital leased assets, gross	775	810
Buildings
Owned Assets:
Owned assets, gross	$ 1,232	1,171
Equipment useful life (in years)	30 years
Land
Owned Assets:
Owned assets, gross	$ 806	766
Capital work in progress
Owned Assets:
Owned assets, gross	$ 9,141	$ 4,964
Minimum | Network equipment and computers
Owned Assets:
Equipment useful life (in years)	3 years
Minimum | Software
Owned Assets:
Equipment useful life (in years)	3 years
Minimum | Leasehold improvements
Owned Assets:
Equipment useful life (in years)	3 years
Minimum | Office furniture and equipment
Owned Assets:
Equipment useful life (in years)	3 years
Minimum | Motor vehicles
Owned Assets:
Equipment useful life (in years)	2 years
Maximum | Network equipment and computers
Owned Assets:
Equipment useful life (in years)	5 years
Maximum | Software
Owned Assets:
Equipment useful life (in years)	5 years
Maximum | Leasehold improvements
Owned Assets:
Equipment useful life (in years)	8 years
Maximum | Office furniture and equipment
Owned Assets:
Equipment useful life (in years)	8 years
Maximum | Motor vehicles
Owned Assets:
Equipment useful life (in years)	5 years

XML

Property, Plant and Equipment - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 6,130	$ 5,552	$ 12,058	$ 10,970
Software development costs	2,242		2,242		$ 2,242
Capitalized software development costs, accumulated amortization	$ 635		$ 635		$ 336

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Goodwill and Intangible Assets - Summary of Company's Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Goodwill [Roll Forward]
Beginning Balance	$ 186,770	$ 171,535
Acquisitions	0	16,108
Currency translation adjustments	1,384	(873)
Ending Balance	188,154	186,770
Insurance
Goodwill [Roll Forward]
Beginning Balance	38,110	35,824
Acquisitions	0	2,510
Currency translation adjustments	130	(224)
Ending Balance	38,240	38,110
Healthcare
Goodwill [Roll Forward]
Beginning Balance	19,276	19,276
Acquisitions	0	0
Currency translation adjustments	0	0
Ending Balance	19,276	19,276
Travel, Transportation and Logistics
Goodwill [Roll Forward]
Beginning Balance	12,983	13,278
Acquisitions	0	0
Currency translation adjustments	570	(295)
Ending Balance	13,553	12,983
Finance and Accounting
Goodwill [Roll Forward]
Beginning Balance	47,537	47,891
Acquisitions	0	0
Currency translation adjustments	684	(354)
Ending Balance	48,221	47,537
All Other
Goodwill [Roll Forward]
Beginning Balance	5,326	5,326
Acquisitions	0	0
Currency translation adjustments	0	0
Ending Balance	5,326	5,326
Analytics
Goodwill [Roll Forward]
Beginning Balance	63,538	49,940
Acquisitions	0	13,598
Currency translation adjustments	0	0
Ending Balance	$ 63,538	$ 63,538

XML

Goodwill and Intangible Assets - Summary of Company's Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	$ 99,865	$ 99,487
Accumulated amortization	(53,792)	(46,617)
Total	46,073	52,870
Intangible assets, gross	100,765	100,387
Intangible assets, net	46,973	53,770
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	75,324	75,181
Accumulated amortization	(38,316)	(32,968)
Total	37,008	42,213
Leasehold benefits
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	2,857	2,715
Accumulated amortization	(2,466)	(2,247)
Total	391	468
Developed technology
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	14,267	14,186
Accumulated amortization	(7,605)	(6,468)
Total	6,662	7,718
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	2,045	2,045
Accumulated amortization	(1,693)	(1,612)
Total	352	433
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	5,372	5,360
Accumulated amortization	(3,712)	(3,322)
Total	1,660	2,038
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets, trade names and trademarks	$ 900	$ 900

XML

Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 3,507	$ 2,718	$ 7,005	$ 5,433
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Remaining amortization period (in years)			5 years 6 months
Leasehold benefits
Acquired Finite-Lived Intangible Assets [Line Items]
Remaining amortization period (in years)			1 year 10 months 24 days
Developed technology
Acquired Finite-Lived Intangible Assets [Line Items]
Remaining amortization period (in years)			4 years 6 months
Non-compete agreements
Acquired Finite-Lived Intangible Assets [Line Items]
Remaining amortization period (in years)			2 years
Trade names and trademarks
Acquired Finite-Lived Intangible Assets [Line Items]
Remaining amortization period (in years)			5 years 3 months 18 days

XML

Goodwill and Intangible Assets - Estimated Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
2018	$ 13,113
2019	12,050
2020	7,775
2021	3,288
2022 and thereafter	9,847
Total	$ 46,073	$ 52,870

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Other current assets - Schedule of Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Derivative instruments	$ 8,826	$ 3,324
Advances to suppliers	1,601	1,091
Receivables from statutory authorities	4,787	11,870
Others	3,570	4,883
Other current assets	$ 18,784	$ 21,168

XML

Accrued expenses and other current liabilities - Summary of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Accrued expenses	$ 30,560	$ 30,690
Derivative instruments	1,315	1,430
Client liability account	2,031	4,005
Others	6,939	7,139
Accrued expenses and other current liabilities	$ 40,845	$ 43,264

XML

Non-current liabilities - Summary of Non-Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Liabilities, Noncurrent [Abstract]
Derivative instruments	$ 1,421	$ 828
Unrecognized tax benefits	692	3,640
Deferred rent	7,855	7,237
Retirement benefits	2,779	1,977
Others	3,419	1,137
Non-current liabilities	$ 16,166	$ 14,819

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Accumulated Other Comprehensive Loss - Summary of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative currency translation adjustments	$ (63,456)	$ (77,299)
Unrealized gain on cash flow hedges, net of taxes of $3,896 and $1,207	8,410	2,740
Retirement benefits, net of taxes of ($295) and ($342)	(405)	(498)
Accumulated other comprehensive loss	(55,451)	(75,057)
Unrealized gain / (loss) on cash flow hedges, taxes	3,896	1,207
Retirement benefits, taxes	$ (295)	$ (342)

XML

Fair Value Measurements - Assets and Liabilities Measured at Fair Value (Details) - Recurring - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets
Money market and mutual funds	$ 132,725
Derivative financial instruments	15,731	$ 6,318
Total	148,456	6,318
Liabilities
Derivative financial instruments	2,736	2,258
Total	2,736	2,258
Level 1
Assets
Money market and mutual funds	132,725	0
Total	132,725	0
Level 2
Assets
Money market and mutual funds	0
Derivative financial instruments	15,731	6,318
Total	15,731	6,318
Liabilities
Derivative financial instruments	2,736	2,258
Total	2,736	2,258
Level 3
Assets
Money market and mutual funds	0
Liabilities
Derivative financial instruments	$ 0	$ 0

XML

Derivatives and Hedge Accounting - Additional Information (Details) £ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2017 GBP (£)	Dec. 31, 2016 USD ($)	Dec. 31, 2016 GBP (£)
Derivative Instruments, Gain (Loss) [Line Items]
Net derivative losses which could be reclassified into earnings within the next 12 months			$ 7,293,000
Maximum outstanding term of cash flow hedges (in months)			45 months
Gain/(losses) that reclassified from AOCI into earning for discontinued hedging transactions	$ 0	$ 0
Derivatives Designated as Hedging Instruments | Derivatives in Cash Flow Hedging Relationships | Foreign Currency Exchange Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Foreign exchange contracts outstanding	308,046,000		$ 308,046,000		$ 218,545,000
Derivatives not Designated as Hedging Instruments | Foreign Currency Exchange Contracts
Derivative Instruments, Gain (Loss) [Line Items]
Foreign exchange contracts outstanding	$ 86,766,000		$ 86,766,000	£ 17,125	$ 64,497,000	£ 17,974

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Derivatives and Hedge Accounting - Summary of Fair Value of Foreign Currency Exchange Contracts (Details) - Foreign Currency Exchange Contracts - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Derivatives Designated as Hedging Instruments | Other current assets
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, asset	$ 8,608	$ 3,211
Derivatives Designated as Hedging Instruments | Other assets
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, asset	6,905	2,994
Derivatives Designated as Hedging Instruments | Accrued expenses and other current liabilities
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, liability	1,315	1,430
Derivatives Designated as Hedging Instruments | Non-current liabilities
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, liability	1,421	828
Derivatives not Designated as Hedging Instruments | Other current assets
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, asset	$ 218	$ 113

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Derivatives and Hedge Accounting - Summary of Effect of Foreign Currency Exchange Contracts on Consolidated Statements of Income (Details) - Foreign Currency Exchange Contracts - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivatives Designated as Hedging Instruments | Derivatives in Cash Flow Hedging Relationships
Derivative Instruments, Gain (Loss) [Line Items]
Gain/(loss) recognized in AOCL on derivative - Effective portion	$ 770	$ (1,884)	$ 9,493	$ 553
Foreign exchange gain/(loss) | Derivatives Designated as Hedging Instruments | Derivatives in Cash Flow Hedging Relationships
Derivative Instruments, Gain (Loss) [Line Items]
Gain/(loss) reclassified from AOCL to foreign exchange gain/(loss) - Effective portion	510	349	1,134	406
Gain/(loss) recognized in foreign exchange gain/(loss) - Ineffective portion	0	0	0	0
Foreign exchange gain/(loss) | Derivatives not Designated as Hedging Instruments
Derivative Instruments, Gain (Loss) [Line Items]
Gain/(loss) recognized in foreign exchange gain/(loss)	$ 151	$ 999	$ 2,773	$ 2,728

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Borrowings - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016	Jun. 30, 2017 USD ($)	Jun. 30, 2016	Dec. 31, 2016 USD ($)
Credit Facilities [Line Items]
Short-term borrowings	$ 10,000,000		$ 10,000,000		$ 10,000,000
Revolving Credit Facility
Credit Facilities [Line Items]
Credit facility capacity	100,000,000		$ 100,000,000
Credit facility expiration date			Oct. 24, 2019
Credit facility capacity, outstanding	45,000,000		$ 45,000,000
Short-term borrowings	$ 10,000,000		$ 10,000,000
Line of credit interest rate during period (as a percent)	2.70%	2.00%	2.60%	2.10%
Unamortized debt issuance costs	$ 224,000		$ 224,000		$ 272,000
Interest coverage ratio, minimum	3.5		3.5
Leverage ratio, minimum	2.5		2.5

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Capital Structure - Additional Information (Details)			3 Months Ended		6 Months Ended
	Feb. 28, 2017 USD ($)	Dec. 30, 2014 USD ($)	Jun. 30, 2017 USD ($) $ / shares shares	Jun. 30, 2016 USD ($) $ / shares shares	Jun. 30, 2017 USD ($) ClassOfCommonStock $ / shares shares	Jun. 30, 2016 USD ($) $ / shares shares
Equity, Class of Treasury Stock [Line Items]
Number of classes of common stock outstanding | ClassOfCommonStock					1
Acquisition of restricted stock from employees in connection with withholding tax payments (in shares) | shares			2,219	1,479	65,003	16,027
Withholding tax payments related to the vesting of restricted stock for total consideration			$ 103,000	$ 76,000	$ 3,016,000	$ 728,000
Weighted average purchase price per share prior to the vesting date (in dollars per share) | $ / shares			$ 46.51	$ 51.39	$ 46.40	$ 45.44
2014 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Repurchase of common stock authorized by board of directors up to		$ 20,000,000
Stock repurchase program, period start (year)		2015
Stock repurchase program, period end (year)		2017
Common stock shares purchased under the repurchase program (in shares) | shares				56,172		194,810
Common stock aggregate purchase price including commissions				$ 2,773,000		$ 8,975,000
Common stock average purchase price per share (in dollars per share) | $ / shares				$ 49.37		$ 46.07
2017 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Repurchase of common stock authorized by board of directors up to	$ 100,000,000
Stock repurchase program, period start (year)	2017
Stock repurchase program, period end (year)	2019
Authorized increase in repurchase amount, 2018	$ 40,000,000
Authorized increase in repurchase amount, 2019	40,000,000
2014 and 2017 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Common stock shares purchased under the repurchase program (in shares) | shares			230,022		423,984
Common stock aggregate purchase price including commissions			$ 11,316,000		$ 20,316,000
Common stock average purchase price per share (in dollars per share) | $ / shares			$ 49.20		$ 47.92
Minimum | 2017 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Authorized increase in repurchase amount	20,000,000
Maximum | 2017 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Authorized increase in repurchase amount	$ 40,000,000

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Employee Benefit Plans - Net Gratuity Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Compensation and Retirement Disclosure [Abstract]
Service cost	$ 494	$ 401	$ 978	$ 801
Interest cost	166	150	328	299
Expected return on plan assets	(111)	(104)	(218)	(208)
Amortization of Actuarial loss	71	22	140	44
Net gratuity cost	$ 620	$ 469	$ 1,228	$ 936

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Employee Benefit Plans - Change in Plan Assets (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Plan assets at January 1, 2017	$ 5,640
Actual return	206
Employer contribution	1,685
Benefits paid	(604)
Effect of exchange rate changes	312
Plan assets at June 30, 2017	$ 7,239

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Employee Benefit Plans - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Compensation and Retirement Disclosure [Abstract]
Expected return on plan assets (as a percent)			8.00%
Discretionary contributions towards 401(k) Plan, maximum (as a percent)			4.00%	4.00%
Discretionary contributions to 401 (k) plans	$ 496	$ 475	$ 1,564	$ 1,391
Contributions to various defined contribution plans	$ 1,792	$ 1,566	$ 3,505	$ 3,048

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Leases - Future Minimum Lease Payments under Capital Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Leases [Abstract]
2018	$ 259
2019	180
2020	134
2021	49
Total minimum lease payments	622
Less: amount representing interest	109
Present value of minimum lease payments	513
Less: current portion	203	$ 232
Long term capital lease obligation	$ 310	$ 300

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Leases - Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2017 USD ($)
Leases [Abstract]
2018	$ 10,834
2019	9,301
2020	5,055
2021	3,403
2022	1,119
2023 and thereafter	1,105
Total operating lease payments	$ 30,817

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Leases - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Leases [Abstract]
Rent expense under both cancelable and non-cancelable operating leases	$ 6,139	$ 5,278	$ 11,806	$ 10,426
Deferred rent	$ 8,785		$ 8,785		$ 7,915

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Income tax expense	$ 823	$ 7,008	$ 4,383	$ 12,903
Effective tax rate	3.90%	30.00%	10.50%	29.90%
Discrete item	$ 1,624		$ 3,681
Uncertain tax position, tax expense (benefit)	(3,153)		(3,153)
Uncertain tax position, interest amount, tax expense (benefit)	(1,433)		(1,433)
Reversal of earn-out liability		$ 3,810		$ 4,060
Unrecognized tax benefits	1,452		1,452		$ 3,087
Interest expense	0	$ 49
Accrued interest and penalties	$ 240		$ 240		$ 1,553

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Income Taxes - Summary of Activity Related to Gross Unrecognized Tax Benefits (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance as of January 1, 2017	$ 3,087
Increases related to prior year tax positions	0
Decreases related to prior year tax positions	(1,720)
Increases related to current year tax positions	0
Decreases related to current year tax positions	0
Effect of exchange rate changes	85
Balance as of June 30, 2017	$ 1,452

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Stock Based Compensation - Costs Related to Company's Stock-Based Compensation Plan (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expenses	$ 5,107	$ 4,450	$ 11,063	$ 10,259
Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expenses	1,129	788	2,339	2,053
General and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expenses	2,344	1,964	4,940	4,336
Selling and marketing expenses
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expenses	$ 1,634	$ 1,698	$ 3,784	$ 3,870

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Stock Based Compensation - Costs Related to Company's Stock-Based Compensation Plan Additional Information (Details)	Jun. 30, 2017 shares
2015 Stock Options Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant	1,464,838

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Stock Based Compensation - Stock Based Compensation Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of Options, Granted (in shares)	0	0	0	0
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of Options, Outstanding, at December 31, 2016 (in shares)			811,902
Number of Options, Granted (in shares)			0
Number of Options, Exercised (in shares)			(136,920)
Number of Options, Forfeited (in shares)			0
Number of Options, Outstanding, at June 30, 2017 (in shares)	674,982		674,982		811,902
Number of Options, Vested and exercisable at June 30, 2017 (in shares)	674,982		674,982
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted-Average Exercise Price, Outstanding, at December 31, 2016 (in dollars per share)			$ 16.31
Weighted-Average Exercise Price, Granted (in dollars per share)			0.00
Weighted-Average Exercise Price, Exercised (in dollars per share)			12.99
Weighted-Average Exercise Price, Forfeited (in dollars per share)			0.00
Weighted-Average Exercise Price, Outstanding, at June 30, 2017 (in dollars per share)	$ 16.98		16.98		$ 16.31
Weighted Average Exercise Price, Vested and exercisable at June 30, 2017 (in dollars per share)	$ 16.98		$ 16.98
Aggregate Intrinsic Value, Outstanding	$ 26,060		$ 26,060		$ 27,718
Weighted-Average Remaining Contractual Life (in years)			2 years 8 months 2 days		2 years 11 months 15 days
Aggregate Intrinsic Value, Vested and exercisable at June 30, 2017	$ 26,060		$ 26,060
Weighted-Average Remaining Contractual Life, Vested and exercisable at June 30, 2017 (in years)			2 years 8 months 2 days

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Stock Based Compensation - Stock Options Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options, granted (in shares)	0	0	0	0
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, unvested options	$ 0		$ 0
Number of options, granted (in shares)			0
Total grant date fair value of option vested in period	$ 0		$ 706

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Stock Based Compensation - Restricted Stock Activity Under Company's Stock Plans (Details) - $ / shares	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at December 31, 2016 (in shares)	246,940
Number, Granted (in shares)	0
Number, Vested (in shares)	(28,694)
Number, Forfeited (in shares)	0
Number, Outstanding, at March 31, 2017 (in shares)	218,246
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at December 31, 2016 (in dollars per share)	$ 42.42
Weighted-Average Fair Value, Granted (in dollars per share)	0.00
Weighted-Average Fair Value, Vested (in dollars per share)	34.89
Weighted-Average Fair Value, Forfeited (in dollars per share)	0.00
Weighted-Average Fair Value, Outstanding, at March 31, 2017 (in dollars per share)	$ 43.41
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at December 31, 2016 (in shares)	1,256,288
Number, Granted (in shares)	387,977
Number, Vested (in shares)	(397,746)
Number, Forfeited (in shares)	(68,201)
Number, Outstanding, at March 31, 2017 (in shares)	1,178,318
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at December 31, 2016 (in dollars per share)	$ 37.38
Weighted-Average Fair Value, Granted (in dollars per share)	47.94
Weighted-Average Fair Value, Vested (in dollars per share)	35.00
Weighted-Average Fair Value, Forfeited (in dollars per share)	40.17
Weighted-Average Fair Value, Outstanding, at March 31, 2017 (in dollars per share)	$ 41.50
Restricted stock units vested (in shares)	146,112	135,054

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Stock Based Compensation - Restricted Stock Additional Information (Details) - Restricted Stock and Restricted Stock Units $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 45,029
Cost not yet recognized, period for recognition	2 years 10 months 6 days

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Stock Based Compensation - Performance Restricted Stock Activity (Details)	6 Months Ended
	Jun. 30, 2017 $ / shares shares
Revenue Based PRSUs
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at December 31, 2016 (in shares) | shares	115,174
Number, Granted (in shares) | shares	62,113
Number, Vested (in shares) | shares	0
Number, Forfeited (in shares) | shares	(6,960)
Number, Outstanding, at March 31, 2017 (in shares) | shares	170,327
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at December 31, 2016 (in dollars per share) | $ / shares	$ 41.70
Weighted-Average Fair Value, Granted (in dollars per share) | $ / shares	47.73
Weighted-Average Fair Value, Vested (in dollars per share) | $ / shares	0.00
Weighted-Average Fair Value, Forfeited (in dollars per share) | $ / shares	42.97
Weighted-Average Fair Value, Outstanding, at March 31, 2017 (in dollars per share) | $ / shares	$ 43.85
Market Condition Based PRSUs
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at December 31, 2016 (in shares) | shares	215,171
Number, Granted (in shares) | shares	62,100
Number, Vested (in shares) | shares	0
Number, Forfeited (in shares) | shares	(6,960)
Number, Outstanding, at March 31, 2017 (in shares) | shares	270,311
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at December 31, 2016 (in dollars per share) | $ / shares	$ 47.42
Weighted-Average Fair Value, Granted (in dollars per share) | $ / shares	54.10
Weighted-Average Fair Value, Vested (in dollars per share) | $ / shares	0.00
Weighted-Average Fair Value, Forfeited (in dollars per share) | $ / shares	58.90
Weighted-Average Fair Value, Outstanding, at March 31, 2017 (in dollars per share) | $ / shares	$ 48.66

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Stock Based Compensation - Performance Based Stock Awards Additional Information (Details) - Performance Based Stock Awards $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 10,252
Cost not yet recognized, period for recognition	1 year 10 months 17 days

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Related Party Disclosures - (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Related Party Transactions [Abstract]
Revenue from related party	$ 328	$ 805
Accounts receivable from related party	$ 305	$ 305	$ 0

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Purchase commitments, net of advances	$ 5,920
Export-oriented units established (as a percent)	100.00%
Transfer pricing issues starting period (year)	2003
Transfer pricing issues ending period (year)	2014
Permanent establishment issues starting period (year)	2003
Permanent establishment issues ending period (year)	2007
Aggregate disputed amount amount related to transfer pricing and permanent establishment	$ 17,099	$ 17,963
Total bank guarantees and deposits in respect of contingencies	8,501	8,640
Amounts paid as deposits in respect of contingencies	6,449	6,690
Bank guarantee issued	$ 2,052	$ 1,950