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.

Components of net periodic benefit cost:



	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Service cost	$	431		$	491		$	1,293		$	1,469
Interest cost	173			166			526			494
Expected return on plan assets	(117		)	(112		)	(359		)	(330		)
Amortization of actuarial (gain)/loss	(37		)	72			(114		)	212
Net periodic benefit cost	$	450		$	617		$	1,346		$	1,845

On January 1, 2018, the Company adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. Pursuant to this, the Company presented service cost separately from other components of net periodic cost for all periods presented. The interest cost, expected return on plan assets and amortization of actuarial (gain)/loss, have been reclassified from “Cost of revenues”, “General and administrative expenses” and “Selling and marketing expenses” to “Other income, net”.

The effect of the retrospective presentation change related to the net periodic cost of our defined benefit Gratuity Plan on applicable lines of our unaudited consolidated statements of income was as follows -



	Three months ended September 30, 2017							Nine months ended September 30, 2017
	As revised		Previously reported*		Effect of change Higher/(Lower)			As revised		Previously reported*		Effect of change Higher/(Lower)
Location in unaudited consolidated statements of income
Cost of revenues	$	123,077	$	123,189	$	(112	)	$	365,883	$	366,216	$	(333	)
General and administrative expenses	$	26,545	$	26,558	$	(13	)	$	75,007	$	75,046	$	(39	)
Selling and marketing expenses	$	12,196	$	12,197	$	(1	)	$	38,631	$	38,634	$	(3	)
Other income, net	$	2,796	$	2,922	$	(126	)	$	8,495	$	8,870	$	(375	)

* Adjusted for the impact of adoption of ASU 2017-12. Refer to Note 17 of the unaudited consolidated financial statements.

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 7.8% per annum on these Gratuity Plans for the nine months ended September 30, 2018.



Change in Plan Assets
Plan assets at January 1, 2018	$	6,915
Business acquisition	210
Actual return	652
Employer contribution	1,191
Benefits paid	(859		)
Effect of exchange rate changes	(899		)
Plan assets at September 30, 2018	$	7,210

The Company maintains several 401(k) plans (the "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. The Company made provision for 401(k) Plans amounting to $645 and $487 for the three months ended September 30, 2018 and 2017, respectively, and $2,630 and $2,051 for the nine months ended September 30, 2018 and 2017, respectively.

On behalf of the Company's employees in India, the Philippines, Bulgaria, Romania, the Czech Republic, South Africa, Colombia and Singapore, the Company contributed $2,003 and $1,845 during the three months ended September 30, 2018 and 2017, respectively, and $5,670 and $5,350 during the nine months ended September 30, 2018 and 2017, respectively, for various defined contribution plans.