Property and Equipment, net

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Property and equipment, net consists of the following:


	Estimated useful lives	As of
	(Years)	June 30, 2020		December 31, 2019
Owned Assets:
Network equipment and computers	3-5	$	96,759	$	98,309
Software	3-5	90,746		79,746
Leasehold improvements	3-8	44,328		44,982
Office furniture and equipment	3-8	20,675		22,046
Motor vehicles	2-5	578		601
Buildings	30	1,053		1,114
Land	—	689		729
Capital work in progress	—	10,784		10,309
		265,612		257,836
Less: Accumulated depreciation and amortization		(174,333)		(179,331)
		$	91,279	$	78,505
Right-of-use assets under finance leases:
Leasehold improvements		$	644	$	738
Office furniture and equipment		210		308
Motor vehicles		710		711
		1,564		1,757
Less: Accumulated depreciation and amortization		(995)		(1,120)
		$	569	$	637
Property and equipment, net		$	91,848	$	79,142

Capital work in progress represents advances paid towards acquisition of property and equipment and costs incurred on internally developed software not yet ready to be placed in service.

During the three and six months ended June 30, 2020, there were no changes in estimated useful lives of property and equipment.

The depreciation and amortization expense, excluding amortization of acquisition-related intangibles, recognized in the unaudited consolidated statements of income was as follows:


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Depreciation and amortization expense	$	8,975	$	7,198	$	17,271	$	15,337

The effect of foreign exchange (loss)/gain upon settlement of cash flow hedges recorded under depreciation and amortization, was as follows:


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Effect of foreign exchange (loss)/gain	$	(71)	$	56	$	(49)	$	113

Internally developed software costs, included under Software, was as follows:


	As of
	June 30, 2020		December 31, 2019
Cost	$	14,891	$	15,784
Less : Accumulated amortization	(4,477)		(4,989)
Internally developed software, net	$	10,414	$	10,795

The amortization expense on internally developed software recognized in the unaudited consolidated statements of income was as follows:


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Amortization expense	$	1,846	$	559	$	2,677	$	1,206

During the three and six months ended June 30, 2019, the Company performed an impairment test of its long-lived assets related to its Health Integrated business. Based on the results, the long-lived assets carrying value exceeded its fair value. The primary factor contributing to a reduction in the fair value is the wind-down of the Health Integrated business, due to reduction to the Company's estimated future cash flows. As a result of this analysis, the Company recognized impairment charges of $951 and $2,178 during the three and six months ended June 30, 2019, respectively, to write down the carrying value of property and equipment to its fair value. This impairment charge was recorded in the unaudited consolidated statements of income under "Impairment and restructuring charges".

As of June 30, 2020, the Company believes no impairment exists because the long-lived asset's future undiscounted net cash flows expected to be generated exceeds its carrying value; however, there can be no assurances that long-lived assets will not be impaired in future periods. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which undiscounted cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. It is reasonably possible that the judgments and estimates described above could change in future periods. The duration and severity of COVID-19 and continued market volatility is highly uncertain and, as such, the impact on undiscounted cash flows is subject to significant judgment and may cause variability in the Company’s assessment of the existence of any impairment.