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Derivatives and Hedge Accounting
 6 Months Ended
Jun. 30, 2022
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 so as to minimize earnings and cash flow volatility associated with changes in foreign currency exchange rates. The Company’s derivative financial instruments are largely forward foreign exchange contracts that are designated as effective hedges and that qualify as cash flow hedges under ASC 815. The Company had outstanding cash flow hedges totaling $568,300 as of June 30, 2022 and $514,580 as of December 31, 2021.

Changes in the fair value of these cash flow hedges are recorded as a component of accumulated other comprehensive income/(loss), net of tax, until the hedged transactions occurs. The resultant foreign exchange gain/(loss) upon settlement of these cash flow hedges is recorded along with the underlying hedged item in the same line of unaudited consolidated statements of income as a part of “Cost of revenues,” “General and administrative expenses,” “Selling and marketing expenses,” and “Depreciation and amortization expense,” as applicable.

The Company evaluates hedge effectiveness at the time a contract is entered into as well as on an ongoing basis. For hedging positions that are discontinued because the forecasted transaction is not expected to occur by the end of the originally specified period, any related amounts recorded in equity are reclassified to earnings.

The Company estimates that approximately $3,795 of derivative losses, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of June 30, 2022, could be reclassified into earnings within the next twelve months. At June 30, 2022, the maximum outstanding term of the cash flow hedges was approximately 42 months.

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, against the risk of foreign currency fluctuations associated with remeasurement of such assets and liabilities to functional currency. 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 the foreign exchange gain/(loss) line item. The Company’s primary exchange rate exposure is with the Indian rupee, the U.K. pound sterling (GBP) and the Philippine peso. The Company also has exposure to Colombian pesos (COP), Czech koruna, the Euro (EUR), South African ZAR, the Australian dollar (AUD) and other local currencies in which it operates. Outstanding foreign currency forward contracts amounted to USD 156,066, GBP 8,700, EUR 1,736 and COP 2,777,668 as of June 30, 2022 and USD 134,612, GBP 6,763, EUR 1,343 and COP 2,541,902 as of December 31, 2021.

The Company uses forward contracts designated as net investment hedges to hedge the foreign currency risks related to our investments in foreign subsidiaries. Gains and losses on these net investment hedges are recognized in AOCI as part of foreign currency translation adjustments.

All of the assets and liabilities related to our foreign exchange forward contracts are subject to master netting arrangements with each individual counterparty. These master netting arrangements generally provide for net settlement of all outstanding contracts with the counterparty in the case of an event of default or a termination event. We have presented all of the assets and liabilities related to our foreign exchange forward contracts on a gross basis, with no offsets, in our unaudited consolidated statements of financial position. There is no financial collateral (including cash collateral) provided or received by us related to our foreign exchange forward 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
Foreign currency exchange contractsJune 30, 2022December 31, 2021
Other current assets$2,727 $8,669 
Other assets$1,043 $6,307 
Accrued expenses and other current liabilities$6,522 $1,324 
Other non-current liabilities$3,978 $1,785 
Derivatives not designated as hedging instruments:As of
Foreign currency exchange contractsJune 30, 2022December 31, 2021
Other current assets$138 $13 
Accrued expenses and other current liabilities$95 $528 

The following tables set forth the effect of foreign currency exchange contracts on accumulated other comprehensive income/(loss) and the unaudited consolidated statements of income for the three and six months ended June 30, 2022 and 2021:
Three months ended June 30,Six months ended June 30,
Forward Exchange Contracts:2022202120222021
Unrealized loss recognized in AOCI
Derivatives in cash flow hedging relationships$(14,632)$(871)$(15,149)$(303)
Loss recognized in unaudited consolidated statements of income
Derivatives not designated as hedging instruments$(5,457)$(805)$(6,356)$(589)
Location and amount of gain/(loss) recognized in unaudited consolidated statements of income for cash flow hedging relationships and derivatives not designated as hedging instruments
Three months ended June 30,
20222021
As per unaudited consolidated
statements of
income		Gain
on foreign currency exchange contracts		As per unaudited consolidated
statements of
income		Gain on foreign currency exchange contracts
Cash flow hedging relationships
Location in unaudited consolidated statements of income where gain was reclassed from AOCI
Cost of revenues$221,207 $1,194 $170,701 $2,418 
General and administrative expenses$40,434 181 $36,499 294 
Selling and marketing expenses$23,985 15 $19,724 15 
Depreciation and amortization expense$14,075 69 $12,310 139 
Total before tax1,459 2,866 
Income tax effects on above(420)(427)
Net of tax$1,039 $2,439 
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where gain/(loss) was recognized
Foreign exchange gain/(loss), net$1,423 $(5,457)$1,353 $(805)
$1,423 $(5,457)$1,353 $(805)
Location and amount of gain/(loss) recognized in unaudited consolidated statements of income for cash flow hedging relationships and derivatives not designated as hedging instruments
Six months ended June 30,
20222021
As per unaudited consolidated
statements of
income		Gain on foreign currency exchange contractsAs per unaudited consolidated
statements of
income		Gain
on foreign currency exchange contracts
Cash flow hedging relationships
Location in unaudited consolidated statements of income where gain was reclassed from AOCI
Cost of revenues$428,723 $2,777 $329,522 $4,842 
General and administrative expenses$80,379 475 $67,202 546 
Selling and marketing expenses$48,155 29 $37,959 28 
Depreciation and amortization expense$27,677 167 $24,411 279 
Total before tax3,448 5,695 
Income tax effects on above(935)(816)
Net of tax$2,513 $4,879 
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where gain/(loss) was recognized
Foreign exchange gain/(loss), net$3,179 $(6,356)$1,787 $(589)
$3,179 $(6,356)$1,787 $(589)
Effect of net investment hedges on accumulated other comprehensive income/(loss):
Three months ended June 30,Six months ended June 30,
Amount of loss recognized in AOCIAmount of loss recognized in AOCI
Net investment hedging relationships2022202120222021
Foreign exchange contracts$— $1,134 $— $1,134