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Dynamic quotes 
OFFON

EXLSERVICE HOLDINGS, INC.

(EXLS)
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EXLSERVICE : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

07/29/2021 | 04:48pm EDT
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, 2020. Some of the statements in the following
discussion are forward looking statements. Dollar amounts within Item 2 are
presented as actual, rounded, dollar amounts.

We have described in this Quarterly Report on Form 10-Q, the impact of the
global Coronavirus Disease 2019 pandemic ("COVID-19") on our financial results
for the three months ended June 30, 2021. See "Cautionary Note Regarding
Forward-Looking Statements" below, Item 1A -"Risk Factors" included elsewhere in
this Quarterly Report on Form 10-Q and Part I, Item 1A, "Risk Factors" in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for
further information regarding risks and uncertainties relating to COVID-19.
Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the United States Private Securities Litigation Reform Act of
1995. 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. Many of the
following risks, uncertainties and other factors identified below have been, and
will be, amplified by the COVID-19 pandemic ("COVID-19"). These factors include
but are not limited to:

•the impact of COVID-19 and related response measures on our business, results
of operations and financial condition, including the impact of governmental
lockdowns and other restrictions on our operations and processes and those of
our clients and suppliers;
•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;
•our ability to accurately estimate and/or manage the costs and/or timing of
winding down businesses;
•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 or breaches, natural or other
disasters, or medical epidemics or pandemics;
•our ability to withstand the loss of a significant customer;
•our ability to realize the entire book value of goodwill and other intangible
assets from acquisitions;
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•our ability to make accurate estimates and assumptions in connection with the
preparation of our consolidated financial statements;
•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;
•operational and information security failures arising as a result of remote
work solutions adopted due to COVID-19;
•cyber security incidents, data breaches, or other 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, 2020. 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.
Executive Overview

We are a leading operations management and analytics company that helps our
clients build and grow sustainable businesses. By orchestrating our domain
expertise, data, analytics and digital technology, we look deeper to design and
manage agile, customer-centric operating models to improve global operations,
drive profitability, enhance customer satisfaction, increase data-driven
insights, and manage risk and compliance. We serve customers in multiple
industries, including insurance, healthcare, banking and financial services,
utilities, travel, transportation and logistics, media and retail, among others.

We operate in the business process management ("BPM") industry and we provide
operations management and analytics services. We manage and report financial
information through our four strategic business units: Insurance, Healthcare,
Analytics and Emerging Business.

Our global delivery network, which includes 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 United States, the United Kingdom, the Philippines,
Bulgaria, Colombia, South Africa, Romania and the Czech Republic.

Continued impact of COVID-19 on Our Business


The global COVID-19 pandemic continues to materially impact worldwide economic
activity and levels of business confidence and has had widespread,
rapidly-evolving and unpredictable impacts on global societies, economies,
financial markets and business practices. During 2020, COVID-19 materially
impacted our business, however during the first half of 2021, we saw moderate
improvement in key indicators, despite being prevented from conducting business
activities as usual from geographies affected by new variants of the COVID-19
virus. Over the course of 2020, and continuing into 2021, our customers,
contractors, suppliers, and other partners adapted in order to conduct business
activities in a COVID-19 environment. The U.S. economy continued on a path to
recovery in the first half of 2021 with millions of Americans receiving the
COVID-19 vaccine, and states and municipalities increasingly reopening. In
addition, the U.S. federal government continued to enact policies to provide
fiscal stimulus to the economy and relief to those affected by the pandemic. As
the global
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economy begins to emerge from the impact of COVID-19 in 2021, our clients are
focused on receiving personalized customer experiences, optimizing costs and
supporting resilient operating models. We remain committed to helping our
clients adapt and thrive through the ongoing uncertainties caused by COVID-19
and, going forward, to the shifting business environment. Notwithstanding the
moderate improvement in conditions during the first half of 2021, the COVID-19
pandemic continues, with temporary shutdowns at our operations centers requested
or mandated by governmental authorities, and due to the associated
uncertainties, we continue to evaluate the nature and scope of the impact to our
business and may take further strategic actions in order to manage our business
operations, costs and liquidity in response to the ongoing impacts and changing
conditions and markets resulting from COVID-19.

We have a business continuity plan in place and have, since early in the
pandemic, adapted delivery to a work from home model, while actively working to
understand our clients' changing requirements, continuing to ensure data
security, prioritizing critical processes, adjusting service levels and managing
discretionary costs (such as travel costs) and fixed costs (such as non-critical
personnel costs). We have made ongoing efforts to reduce our reliance on travel
by incorporating into our business model the ability to conduct business using
virtual conferencing and collaboration tools. Our work from home delivery
capability steadily improved throughout 2020 and continued to improve during the
first half of 2021. We estimate that we are able to deliver a significant
portion of our clients' current requirements in a work from home model given the
current lockdown restrictions in the locations in which we operate and certain
clients not authorizing us to perform the remaining process work remotely due to
its sensitive nature. In addition, we have also worked, and continue to work
with national, state, and local authorities to comply with applicable rules and
regulations related to COVID-19. There continues to be volatility and economic
and geopolitical uncertainty in many markets around the world due to the
emergence and spread of new variants of COVID-19 across geographies. Despite the
efforts described above, there is a risk that if jurisdictions in which we
operate reinstate prior restrictions, stagnate in their reopening processes, or
implement new restrictions in response to new outbreaks or continued spread, our
operations and business could be materially impacted. In late March 2021, a new
serious outbreak of the COVID-19 virus began affecting India with an exorbitant
spike in the number of COVID patients. The Indian government reinstated
lockdowns limiting in certain cases the movement of our employees to offices,
however these lockdowns were lifted as the situation in India improved. During
the same period, the Philippines also began experiencing a spike in the number
of COVID patients. Our Indian and Philippines operations were not materially
affected as we initiated appropriate business continuity procedures, so as to
minimize the effects of these new developments, but it is possible that our
business and results of operations could nevertheless be materially affected if
any further developments, including new variants of the COVID-19 virus, emerge.

We also took actions in response to the pandemic that focused on helping our
employees. In the geographies most affected by the recent COVID-19 variants,
these actions included healthcare support including securing and administering
vaccines for our employees, facilitating our employees' access to medical
equipment, providing ambulance services and online medical consultations,
extending medical insurance to our employees' family members and enhancing the
dollar value of such coverage. We also instituted a one-time employee
compensation payment to beneficiaries of employees, facilitated voluntary
contributions from our clients and employees to support the family members of
deceased employees and providing financial support for their children's
education. Other actions included disseminating guidance and information to our
employees, facilitating work from home, implementing best practices for
employees while working from home, periodic CEO messaging, various programs
aimed at employee wellness, including a global wellness program, enhanced leave
for employees affected by COVID-19, enhanced awareness towards information
security, and updated cyber security and data privacy policies, among others. We
continue to have broad travel restrictions and largely operating in virtual-only
events for the safety of our employees and our customers. We also implemented
pandemic-specific protocols for our essential employees whose jobs require them
to be on-site or with our customers by implementing additional safety measures
at all of our facilities, including increased frequency in cleaning and
disinfecting, and enhanced hygiene and social distancing practices.

We continue to incur additional costs in order to ensure the continuity of our
operations and support our work from home model. Such costs include purchase of
desktops and laptops for our employees, software and internet connectivity
devices, technology tools for productivity enhancement, accommodation, meal,
overtime, transportation and regular sanitization and cleaning costs of our
offices and facilities. We also expect that we will continue to incur additional
costs to monitor and improve operational efficiency of our work from home model,
implement new information technology solutions and security measures to
safeguard against information security risks and protect the health and safety
of our employees as they gradually return to the office. We believe that these
short-to-medium-term costs may benefit us in the long-term, as these steps have
broadened our "remote working" capabilities, which we expect to become a
permanent feature in our future delivery model, as well as our business
continuity plans.

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In response to certain anticipated impacts from COVID-19, we implemented a
series of temporary cost reduction measures in 2020 which continued in the first
half of 2021 to further preserve financial flexibility. These actions included
the postponement of certain discretionary spending including travel and
marketing expenses, reevaluating the pace of our capital expenditures,
rationalizing certain of our real estate and facilities, deferring non-critical
hiring among others.

Certain impacts of COVID-19 on our business, results of operations, financial
position and cash flow during the first half of 2021 has been described above
and below, however the full extent of the impact for the period beyond the first
half of 2021 is currently uncertain and will depend on many factors that are not
within our control, including, but not limited to: the duration and scope of the
pandemic; the effectiveness of actions taken to contain or mitigate the pandemic
and prevent or limit any reoccurrence; governmental, business and individuals'
actions that have been and continue to be taken in response to the pandemic;
development and availability of effective treatments and vaccines and the speed
at which such vaccines are administered; significant increases in healthcare
costs in the event that a significant number of our personnel become infected
with COVID-19 and require medical treatment; general economic uncertainty in key
global markets and financial market volatility; global economic conditions and
levels of economic growth; and the pace of recovery when COVID-19 subsides. Due
to the above circumstances and as described generally in this Quarterly Report
on Form 10-Q, our financial results, including but not limited to net revenues,
income from operations, net income, cash flow and earnings per share, are not
necessarily indicative of the results to be expected for the full fiscal year of
2021. We continue to monitor the implications of COVID-19 on our business, as
well as our customers' and suppliers' businesses.

For additional information and risks related to COVID-19, see Item 1A - "Risk
Factors" included elsewhere in this Quarterly Report on Form 10-Q and Part I,
Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2020.

Revenues

For the three months ended June 30, 2021, we had revenues of $275.1 million
compared to revenues of $222.5 million for the three months ended June 30, 2020,
an increase of $52.6 million, or 23.6%. For the six months ended June 30, 2021,
we had revenues of $536.5 million compared to revenues of $468.5 million for the
six months ended June 30, 2020, an increase of $68.0 million, or 14.5%.

We serve clients mainly in the United States and the United Kingdom, with these
two regions generating 85.5% and 9.5%, respectively, of our total revenues for
the three months ended June 30, 2021, and 85.0% and 8.5%, respectively, of our
total revenues for the three months ended June 30, 2020. For the six months
ended June 30, 2021, these two regions generated 85.7% and 9.5%, respectively,
of our total revenues and 84.7% and 9.0%, respectively, of our total revenues
for the six months ended June 30, 2020.

For the three months ended June 30, 2021 and 2020, our total revenues from our
top ten clients accounted for 37.8% and 38.7% of our total revenues,
respectively. For the six months ended June 30, 2021 and 2020, our total
revenues from our top ten clients accounted for 38.5% and 37.1% of our total
revenues, respectively. Our revenue concentration with our top clients remains
largely consistent year-over-year and we continue to develop relationships with
new clients to diversify our client base. We believe that the loss of any of our
top ten clients could have a material adverse effect on our financial
performance.
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 United States, Europe and Australia.

Operations Management Services: We provide our clients with a range of
operations management services from our Insurance, Healthcare and Emerging
Business operating segments, which typically involve the transfer by our clients
to EXL of certain of their business operations, such as claims processing,
clinical operations, or financial transaction processing, after which we
administer and manage those operations 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
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on the scope, deliverables and complexity of the engagement. We also provide
consulting services related to operations management that include
industry-specific digital transformational services as well as cross-industry
finance and accounting services as part of the Emerging Business operating
segment.

We provide our services under contracts with our clients, which typically have
terms of three or more years, with some being rolling contracts with no end
dates. Typically, our clients can terminate these contracts with or without
cause and with short notice periods. These contracts 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.

We charge for our services using various pricing models like time-and-material
pricing, full-time-equivalent pricing, transaction-based pricing, outcome-based
pricing, subscription-based pricing and other alternative pricing models.
Outcome-based pricing arrangements are examples of non-linear pricing models
where clients link revenues from platforms and solutions and the services we
provide to usage or savings rather than the efforts deployed to provide these
services. We continue to observe a shift in the industry pricing models toward
transaction-based pricing, outcome-based pricing and other alternative pricing
models. We believe this trend will continue and we use such alternative pricing
models with some of our current clients and are seeking to move certain other
clients from a full-time-equivalent pricing model to a transaction-based or
other alternative pricing model. These alternative pricing models place the
focus on operating efficiency in order to maintain or improve our gross margins.

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.

Analytics: Our analytics services focus on driving improved business outcomes
for our customers by unlocking deep insights from data and create data-driven
solutions across all parts of our customers' business. We also provide care
optimization and reimbursement optimization services, for our clients through
our healthcare analytics solutions and services. We also offer integrated
solutions to help our clients in cost containment by leveraging technology
platforms, customizable and configurable analytics and expertise in healthcare
reimbursements to help clients enhance their claim payment accuracy. 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, payment integrity and care management and data management. We
enhance, modernize and enrich structured and unstructured data and use a
spectrum of advanced analytical tools and techniques, including our in-house
Machine Learning ("ML") and Artificial Intelligence ("AI") capabilities to
create insights and improve decision making for our clients. We actively
cross-sell and, where appropriate, integrate our Analytics services with other
operations management services as part of a comprehensive offering for our
clients. Our projects-based analytics services are cyclical and can be
significantly affected by variations in business cycles. In addition, our
projects-based analytics services are documented in contracts with terms
generally not exceeding one year and may not produce ongoing or recurring
business for us once the project is completed. These contracts also usually
contain provisions permitting termination of the contract after a short notice
period. The short-term nature and specificity of these projects could lead to
fluctuations and uncertainties in the revenues generated from providing
analytics services.

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





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Critical Accounting Policies and Estimates


There have been no significant changes in our critical accounting policies and
estimates, during the three and six months ended June 30, 2021, as compared to
the critical accounting policies and estimates referred in Part II, Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" under "Critical Accounting Policies and Estimates" and Note 2 -
Summary of Significant Accounting Policies to our consolidated financial
statements included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2020.

Results of Operations
The following table summarizes our results of operations for the three months
and six months ended June 30, 2021 and 2020:
                                                        Three months ended June 30,               Six months ended June 30,
                                                          2021                 2020                 2021                2020
                                                           (dollars in millions)                    (dollars in millions)
Revenues, net                                       $        275.1$  222.5$       536.5$  468.5
Cost of revenues(1)                                          170.7             158.4                  329.5             321.1
Gross profit(1)                                              104.4              64.1                  207.0             147.4
Operating expenses:
General and administrative expenses                           36.5              28.8                   67.2              57.7
Selling and marketing expenses                                19.8              13.0                   38.0              27.5
Depreciation and amortization expense                         12.3              12.4                   24.4              24.9

Total operating expenses                                      68.6              54.2                  129.6             110.1
Income from operations                                        35.8               9.9                   77.4              37.3
Foreign exchange gain, net                                     1.4               1.4                    1.8               2.7
Interest expense                                              (2.5)             (2.9)                  (5.0)             (6.0)
Other income, net                                              2.2               4.2                    3.6               6.8

Income before income tax expense and earnings from equity affiliates

                                             36.9              12.6                   77.8              40.8
Income tax expense                                             8.9               4.1                   17.9               9.9
Income before earnings from equity affiliates                 28.0               8.5                   59.9              30.9
Loss from equity-method investment                               -               0.1                      -               0.1
Net income attributable to ExlService Holdings,
Inc. stockholders                                   $         28.0          $    8.4$        59.9$   30.8

(1) Exclusive of depreciation and amortization expense.

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Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020
Revenues.

The following table summarizes our revenues by reportable segments for the three months ended June 30, 2021 and 2020:

                                  Three months ended June 30,                         Percentage
                                       2021                   2020        Change        change
                                     (dollars in millions)
     Insurance             $         94.7                   $  81.3$ 13.4           16.5  %
     Healthcare                      28.3                      25.0         3.3           13.1  %
     Emerging Business               40.7                      34.5         6.2           17.8  %
     Analytics                      111.4                      81.7        29.7           36.4  %
     Total revenues, net   $        275.1$ 222.5$ 52.6           23.6  %


Revenues for the three months ended June 30, 2021 were $275.1 million, up $52.6 million, or 23.6%, compared to the three months ended June 30, 2020.


Revenue growth in Insurance of $13.4 million was primarily driven by expansion
of business from our existing clients aggregating to $12.1 million and an
increase in revenues of $1.3 million that was mainly attributable to the
appreciation of the Australian dollar, the U.K. pound sterling and the South
African ZAR against the U.S. dollar during the three months ended June 30, 2021,
compared to the three months ended June 30, 2020. Insurance revenues were 34.4%
and 36.5% of our total revenues in the three months ended June 30, 2021 and
June 30, 2020, respectively.

Revenue growth in Healthcare of $3.3 million was primarily driven by expansion
of business from our new and existing clients aggregating to $3.3 million during
the three months ended June 30, 2021. Healthcare revenues were 10.3% and 11.2%
of our total revenues in the three months ended June 30, 2021 and June 30, 2020,
respectively.

Revenue growth in Emerging Business of $6.2 million was primarily driven by
expansion of business from our new and existing clients aggregating to $5.6
million and an increase in revenues of $0.6 million that was mainly attributable
to the appreciation of the Indian rupee and the U.K. pound sterling against the
U.S. dollar during the three months ended June 30, 2021, compared to the three
months ended June 30, 2020. Emerging Business revenues were 14.8% and 15.5% of
our total revenues in the three months ended June 30, 2021 and June 30, 2020,
respectively.

Revenue growth in Analytics of $29.7 million was attributable to the higher
volumes in our annuity and project-based engagements from our new and existing
clients of $28.7 million and an increase in revenues of $1.0 million mainly
attributable to the appreciation of the U.K. pound sterling against the U.S.
dollar during the three months ended June 30, 2021, compared to the three months
ended June 30, 2020. Analytics revenues were 40.5% and 36.7% of our total
revenues in the three months ended June 30, 2021 and June 30, 2020,
respectively.

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Table of Contents 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,             Change            Percentage                Three months ended June 30,               Change
                               2021                 2020                                 change                  2021                  2020
                                (dollars in millions)
Insurance                $         59.4          $   59.1$   0.3                     0.5  %               37.3  %               27.3  %            10.0  %
Healthcare                         17.7              19.6             (1.9)                   (9.7) %               37.4  %               21.4  %            16.0  %
Emerging Business                  22.3              22.5             (0.2)                   (0.9) %               45.1  %               35.1  %            10.0  %
Analytics                          71.3              57.2             14.1                    24.7  %               36.0  %               29.9  %             6.1  %
Total                    $        170.7$  158.4$  12.3                     7.8  %               37.9  %               28.8  %             9.1  %



For the three months ended June 30, 2021, cost of revenues was $170.7 million
compared to $158.4 million for the three months ended June 30, 2020, an increase
of $12.3 million, or 7.8%. Our gross margin for the three months ended June 30,
2021 was 37.9% compared to 28.8% for the three months ended June 30, 2020, an
increase of 9.1% primarily driven by higher revenues and operational
efficiencies during the three months ended June 30, 2021, compared to the impact
of COVID-19 related expenses during the three months ended June 30, 2020.

The increase in cost of revenues in Insurance of $0.3 million for the three
months ended June 30, 2021 was primarily due to increases in employee-related
costs, partially offset by lower COVID-19 related expenses. Gross margin in
Insurance increased by 10.0% during the three months ended June 30, 2021,
compared to the three months ended June 30, 2020, primarily due to higher
revenues and operational efficiencies during the three months ended June 30,
2021, compared to the impact of COVID-19 related expenses during the three
months ended June 30, 2020.

The decrease in cost of revenues in Healthcare of $1.9 million for the three
months ended June 30, 2021 was primarily due to decreases in employee-related
costs of $1.9 million. Gross margin in Healthcare increased by 16.0% during the
three months ended June 30, 2021, compared to the three months ended June 30,
2020, primarily due to higher revenues during the three months ended June 30,
2021, compared to the impact of COVID-19 related expenses during the three
months ended June 30, 2020.

The decrease in cost of revenues in Emerging Business of $0.2 million for the
three months ended June 30, 2021 was primarily due to decreases in
employee-related costs. Gross margin in Emerging Business increased by 10.0%
during the three months ended June 30, 2021, compared to the three months ended
June 30, 2020, primarily due to higher revenues, decrease in employee-related
costs and operational efficiencies during the three months ended June 30, 2021,
compared to the impact of COVID-19 related expenses during the three months
ended June 30, 2020.

The increase in cost of revenues in Analytics of $14.1 million for the three
months ended June 30, 2021 was primarily due to increases in employee-related
costs of $8.5 million, higher other operating costs of $5.2 million and higher
technology costs of $0.4 million. Gross margin in Analytics increased by 6.1%
during the three months ended June 30, 2021, compared to the three months ended
June 30, 2020, primarily due to higher revenues during the three months ended
June 30, 2021, compared to the impact of COVID-19 related expenses during the
three months ended June 30, 2020.
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Selling, General and Administrative ("SG&A") Expenses.
                                                         Three months ended June 30,              Change             Percentage
                                                           2021                 2020                                   change
                                                            (dollars in millions)
General and administrative expenses                  $       36.5$    28.8$    7.7                      26.7  %
Selling and marketing expenses                               19.8                13.0               6.8                      52.3  %
Selling, general and administrative expenses         $       56.3$    41.8$   14.5                      34.7  %
As a percentage of revenues                                  20.4   %            18.8  %



The increase in SG&A expenses of $14.5 million was primarily due to higher
employee-related costs of $13.0 million, COVID-19-related expenses of $2.2
million, primarily related to financial support to family members of deceased
employees and higher other operating costs of $0.6 million, partially offset by
lower facilities costs of $1.3 million due to optimization of office space.
Depreciation and Amortization.
                                                       Three months ended June 30,            Change             Percentage
                                                         2021                 2020                                 change
                                                          (dollars in millions)
Depreciation expense                               $        8.9$     9.0$ (0.1)                     (1.1) %
Intangible amortization expense                             3.4                 3.4               -                         -  %
Depreciation and amortization expense              $       12.3$    12.4$ (0.1)                     (0.8) %
As a percentage of revenues                                 4.5   %         

5.6 %




The decrease in depreciation expense of $0.1 million was primarily due to lower
depreciation on assets related to operating centers closed as a result of
optimization of office space and increased reliance on the work from home model,
due to the impact of COVID-19 during the three months ended June 30, 2021,
compared to the three months ended June 30, 2020.

Income from Operations. Income from operations increased by $25.9 million, or
261.6%, from $9.9 million for the three months ended June 30, 2020 to $35.8
million for the three months ended June 30, 2021, primarily due to higher
revenues, partially offset by higher cost of revenues and higher SG&A expenses
during the three months ended June 30, 2021. As a percentage of revenues, income
from operations increased from 4.4% for the three months ended June 30, 2020 to
13.0% for the three months ended June 30, 2021.

Foreign Exchange Gain/(Loss). Net foreign exchange gains and losses are
primarily attributable to the movement of the U.S. dollar against the Indian
rupee, the U.K. pound sterling, the Philippine peso and the South African ZAR
during the three months ended June 30, 2021. The average exchange rate of the
U.S. dollar against the Indian rupee decreased from 75.41 during the three
months ended June 30, 2020 to 73.67 during the three months ended June 30, 2021.
The average exchange rate of the U.K. pound sterling against the U.S. dollar
increased from 1.24 during the three months ended June 30, 2020 to 1.40 during
the three months ended June 30, 2021. The average exchange rate of the U.S.
dollar against the Philippine peso decreased from 50.28 during the three months
ended June 30, 2020 to 48.20 during the three months ended June 30, 2021. The
average exchange rate of the U.S. dollar against the South African ZAR decreased
from 17.66 during the three months ended June 30, 2020 to 14.15 during the three
months ended June 30, 2021.

We recorded a net foreign exchange gain of $1.4 million, each, for the three months ended June 30, 2021 and 2020.


Interest expense. Interest expense decreased from $2.9 million for the three
months ended June 30, 2020 to $2.5 million for the three months ended June 30,
2021, primarily due to lower outstanding borrowings and lower effective interest
rates of
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1.8% under our Credit Facility during the three months ended June 30, 2021,
compared to 2.2% during the three months ended June 30, 2020.
Other Income, net.
                                                          Three months ended June 30,                                 Percentage
                                                            2021                 2020             Change                change
                                                             (dollars in millions)

Gain on sale and mark-to-market of mutual funds $ 1.6

   $    3.1$   (1.5)                    (48.4) %
Interest and dividend income                                     0.7               0.6               0.1                      16.7  %
Other, net                                                      (0.1)              0.5              (0.6)                   (120.0) %
Other income, net                                     $          2.2          $    4.2$   (2.0)                    (47.6) %



Other income, net decreased by $2.0 million, from $4.2 million for the three
months ended June 30, 2020 to $2.2 million for the three months ended June 30,
2021, primarily due to lower return on mutual fund investments of $1.5 million,
partially offset by increase in interest income of $0.1 million during the three
months ended June 30, 2021, compared to the three months ended June 30, 2020.

Income Tax Expense. The effective tax rate decreased from 32.4% during the three
months ended June 30, 2020 to 24.0% during the three months ended June 30, 2021.
We recorded income tax expense of $8.9 million and $4.1 million for the three
months ended June 30, 2021 and 2020, respectively. The increase in income tax
expense was primarily as a result of higher profit during the three months ended
June 30, 2021, compared to the three months ended June 30, 2020, partially
offset by recording of a one-time tax expense of $1.3 million due to the
election of a new tax regime, during the three months ended June 30, 2020, for
two of our Indian subsidiaries that provides for a lower tax rate on earnings in
exchange for foregoing certain tax credits, including minimum alternative tax
credits.

Net Income. Net income increased from $8.4 million for the three months ended
June 30, 2020 to $28.0 million for the three months ended June 30, 2021,
primarily due to increase in income from operations of $25.9 million, lower
interest expense of $0.4 million and lower loss from equity-method investment of
$0.1 million, partially offset by higher income tax expense of $4.8 million and
lower other income, net of $2.0 million. As a percentage of revenues, net income
increased from 3.8% for the three months ended June 30, 2020 to 10.2% for the
three months ended June 30, 2021.

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Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Revenues.

The following table summarizes our revenues by reportable segments for the six months ended June 30, 2021 and 2020:

                             Six months ended June 30,                        Percentage
                                 2021                 2020        Change        change
                               (dollars in millions)
Insurance             $       185.8$ 165.0$ 20.8           12.6  %
Healthcare                     58.6                    52.0         6.6           12.5  %
Emerging Business              78.4                    77.4         1.0            1.3  %
Analytics                     213.7                   174.1        39.6           22.8  %
Total revenues, net   $       536.5$ 468.5$ 68.0           14.5  %



Revenues for the six months ended June 30, 2021 were $536.5 million, up $68.0 million, or 14.5%, compared to the six months ended June 30, 2020.


Revenue growth in Insurance of $20.8 million was primarily driven by expansion
of business from our existing clients aggregating to $18.4 million and an
increase in revenues $2.4 million that was mainly attributable to the
appreciation of the Australian dollar, the U.K. pound sterling and the South
African ZAR against the U.S. dollar during the six months ended June 30, 2021,
compared to the six months ended June 30, 2020. Insurance revenues were 34.6%
and 35.2% of our total revenues in the six months ended June 30, 2021 and
June 30, 2020, respectively.

Revenue growth in Healthcare of $6.6 million was primarily driven by expansion
of business from our new and existing clients aggregating to $6.6 million during
the six months ended June 30, 2021. Healthcare revenues were 10.9% and 11.1% of
our total revenues in the six months ended June 30, 2021 and June 30, 2020,
respectively.

Revenue growth in Emerging Business of $1.0 million was primarily driven by
expansion of business from our new clients and existing clients aggregating to
$0.3 million and an increase in revenues of $0.7 million that was mainly
attributable to the appreciation of the Indian rupee and the U.K. pound sterling
against the U.S. dollar during the six months ended June 30, 2021 compared to
the six months ended June 30, 2020. Emerging Business revenues were 14.6% and
16.5% of our total revenues in the six months ended June 30, 2021 and June 30,
2020, respectively.

Revenue growth in Analytics of $39.6 million was attributable to the higher
volumes in our annuity and project based engagements from our new and existing
clients of $37.9 million and an increase in revenues $1.7 million mainly
attributable to the appreciation of the U.K. pound sterling and the South
African ZAR against the U.S. dollar during the six months ended June 30, 2021,
compared to the six months ended June 30, 2020. Analytics revenues were 39.8%
and 37.2% of our total revenues in the six months ended June 30, 2021 and
June 30, 2020, respectively.

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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,                                                        Six months ended June 30,
                                         2021                2020           Change         Percentage change             2021                2020      
        Change
                                         (dollars in millions)
Insurance                          $       115.5$ 118.1$ (2.6)                    (2.2) %              37.9  %             28.4  %             9.5  %
Healthcare                                  35.1             39.2            (4.1)                   (10.5) %              40.1  %             24.6  %            15.5  %
Emerging Business                           43.1             48.0            (4.9)                   (10.2) %              44.9  %             38.1  %             6.8  %
Analytics                                  135.8            115.8            20.0                     17.3  %              36.5  %             33.5  %             3.0  %
Total                              $       329.5$ 321.1$  8.4                      2.6  %              38.6  %             31.5  %             7.1  %




For the six months ended June 30, 2021, cost of revenues was $329.5 million
compared to $321.1 million for the six months ended June 30, 2020, an increase
of $8.4 million, or 2.6%. Our gross margin for the six months ended June 30,
2021 was 38.6% compared to 31.5% for six months ended June 30, 2020, an increase
of 7.1% primarily driven by higher revenues and operational efficiencies during
the six months ended June 30, 2021, compared to the impact of COVID-19 related
expenses during the six months ended June 30, 2020.

The decrease in cost of revenues in Insurance of $2.6 million for the six months
ended June 30, 2021 was primarily due to decreases in other operating costs of
$4.4 million, due to the impact of COVID-19 related expenses during the six
months ended June 30, 2020 and foreign exchange gain, net of hedging of $0.1
million. This was partially offset by higher employee-related costs of $1.9
million. Gross margin in Insurance increased by 9.5% during the six months ended
June 30, 2021, compared to the six months ended June 30, 2020, primarily due to
higher revenues, expansion in margin in certain existing clients and operational
efficiencies during the six months ended June 30, 2021, compared to the impact
of COVID-19 related expenses during the six months ended June 30, 2020.

The decrease in cost of revenues in Healthcare of $4.1 million for the six
months ended June 30, 2021 was primarily due to decreases in employee-related
costs of $4.3 million, partially offset by higher other operating costs of $0.2
million. Gross margin in Healthcare increased by 15.5% during the six months
ended June 30, 2021, compared to the six months ended June 30, 2020, primarily
due to higher revenues during the six months ended June 30, 2021, compared to
the impact of COVID-19 related expenses during the six months ended June 30,
2020.

The decrease in cost of revenues in Emerging Business of $4.9 million for the
six months ended June 30, 2021 was primarily due to decreases in
employee-related costs of $3.8 million, lower other operating costs of $0.9
million and foreign exchange gain, net of hedging $0.2 million. Gross margin in
Emerging Business increased by 6.8% during the six months ended June 30, 2021,
compared to the six months ended June 30, 2020, primarily due to higher
revenues, decrease in employee-related costs and higher operational efficiencies
during the six months ended June 30, 2021, compared to the impact of COVID-19
related expenses during the six months ended June 30, 2020.

The increase in cost of revenues in Analytics of $20.0 million for the six
months ended June 30, 2021 was primarily due to increases in employee-related
costs of $13.3 million, higher other operating costs of $7.4 million and higher
technology costs of $1.2 million, primarily due to increased usage of the work
from home model. This was partially offset by lower travel costs of $1.5 million
and foreign exchange gain, net of hedging of $0.4 million. Gross margin in
Analytics increased by 3.0% during the six months ended June 30, 2021, compared
to the six months ended June 30, 2020, primarily due to higher revenues during
the six months ended June 30, 2021, compared to the impact of COVID-19 related
expenses during the six months ended June 30, 2020.


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Selling, General and Administrative ("SG&A") Expenses.
                                                   Six months ended June 30,
                                                    2021                 2020              Change          Percentage change
                                                     (dollars in millions)
General and administrative expenses           $       67.2$     57.7$   9.5                      16.5  %
Selling and marketing expenses                        38.0                 27.5             10.5                      38.2  %
Selling, general and administrative expenses  $      105.2$     85.2$  20.0                      23.5  %
As a percentage of revenues                           19.6   %             18.2  %



The increase in SG&A expenses of $20.0 million was primarily due to higher
employee-related costs of $19.7 million, COVID-19-related expenses of $2.2
million primarily related to financial support to family members of deceased
employees, higher other operating costs of $2.0 million, partially offset by
lower facilities costs of $2.8 million due to optimization of office space and
lower travel costs of $1.1 million due to COVID-19 cost reduction measures.

Depreciation and Amortization.

                                                 Six months ended June 30,
                                                  2021                2020            Change           Percentage change
                                                   (dollars in millions)
Depreciation expense                         $      17.6$   17.3$  0.3                         1.7  %
Intangible amortization expense                      6.8                7.6            (0.8)                      (10.5) %
Depreciation and amortization expense        $      24.4$   24.9$ (0.5)                       (2.0) %
As a percentage of revenues                          4.6   %            5.3 

%




The decrease in intangibles amortization expense of $0.8 million was primarily
due to end of useful lives for certain intangible assets during the six months
ended June 30, 2021, compared to the six months ended June 30, 2020. The
increase in depreciation expense of $0.3 million was primarily due to
depreciation related to our investments in new operating centers, internally
developed software and accelerated depreciation resulting from a reduction in
useful lives related to certain operating centers, due to the impact of COVID-19
during the six months ended June 30, 2021, compared to the six months ended
June 30, 2020.

Income from Operations. Income from operations increased by $40.1 million, or
107.5%, from $37.3 million for the six months ended June 30, 2020 to $77.4
million for the six months ended June 30, 2021, primarily due to higher
revenues, partially offset by higher cost of revenues, higher SG&A expenses
during the six months ended June 30, 2021. As a percentage of revenues, income
from operations increased from 8.0% for the six months ended June 30, 2020 to
14.4% for the six months ended June 30, 2021.

Foreign Exchange Gain/(Loss). Net foreign exchange gains and losses are
primarily attributable to the movement of the U.S. dollar against the Indian
rupee, the U.K. pound sterling, the Philippine peso and the South African ZAR
during the six months ended June 30, 2021. The average exchange rate of the U.S.
dollar against the Indian rupee decreased from 74.25 during the six months ended
June 30, 2020 to 73.42 during the six months ended June 30, 2021. The average
exchange rate of the U.K. pound sterling against the U.S. dollar increased from
1.26 during the six months ended June 30, 2020 to 1.39 during the six months
ended June 30, 2021. The average exchange rate of the U.S. dollar against the
Philippine peso decreased from 50.55 during the six months ended June 30, 2020
to 48.29 during the six months ended June 30, 2021. The average exchange rate of
the U.S. dollar against the South African ZAR decreased from 16.90 during the
six months ended June 30, 2020 to 14.58 during the six months ended June 30,
2021.

We recorded a net foreign exchange gain of $1.8 million for the six months ended
June 30, 2021, compared to the net foreign exchange gain of $2.7 million for the
six months ended June 30, 2020.

Interest expense. Interest expense decreased from $6.0 million for the six
months ended June 30, 2020 to $5.0 million for the six months ended June 30,
2021 primarily due to lower outstanding borrowings and lower effective interest
rates of 1.9%
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under our Credit Facility during the six months ended June 30, 2021, compared to
2.6% during the six months ended June 30, 2020.

Other Income, net.

                                                      Six months ended June 30,
                                                        2021                2020            Change         Percentage change

Gain on sale and mark-to-market of mutual funds $ 2.7 $

  5.2          $ (2.5)                   (48.1) %
Interest and dividend income                                1.3               1.2             0.1                      8.3  %
Other, net                                                 (0.4)              0.4            (0.8)                  (200.0) %
Other income, net                                 $         3.6          $    6.8$ (3.2)                   (47.1) %




Other income, net decreased by $3.2 million, from $6.8 million for the six
months ended June 30, 2020 to $3.6 million for the six months ended June 30,
2021, primarily due to lower return on mutual fund investments of $2.5 million
during the six months ended June 30, 2021, compared to the six months ended
June 30, 2020.

Income Tax Expense. The effective tax rate decreased from 24.3% during the six
months ended June 30, 2020 to 22.9% during the six months ended June 30, 2021.
We recorded income tax expense of $17.9 million and $9.9 million for the six
months ended June 30, 2021 and 2020, respectively. The increase in income tax
expense was primarily as a result of higher profit during the six months ended
June 30, 2021, compared to the six months ended June 30, 2020, which was
partially offset by (i) recording of a one-time tax expense of $1.3 million due
to the election of a new tax regime, during the six months ended June 30, 2020,
for two of our Indian subsidiaries that provides for a lower tax rate on
earnings in exchange for foregoing certain tax credits, including minimum
alternative tax credits and (ii) recording of higher excess tax benefits related
to stock awards of $1.8 million pursuant to ASU No. 2016-09 during the six
months ended June 30, 2020 compared to $1.0 million during the six months ended
June 30, 2021.

Net Income. Net income increased from $30.8 million for the six months ended
June 30, 2020 to $59.9 million for the six months ended June 30, 2021, primarily
due to increase in income from operations of $40.1 million, lower interest
expense of $1.0 million and lower loss from equity-method investment of $0.1
million, partially offset by higher income tax expense of $8.0 million, lower
other income, net of $3.2 million and foreign exchange gain, net of $0.9
million. As a percentage of revenues, net income increased from 6.6% for the six
months ended June 30, 2020 to 11.2% for the six months ended June 30, 2021.

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Liquidity and Capital Resources
                                                                         Six months ended June 30,
                                                                          2021                 2020
                                                                           (dollars in millions)
Opening cash, cash equivalents and restricted cash                  $       225.5$    127.0
Net cash provided by operating activities                                    53.9                58.9
Net cash provided by investing activities                                    11.7                 1.1
Net cash used for financing activities                                     (131.4)              (13.4)
Effect of exchange rate changes                                              (2.2)               (2.8)
Closing cash, cash equivalents and restricted cash                  $       

157.5 $ 170.8




As of June 30, 2021 and 2020, we had $294.7 million and $335.6 million,
respectively, in cash, cash equivalents and short-term investments, of which
$254.2 million and $275.5 million, respectively, is located in foreign
jurisdictions that upon distribution may be subject to withholding and other
taxes. We periodically evaluate opportunities to distribute cash among our group
entities to fund our operations in the United States and other geographies, and
as and when we decide to distribute, we may have to accrue, additional taxes in
accordance with local tax laws, rules and regulations in the relevant foreign
jurisdictions. During the three months ended June 30, 2021, we repatriated to
the United States$49.0 million (net of $2.6 million withholding taxes) from
India, $42.5 million (net of $7.5 million withholding taxes) from the
Philippines and $17.0 million (net of $0.9 million withholding taxes) from India
in July 2021. These distributions do not constitute a change in our permanent
reinvestment assertion. We base our decision to continue to indefinitely
reinvest earnings in India and the Philippines on our estimate of the working
capital required to support our operations in these geographies and periodically
review our capital initiatives to support and expand our global operations, as
well as an economically viable rate of return on our investments made in India
and the Philippines as compared to those made in the United States.

Operating Activities: Net cash provided by operating activities was $53.9
million for the six months ended June 30, 2021 as compared to net cash provided
by operating activities of $58.9 million for the six months ended June 30, 2020,
reflecting higher working capital needs, offset by cash earnings. The major
drivers contributing to the decrease of $5.0 million year-over-year included the
following:

•Changes in accounts receivable, including advance billings, contributed lower
cash flow of $71.9 million in the six months ended June 30, 2021 compared to the
six months ended June 30, 2020. The decrease was a result of higher accounts
receivable resulting from revenue growth, change in credit terms for certain
clients during the six months ended June 30, 2021, and advance collections
during the three months ended December 31, 2020. This was partially offset by
our accounts receivable days sales outstanding, which improved to 58 days as of
June 30, 2021 from 63 days as of June 30, 2020.

•Increase in net income of $29.1 million in the six months ended June 30, 2021
compared to the six months ended June 30, 2020, primarily due to an increase in
income from operations of $40.1 million driven by higher revenues, offset by
higher income tax expense of $8.0 million and lower other income, net of
interest expense of $3.1 million.

•Increase in accrued employee costs, accrued expenses and other liabilities
contributed higher cash flow of $51.6 million in the six months ended June 30,
2021 compared to the six months ended June 30, 2020. The increase was primarily
due to lower payment and higher provisions of annual performance incentives of
$23.3 million, higher other employee cost accruals of $4.0 million and higher
accrued expenses and other liabilities of $24.3 million, during the six months
ended June 30, 2021 compared to the six months ended June 30, 2020.

•Other drivers decreasing cash flows during the six months ended June 30, 2021
compared to the six months ended June 30, 2020 included: income tax payments,
net of refunds, of $13.8 million, primarily due to higher advance income tax
payments on account of higher net income.

Investing Activities: Cash flows provided by investing activities were $11.7
million for the six months ended June 30, 2021 as compared to cash flows
provided by investing activities of $1.1 million for the six months ended
June 30, 2020. The increase is mainly due to net redemption of investments of
$31.0 million during six months ended June 30, 2021 as compared to
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net redemption of investments of $23.8 million during the six months ended
June 30, 2020, lower capital expenditures for purchase of long-lived assets,
including investments in infrastructure, technology assets, software and product
developments of $2.7 million during the six months ended June 30, 2021 as
compared to the six months ended June 30, 2020 and acquisition of an additional
stake in our equity affiliate of $0.7 million during the six months ended
June 30, 2020.

Financing Activities: Cash flows used for financing activities were $131.4
million during the six months ended June 30, 2021 as compared to cash flows used
for financing activities of $13.4 million during the six months ended June 30,
2020. The increase in cash flows used for financing activities was primarily due
to higher net repayment of $73.8 million under our revolving Credit Facility,
higher purchases of treasury stock by $43.4 million under our share repurchase
program and lower proceeds from the exercise of stock options of $0.8 million
during the six months ended June 30, 2021 as compared to the six months ended
June 30, 2020.

We expect to use cash from operating activities to maintain and expand our
business by making investments primarily related to new facilities and capital
expenditures associated with leasehold improvements to build our facilities,
digital capabilities and purchase telecommunications equipment and computer
hardware and software in connection with managing client operations.

We incurred $19.9 million of capital expenditures in the six months ended
June 30, 2021. We expect to incur capital expenditures of between $35.0 million
and $40.0 million in 2021, primarily to meet our growth requirements, including
additions to our facilities as well as investments in technology applications,
product development, digital technology, advanced automation, robotics and
infrastructure.

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 (see Note 24 - Commitments and
Contingencies to our unaudited consolidated financial statements herein for
further details). We anticipate that we will continue to rely upon cash from
operating activities to finance our working capital needs, capital expenditures
and smaller acquisitions. If we have significant growth through acquisitions, we
may need to obtain additional financing.

The Coronavirus Aid, Relief, and Economic Security Act, (the "CARES Act") allows
employers to defer the payment of the employer share of Federal Insurance
Contributions Act ("FICA") taxes for the period from April 1, 2020 and ending
December 31, 2020. As of June 30, 2021 and December 31, 2020, we deferred our
contributions to FICA of $6.3 million each under the CARES Act. The deferred
amount will be payable as follows: (1) 50% of the deferred amount will be paid
on or before December 31, 2021 and (2) the remaining 50% of the deferred amount
will be paid on or before December 31, 2022.
Financing Arrangements (Debt Facility and Notes)
The following tables summarizes our Debt balances as of June 30, 2021 and
December 31, 2020.
                                                               As of June 30,2021
                                                             (dollars in millions)
                                              Revolving Credit Facility        Notes        Total
Current portion of long-term borrowings      $                     15.0      $     -      $  15.0

Long-term borrowings                         $                        -      $ 150.0$ 150.0
Unamortized debt discount                                             -         (9.9)        (9.9)
Unamortized debt issuance costs*                                      -         (0.7)        (0.7)
Long-term borrowings                         $                        -      $ 139.4$ 139.4
Total borrowings                             $                     15.0      $ 139.4$ 154.4


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                                                             As of December 31,2020
                                                             (dollars in millions)
                                              Revolving Credit Facility        Notes        Total
Current portion of long-term borrowings      $                     25.0      $     -      $  25.0

Long-term borrowings                         $                     64.0      $ 150.0$ 214.0
Unamortized debt discount                                             -        (11.2)       (11.2)
Unamortized debt issuance costs*                                      -         (0.8)        (0.8)
Long-term borrowings                         $                     64.0      $ 138.0$ 202.0
Total borrowings                             $                     89.0      $ 138.0$ 227.0

*Unamortized debt issuance costs for our revolving Credit Facility of $0.4 million and $0.5 million as of June 30, 2021 and December 31, 2020, respectively, is presented under "Other current assets" and "Other assets" in our consolidated balance sheets.


See Note 17 - Borrowings to our unaudited consolidated financial statements
herein for further details on our debt facilities.
Off-Balance Sheet Arrangements
In the ordinary course of business, we provide standby letters of credit to
third parties primarily for facility leases. As of June 30, 2021 and
December 31, 2020, we had outstanding letters of credit of $0.5 million each,
that were not recognized in our unaudited and audited consolidated balance
sheets, respectively. These are not reasonably likely to have, a current or
future material effect on our financial condition, revenues or expenses, results
of operations, liquidity, capital expenditures or capital resources. We had no
other off-balance sheet arrangements or obligations.
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Contractual Obligations
The following table sets forth our contractual obligations as of June 30, 2021:
                                                            Payment Due by Period
                                               Less than        1-3          4-5         After
                                                 1 year        years        years       5 years       Total
                                                                   (dollars in millions)
  Finance leases                              $      0.2$  0.3      $     -      $     -      $   0.5
  Operating leases(a)                               24.2        44.5        

21.5 29.9 120.1

  Purchase obligations                               7.1           -            -            -          7.1
  Other obligations(b)                               2.8         5.0        

3.9 7.0 18.7

Borrowings:

  Principal payments(c)                             15.0           -        150.0            -        165.0
  Interest payments(d)                               5.3        10.5          2.6            -         18.4

Total contractual cash obligations(e) $ 54.6$ 60.3$ 178.0$ 36.9$ 329.8





(a)Represents undiscounted operating lease liabilities payable over the lease
term.
(b)Represents estimated employee benefit payments under the Gratuity Plan.
(c)Represents our intent and ability to settle the principal amount of our Notes
of $150 million in cash and does not reflect any assumptions about our ability
or intent to settle the Notes before their maturity.
(d)Interest on borrowings is calculated based on the interest rate on the
outstanding borrowings as of June 30, 2021.
(e)Excludes $0.9 million related to uncertain tax positions, since the extent of
the amount and timing of payment is currently not reliably estimable or
determinable.

Certain units of our Indian subsidiaries were established as 100%
Export-Oriented units under the Software Technology Parks of India or Special
Economic Zone 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 Philippine
Economic Zone Authority. The registration provides us with certain fiscal
incentives on the import of capital goods and local purchase of services and
materials and requires that ExlService Philippines, Inc. to 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 the unaudited consolidated financial statements
contained herein.
                                       58
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