Segment Reporting

12 Months Ended

Dec. 31, 2013

Segment Reporting

15. Segment Reporting

The Company is organized geographically and by business segment. For management purposes, the Company is primarily organized on a worldwide basis into four business segments:

• Application Outsourcing,

• Knowledge Process Outsourcing (KPO),

• e-Business and

• TeamSourcing

These segments are the basis on which the Company reports its primary segment information to management.

Through Application Outsourcing, the Company provides higher-value outsourcing services for ongoing management, development and maintenance of customers’ business applications.

Through KPO, Syntel provides outsourced solutions for a customer’s business processes, providing them with the advantage of a low cost position and process enhancement through optimal use of technology. Syntel uses a proprietary tool called Identeon™ to assist with strategic assessments of business processes and identifying the right ones for outsourcing.

Through e-Business, the Company provides development and implementation services for a number of emerging and rapidly growing high technology applications, including Web development, Data Warehousing, e-commerce, CRM, Oracle and SAP; as well as partnership agreements with software providers.

Through TeamSourcing, the Company provides professional information technology consulting services directly to customers on a staff augmentation basis. TeamSourcing services include systems specification, design, development, implementation and maintenance of complex information technology applications involving diverse computer hardware, software, data and networking technologies and practices.

The accounting policies of the segments are the same as those presented in Note 2. Management allocates all corporate expenses to the segments. No balance sheet/identifiable assets data is presented since the Company does not segregate its assets by segment.

The following table presents the segment-wise revenues and gross profits for the years ended December 31, 2013, 2012 and 2011:

	2013		2012		2011
	(In thousands)
Net Revenues:
Applications Outsourcing	$	636,282	$	544,694	$	478,927
KPO		126,135		110,455		97,777
e-Business		51,662		54,397		52,854
TeamSourcing		10,686		14,357		12,846
		824,765		723,903		642,404
Gross Profit:
Applications Outsourcing		256,723		217,732		164,812
KPO		81,933		68,756		57,291
e-Business		21,402		22,504		19,899
TeamSourcing		4,131		5,992		4,947
		364,189		314,984		246,949
Selling, general and administrative expenses		96,587		103,044		108,721
Income from operations	$	267,602	$	211,940	$	138,228

The Company’s largest customer in 2013, 2012 and 2011 was American Express, which accounted for revenues in excess of 10% of total consolidated revenues. Revenue from this customer was approximately $205.5 million, $194.8 million and $170.8 million, contributing approximately 25%, 27% and 27% of total consolidated revenues during 2013, 2012 and 2011, respectively. At December 31, 2013, 2012 and 2011, accounts receivable from this customer were $20.4 million, $17.1 million and $19.1 million, respectively. The revenue from American Express Corp. was generated, primarily in the Application Outsourcing segment and some in the KPO segment.

The Company’s second largest customer, State Street Bank, had revenues in excess of 10% of total consolidated revenues for the years 2013, 2012 and 2011. Revenue from this customer was approximately $129.3 million, $121.8 million and $109.4 million, contributing approximately 16%, 17% and 17% of total consolidated revenues during 2013, 2012 and 2011, respectively. At December 31, 2013, 2012 and 2011, accounts receivable from this customer was $10.6 million, $9.8 million and $13.7 million, respectively. Approximately 76% of the revenue from this customer was generated in the KPO segment and 24% in the Applications Outsourcing segment.