10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2018

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROMTO

COMMISSION FILE NUMBER 001-33089

_________________________________________________________

EXLSERVICE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

_________________________________________________________

DELAWARE	82-0572194
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
280 PARK AVENUE, 38TH FLOOR, NEW YORK, NEW YORK	10017
(Address of principal executive offices)	(Zip code)

(212) 277-7100

(Registrant’s telephone number, including area code)

________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	ý	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

As of July 31, 2018, there were 34,312,699 shares of the registrant’s common stock outstanding, par value $0.001 per share.

TABLE OF CONTENTS

		PAGE
ITEM
	Part I. Financial Information	3
1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of June 30, 2018 (Unaudited) and December 31, 2017	3
	Consolidated Statements of Income (Unaudited) for the Three months and Six months ended June 30, 2018 and 2017	4
	Consolidated Statements of Comprehensive (Loss)/Income (Unaudited) for the Three months and Six months ended June 30, 2018 and 2017	5
	Consolidated Statements of Equity (Unaudited) for the Six months ended June 30, 2018 and 2017	6
	Consolidated Statements of Cash Flows (Unaudited) for the Six months ended June 30, 2018 and 2017	7
	Notes to Consolidated Financial Statements (Unaudited)	8
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
3.	Quantitative and Qualitative Disclosures About Market Risk	50
4.	Controls and Procedures	50
	Part II. Other Information	50
1.	Legal Proceedings	50
1A.	Risk Factors	50
2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
3.	Defaults Upon Senior Securities	51
4.	Mine Safety Disclosures	51
5.	Other Information	51
6.	Exhibits	52
Signatures		53

2

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	As of
	June 30, 2018			December 31, 2017
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	84,091		$	86,795
Short-term investments	149,045			178,479
Restricted cash	2,256			3,674
Accounts receivable, net	147,099			135,705
Prepaid expenses	9,963			9,781
Advance income tax, net	11,278			8,801
Other current assets	23,002			29,582
Total current assets	426,734			452,817
Property and equipment, net	66,112			66,757
Restricted cash	3,645			3,808
Deferred taxes, net	12,702			8,585
Intangible assets, net	41,170			48,958
Goodwill	200,981			204,481
Other assets	36,033			36,369
Investment in equity affiliate	2,886			3,000
Total assets	$	790,263		$	824,775
Liabilities and equity
Current liabilities:
Accounts payable	$	5,428		$	5,918
Current portion of long-term borrowings	10,318			10,318
Deferred revenue	10,448			10,716
Accrued employee costs	33,338			55,664
Accrued expenses and other current liabilities	59,882			61,366
Current portion of capital lease obligations	223			267
Total current liabilities	119,637			144,249
Long term borrowings	57,326			50,391
Capital lease obligations, less current portion	270			331
Income taxes payable	8,721			13,557
Other non-current liabilities	18,830			16,202
Total liabilities	204,784			224,730
Commitments and contingencies (Refer to Note 25)
Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued	—			—
ExlService Holdings, Inc. Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized, 37,583,160 shares issued and 34,288,314 shares outstanding as of June 30, 2018 and 36,790,751 shares issued and 33,888,733 shares outstanding as of December 31, 2017	38			37
Additional paid-in capital	334,643			322,246
Retained earnings	465,138			427,064
Accumulated other comprehensive loss	(87,621		)	(45,710		)
Total including shares held in treasury	712,198			703,637
Less: 3,294,846 shares as of June 30, 2018 and 2,902,018 shares as of December 31, 2017, held in treasury, at cost	(126,952		)	(103,816		)
Stockholders’ equity	$	585,246		$	599,821
Non-controlling interest	233			224
Total equity	$	585,479		$	600,045
Total liabilities and equity	$	790,263		$	824,775

See accompanying notes to unaudited consolidated financial statements.

3

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except share and per share amounts)

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
Revenues, net	$	210,112		$	189,057		$	417,085		$	372,090
Cost of revenues(1)	139,649			123,734			277,750			242,806
Gross profit(1)	70,463			65,323			139,335			129,284
Operating expenses:
General and administrative expenses	27,640			24,425			56,906			48,462
Selling and marketing expenses	15,151			13,095			29,103			26,435
Depreciation and amortization	10,582			9,535			21,086			18,907
Total operating expenses	53,373			47,055			107,095			93,804
Income from operations	17,090			18,268			32,240			35,480
Foreign exchange gain, net	1,414			886			2,029			1,268
Interest expense	(706		)	(465		)	(1,244		)	(897		)
Other income, net	2,232			2,512			5,766			5,698
Income before income tax expense	20,030			21,201			38,791			41,549
Income tax expense	5,510			823			1,057			4,383
Loss from equity-method investment	58			—			114			—
Net income attributable to ExlService Holdings, Inc. stockholders	$	14,462		$	20,378		$	37,620		$	37,166
Earnings per share attributable to ExlService Holdings, Inc. stockholders:
Basic	$	0.42		$	0.60		$	1.09		$	1.10
Diluted	$	0.41		$	0.58		$	1.07		$	1.06
Weighted-average number of shares used in computing earnings per share attributable to ExlService Holdings, Inc. stockholders:
Basic	34,511,777			33,819,320			34,479,202			33,833,153
Diluted	35,142,388			34,993,226			35,222,838			35,051,767

(1) Exclusive of depreciation and amortization.

See accompanying notes to unaudited consolidated financial statements.

4

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME (UNAUDITED)

(In thousands)

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
Net income	$	14,462		$	20,378		$	37,620		$	37,166
Other comprehensive (loss)/income:
Unrealized (loss)/gain on effective cash flow hedges, net of taxes ($3,573), $1,536, ($4,373) and $3,580, respectively	(8,656		)	707			(12,870		)	7,692
Foreign currency translation (loss)/gain	(18,219		)	2,200			(26,030		)	13,843
Reclassification adjustments
Gain on cash flow hedges, net of taxes ($426), ($607), ($1,202) and ($891), respectively(1)	(1,041		)	(1,376		)	(2,936		)	(2,022		)
Retirement benefits, net of taxes ($3), $40, ($2) and $47, respectively(2)	(35		)	31			(75		)	93
Total other comprehensive (loss)/income	$	(27,951	)	$	1,562		$	(41,911	)	$	19,606
Total comprehensive (loss)/income	$	(13,489	)	$	21,940		$	(4,291	)	$	56,772

(1) These are reclassified to net income and are included either in cost of revenues, or operating expenses, as applicable in the unaudited consolidated statements of income. Refer to Note 17 to the unaudited consolidated financial statements.

(2) These are reclassified to net income and are included in other income, net in the unaudited consolidated statements of income. Refer to Note 20 to the unaudited consolidated financial statements.

See accompanying notes to unaudited consolidated financial statements.

5

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(In thousands, except share and per share amounts)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)			Treasury Stock					Non - Controlling Interest		Total Equity
	Shares	Amount									Shares		Amount
Balance as of December 31, 2017	36,790,751	$	37	$	322,246	$	427,064	$	(45,710	)	(2,902,018	)	$	(103,816	)	$	224	$	600,045
Impact of adoption of Topic 606	—	—		—		454		—			—		—			—		454
Balance as of January 1, 2018	36,790,751	37		322,246		427,518		(45,710		)	(2,902,018	)	(103,816		)	224		600,499
Stock issued on exercise/vesting of equity awards	792,409	1		430		—		—			—		—			—		431
Stock-based compensation	—	—		11,967		—		—			—		—			—		11,967
Acquisition of treasury stock	—	—		—		—		—			(392,828	)	(23,136		)	—		(23,136		)
Non-controlling interest	—	—		—		—		—			—		—			9		9
Other comprehensive loss	—	—		—		—		(41,911		)	—		—			—		(41,911		)
Net income	—	—		—		37,620		—			—		—			—		37,620
Balance as of June 30, 2018	37,583,160	$	38	$	334,643	$	465,138	$	(87,621	)	(3,294,846	)	$	(126,952	)	$	233	$	585,479

	Common Stock			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive (Loss)			Treasury Stock					Non - Controlling Interest		Total Equity
	Shares	Amount										Shares		Amount
Balance as of December 31, 2016	35,699,819	$	36	$	284,646	$	382,722		$	(75,057	)	(2,071,710	)	$	(60,362	)	$	193	$	532,178
Impact of adoption of ASU 2016-09	—	—		5,999		(4,546		)	—			—		—			—		1,453
Balance as of January 1, 2017	35,699,819	$	36	$	290,645	$	378,176		$	(75,057	)	(2,071,710	)	$	(60,362	)	$	193	$	533,631
Stock issued on exercise/vesting of equity awards	552,609	—		1,778		—			—			—		—			—		1,778
Stock-based compensation	—	—		11,063		—			—			—		—			—		11,063
Acquisition of treasury stock	—	—		—		—			—			(488,987	)	(23,332		)	—		(23,332		)
Non-controlling interest	—	—		—		—			—			—		—			10		10
Other comprehensive income	—	—		—		—			19,606			—		—			—		19,606
Net income	—	—		—		37,166			—			—		—			—		37,166
Balance as of June 30, 2017	36,252,428	$	36	$	303,486	$	415,342		$	(55,451	)	(2,560,697	)	$	(83,694	)	$	203	$	579,922

See accompanying notes to unaudited consolidated financial statements.

6

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Six months ended June 30,
	2018			2017
Cash flows from operating activities:
Net income	$	37,620		$	37,166
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,279			19,063
Stock-based compensation expense	11,967			11,063
Unrealized gain on short term investments	(3,940		)	(2,246		)
Unrealized foreign exchange (gain)/loss	(7,782		)	1,643
Deferred income tax expense/(benefit)	543			(3,118		)
Allowances for doubtful accounts receivable	(590		)	—
Loss from equity-method investment	114			—
Others, net	123			27
Change in operating assets and liabilities:
Accounts receivable	(11,719		)	(9,775		)
Prepaid expenses and other current assets	(2,430		)	7,161
Accounts payable	(1,343		)	5,295
Deferred revenue	(199		)	(2,367		)
Accrued employee costs	(20,711		)	(11,612		)
Accrued expenses and other liabilities	2,753			(6,074		)
Advance income tax, net	(7,605		)	(1,117		)
Other assets	(4,287		)	(36		)
Net cash provided by operating activities	13,793			45,073
Cash flows from investing activities:
Purchase of property and equipment	(19,296		)	(20,447		)
Business acquisition (net of cash acquired)	(495		)	—
Purchase of investments	(40,663		)	(169,422		)
Proceeds from redemption of investments	60,811			39,475
Net cash provided by/(used for) investing activities	357			(150,394		)
Cash flows from financing activities:
Principal payments on capital lease obligations	(83		)	(94		)
Proceeds from borrowings	12,000			—
Repayments of borrowings	(5,065		)	—
Acquisition of treasury stock	(23,136		)	(23,332		)
Proceeds from exercise of stock options	431			1,778
Net cash used for financing activities	(15,853		)	(21,648		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2,582		)	1,579
Net decrease in cash, cash equivalents, and restricted cash	(4,285		)	(125,390		)
Cash, cash equivalents, and restricted cash at beginning of period	94,277			220,394
Cash, cash equivalents, and restricted cash at end of period	$	89,992		$	95,004

See accompanying notes to unaudited consolidated financial statements.

7

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

(In thousands, except share and per share amounts)

1. Organization

ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the state of Delaware. ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), operates in the Business Process Management (“BPM”) industry providing operations management services and analytics services that help businesses enhance revenue growth and improve profitability. Using its proprietary platforms, methodologies and tools, the Company looks deeper to help companies improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. The Company’s clients are located principally in the United States of America (“U.S.”) and the United Kingdom (“U.K”)

2. Summary of Significant Accounting Policies

(a) Basis of Preparation and Principles of Consolidation

The unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“US GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

The unaudited consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intra-group balances and transactions, and income and expenses arising from intra-group transactions, are eliminated while preparing those financial statements. The un-realized gains resulting from intra-group transactions are also eliminated. Similarly, the un-realized losses are eliminated, unless the transaction provides evidence as to impairment of the asset transferred.

Accounting policies of the respective individual subsidiary and associate are aligned, wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under US GAAP.

The Company’s investments in equity affiliates are initially recorded at cost and any excess cost over proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill. The proportionate share of net income or loss of the investee is recognized in the unaudited consolidated statements of income.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to the parent and it represents the minority partner’s interest in the operations of ExlService Colombia S.A.S. Non-controlling interest consists of the amount of such interest at the date of obtaining control over the subsidiary, and the non-controlling interest's share of changes in equity since that date. The non-controlling interest in the operations for all periods presented were insignificant and is included under general and administrative expenses in the unaudited consolidated statements of income.

(b) Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the unaudited consolidated statements of income during the reporting period. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates and assumptions that affect the financial statements include, but are not limited to, allowance for doubtful receivables, recoverability of service tax receivables, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, assumptions used to calculate stock-based compensation expense, depreciation and amortization periods, purchase price allocation, recoverability of long-term assets including goodwill and intangibles, and estimated costs to complete fixed price contracts.

8

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

(c) Employee Benefits

Contributions to defined contribution plans are charged to the consolidated statements of income in the period in which services are rendered by the covered employees. Current service costs for defined benefit plans are accrued in the period to which they relate. The liability in respect of defined benefit plans is calculated annually by the Company using the projected unit credit method. Prior service cost, if any, resulting from an amendment to a plan is recognized and amortized over the remaining period of service of the covered employees.

The Company recognizes its liabilities for compensated absences depending on whether the obligation is attributable to employee services already rendered, relates to rights that vest or accumulate and payment is probable and estimable.

Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2017-07, Compensation -Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post Retirement Benefit Cost. Pursuant to this, the Company retrospectively adopted the presentation of service cost separate from other components of net periodic costs for each period presented. The interest cost, expected return on plan assets and amortization of actuarial gains / loss, have been reclassified from “Cost of revenues”, “General and administrative expenses” and “Selling and marketing expenses” to “Other income, net”. Refer to Note 20 to the unaudited consolidated financial statements for details.

(d) Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity of ninety days or less to be cash equivalents. Pursuant to the Company’s investment policy, surplus funds are invested in highly-rated debt mutual funds, money market accounts and time deposits to reduce its exposure to market risk with regard to these funds.

Restricted cash represents amounts on deposit with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax assessments (refer to Note 25 to the unaudited consolidated financial statements for details). These deposits with banks have maturity dates after June 30, 2019. Restricted cash presented under current assets represents funds held on behalf of clients in dedicated bank accounts.

Effective January 1, 2018, the Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash. Pursuant to this adoption, for the purpose of unaudited statements of cash flows, the Company includes in its cash and cash-equivalent balances those amounts that have been classified as restricted cash and restricted cash equivalents for each period presented.

(e) Revenue Recognition

Revenue is recognized when services are provided to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for our services.

Revenue is measured based on consideration specified in a contract with a customer and excludes discounts and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by providing services to a customer.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Adoption of ASU 2014-09 Topic 606, “Revenue from Contracts with Customers” (Topic 606)

On January 1, 2018, the date of initial application, the Company adopted Topic 606 using the modified retrospective method by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity, resulting in an increase of $454, primarily due to new contract acquisition costs. The initial application scopes in those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Company’s historical accounting under Topic 605. The key area impacted upon adoption of Topic 606 relates to the accounting for sales commissions costs. Specifically, under Topic 606 a portion of sales commissions costs have been recorded as an asset and recognized as an operating expense on a straight line basis over the life of the contract. Prior to adoption, the Company was expensing sales commission costs as incurred.

9

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

Nature of services

The Company derives its revenues from operations management and analytics services. The Company operates in the business process management (“BPM”) industry providing operations management and analytics services helping businesses enhance revenue growth and improve profitability. The Company provides BPM or “operations management” services, which typically involve transfer to the Company of business operations of a client, after which it administers and manages those operations for its client on an ongoing basis. The Company also provides industry-specific digital transformational services related to operations management services, and analytics services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business.

Arrangements with Multiple Performance Obligations

The Company’s contracts with customers do not generally bundle different services together except for software and related services contracts, which are not significant, involving implementation services and post contract maintenance services. In such software and related services contracts, revenue is allocated to each performance obligation based on the relative standalone selling price.

A separate contract is generally drafted for each type of service sold, even if to the same customer. The typical length of a contract is 3 to 5 years.

Type of Contracts

i. a) Revenues under time-and-material, transaction and outcome-based contracts are recognized as the services are performed. When the terms of the client contract specify service level parameters that must be met (such as turnaround time or accuracy), the Company monitors such service level parameters to determine if any service credits or penalties have been incurred. Revenues are recognized net of any penalties or service credits that are due to a client.

b) In respect of arrangements involving subcontracting, in part or whole of the assigned work, the Company evaluates revenues to be recognized under Accounting Standard Codification ("ASC") topic 606-10-55-36 and 37, “Principal versus agent considerations”.

ii. Revenues for Company’s fixed-price contracts are recognized using the time-elapsed output method because the Company transfers control evenly during execution of its projects. Determining a measure of progress requires management to make judgments that affect the timing of revenue recognized. The Company regularly monitors its estimates for progress on completion of a project and records changes in the period in which a change in an estimate is determined. If a change in an estimate results in a projected loss on a project, such loss is recognized in the period in which it is first identified.

iii. Revenues from the Company's software and related services contracts, which are not significant, are primarily related to maintenance renewals or incremental license fees for additional users. Maintenance revenues are generally recognized on a straight-line basis over the annual contract term. Fees for incremental license fees without any associated services are recognized upon delivery of the related incremental license.

The Company accrues revenues for services rendered between the last billing date and the balance sheet date. Accordingly amounts for services, that the Company has performed and for which an invoice has not yet been issued to the client are presented as a part of contract assets as receivables.

The Company defers the revenues and related cost of revenue during the period while production set-ups are underway and recognize such revenues and costs ratably over the period during which the related services are expected to be performed. The deferred costs are limited to the amounts of the deferred revenues. Deferred revenue also includes the amount for which the services have been rendered but the other conditions of revenue recognition are not met, for example where the Company does not have the persuasive evidence of the arrangements.

Reimbursements of out-of-pocket expenses received from clients are included as part of revenues.

Payment terms

All Contracts entered into by the Company specify the payment terms. Usual payment terms range between 30-60 days. The Company does not have any extended payment terms clauses in existing contracts. At times the Company does enter into fixed price contracts and software licenses involving significant implementation wherein the milestones are defined such that the

10

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

Company can recover the costs with a reasonable margin. The payment terms do not have any linkage to segment or types of contracts, as they are defined for each contract separately.

Variable Consideration

Variability in the transaction price arises primarily due to service level agreements, cost of living adjustments, and pre-payment and volume discounts.

The Company considers its experience with similar transactions and expectations regarding the contract in estimating the amount of variable consideration that should be recognized during a period.

The Company believes that the expected value method is most appropriate for determining the variable consideration since the company has large number of contracts with similar nature of transactions/services.

Allocation of transaction price to performance obligations

The transaction price is allocated to performance obligations on a relative standalone selling price basis. Standalone selling prices are estimated by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract.  In assessing whether to allocate variable consideration to a specific part of the contract, the Company considers the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract.

Practical expedients and exemptions

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

(f) Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-02, Leases (Topic 842), which requires the identification of arrangements that should be accounted for as leases. In general, lease arrangements exceeding a twelve months term should be recognized as assets with corresponding liabilities on the balance sheet of the lessee. This ASU requires recording a right-of-use asset and lease obligation for all leases, whether operating or finance, while the income statement will reflect lease expense for operating leases and amortization and interest expense for finance leases. The balance sheet amount recorded for existing leases at the date of adoption of this ASU must be calculated using the applicable incremental borrowing rate. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and the implementation approach to be used.

In June 2016, FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is to be deducted from the amortized cost of the financial asset(s) so as to present the net carrying value at the amount expected to be collected on the financial asset. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendment should be applied through a modified retrospective approach. Early adoption as of the fiscal years beginning after December 15, 2018 is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In June 2018, FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting. This ASU involves several aspects of the accounting for non-employee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non employees. The amendments in this ASU affect all entities that enter into share-based payment transactions for acquiring goods and services from non employees. This ASU is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.  Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The adoption of this ASU is not expected to have any material effect on the Company’s consolidated financial statements.

11

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

(g) Recently Adopted Accounting Pronouncements

In May 2014, FASB issued ASU No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. Refer to Note 4 to the unaudited consolidated financial statements for details.

In August 2016, FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments apply to all entities that are required to present a statement of cash flows under Topic 230. The amendments are an improvement to US GAAP because they provide guidance for each of the eight issues, thereby reducing the current and potential future diversity in practice. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company has adopted the guidance retrospectively to each period presented. The adoption does not have any material effect on the presentation of its unaudited consolidated statements of cash flows.

In November 2016, FASB issued ASU No. 2016-18, Statement of cash flows (Topic 230) - Restricted cash. The amendments apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. The amendments in this update require that a statement of cash flows should explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. Early adoption is permitted with an adjustment reflected as of the beginning of the fiscal year in which the amendment is adopted. The Company has adopted the guidance retrospectively to each period presented. The adoption does not have any material effect on the presentation of its unaudited consolidated statements of cash flows. Refer to Note 6 to the unaudited consolidated financial statements for details.

In January 2017, FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively. The Company has adopted the guidance effective January 1, 2018. The adoption does not have any material effect on its unaudited consolidated financial statements.

In March, 2017, FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. The ASU amends ASC 715, Compensation — Retirement Benefits, to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic post-retirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in non-operating expenses. The update also stipulates that only the service cost component of net benefit cost is eligible for capitalization. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company has adopted the guidance retrospectively to each period presented. Refer to Note 2(c) and Note 20 to the unaudited consolidated financial statements for details.

In May 2017, FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company has adopted the guidance effective January 1, 2018. The adoption does not have any material effect on its unaudited consolidated financial statements.

12

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

3. Segment and Geographical Information

The Company operates in the BPM industry and is a provider of operations management and analytics services. The Company has eight operating segments, which are strategic business units that align its products and services with how it manages its business, approaches its key markets and interacts with its clients. Six of those operating segments provide BPM or “operations management” services, five of which are industry-focused operating segments (Insurance, Healthcare, Travel, Transportation and Logistics, Banking and Financial Services, and Utilities) and one of which is a “capability” operating segment (Finance and Accounting) that provides services to clients in our industry-focused segments as well as clients across other industries. In each of these six operating segments, the Company provides operations management services, which typically involve transfer to the Company of the business operations of a client, after which it administers and manages those operations for its client on an ongoing basis. The remaining two operating segments are Consulting, which provides industry-specific transformational services related to operations management services, and Analytics, which provides services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business.

The Company presents information for the following reportable segments:

• Insurance

• Healthcare

• Travel, Transportation and Logistics (“TT&L”)

• Finance and Accounting (“F&A”)

• Analytics, and

• All Other (consisting of the Company's remaining operating segments, which are the Banking and Financial Services, Utilities and Consulting operating segments).

The chief operating decision maker (“CODM”) generally reviews financial information such as revenues, cost of revenues and gross profit, disaggregated by the operating segments to allocate an overall budget among the operating segments.

The Company does not allocate and therefore the CODM does not evaluate other operating expenses, interest expense or income taxes by segment. Many of the Company’s assets are shared by multiple operating segments. The Company manages these assets on a total Company basis, not by operating segment, and therefore asset information and capital expenditures by operating segment are not presented.

Revenues and cost of revenues for the three months ended June 30, 2018 and 2017, respectively, for each of the reportable segments, are as follows:

	Three months ended June 30, 2018
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	64,812	$	19,817	$	18,549	$	24,228	$	23,088	$	59,618	$	210,112
Cost of revenues(1)	44,033		16,713		10,625		14,543		15,079		38,656		139,649
Gross profit(1)	$	20,779	$	3,104	$	7,924	$	9,685	$	8,009	$	20,962	$	70,463
Operating expenses													53,373
Foreign exchange gain, interest expense and other income, net													2,940
Income tax expense													5,510
Loss from equity-method investment													58
Net income													$	14,462

⁽¹⁾ Exclusive of depreciation and amortization.

13

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

	Three months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	58,255	$	18,923	$	17,835	$	21,038	$	21,447	$	51,559	$	189,057
Cost of revenues(1)*	40,471		12,306		10,323		12,338		14,645		33,651		123,734
Gross profit(1)*	$	17,784	$	6,617	$	7,512	$	8,700	$	6,802	$	17,908	$	65,323
Operating expenses*													47,055
Foreign exchange gain, interest expense and other income, net*													2,933
Income tax expense													823
Net income													$	20,378

⁽¹⁾ Exclusive of depreciation and amortization.

Revenues and cost of revenues for the six months ended June 30, 2018 and 2017, respectively, for each of the reportable segments, are as follows:

	Six months ended June 30, 2018
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	128,715	$	42,614	$	36,048	$	48,200	$	44,788	$	116,720	$	417,085
Cost of revenues(1)	86,460		33,955		21,068		29,272		30,264		76,731		277,750
Gross profit(1)	$	42,255	$	8,659	$	14,980	$	18,928	$	14,524	$	39,989	$	139,335
Operating expenses													107,095
Foreign exchange gain, interest expense and other income, net													6,551
Income tax expense													1,057
Loss from equity-method investment													114
Net income													$	37,620

⁽¹⁾ Exclusive of depreciation and amortization.

	Six months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	114,176	$	37,855	$	34,878	$	42,052	$	42,563	$	100,566	$	372,090
Cost of revenues(1)*	78,501		24,615		20,461		24,764		29,058		65,407		242,806
Gross profit(1)*	$	35,675	$	13,240	$	14,417	$	17,288	$	13,505	$	35,159	$	129,284
Operating expenses*													93,804
Foreign exchange gain, interest expense and other income, net*													6,069
Income tax expense													4,383
Net income													$	37,166

⁽¹⁾ Exclusive of depreciation and amortization.

14

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

*The Company early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Pursuant to this adoption, effective January 1, 2017, the resultant foreign exchange gain/(loss) upon settlement of cash flow hedges are recorded along with the underlying hedged item in the same income statement line as either part of “Cost of revenues”, “General and administrative expenses”, “Selling and marketing expenses”, "Depreciation and Amortization”, as applicable. Refer to Note 17 to the unaudited consolidated financial statements for details.

Revenues, net of the Company by service type, were as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
BPM and related services(1)	$	150,494	$	137,498	$	300,365	$	271,524
Analytics services	59,618		51,559		116,720		100,566
Total	$	210,112	$	189,057	$	417,085	$	372,090

⁽¹⁾ BPM and related services include revenues of the Company's five industry-focused operating segments, one capability operating segment and the consulting operating segment, which provides services related to operations management services. See segment disclosure above.

The Company attributes the revenues to regions based upon the location of its customers.

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Revenues, net
United States	$	174,087	$	153,894	$	345,285	$	304,175
Non-United States
United Kingdom	27,480		28,951		55,496		55,033
Rest of World	8,545		6,212		16,304		12,882
Total Non-United States	36,025		35,163		71,800		67,915
	$	210,112	$	189,057	$	417,085	$	372,090

Property and equipment, net by geographic area, were as follows:

	As of
	June 30, 2018		December 31, 2017
Property and equipment, net
India	$	35,060	$	39,143
United States	21,182		16,371
Philippines	6,748		8,217
Rest of World	3,122		3,026
	$	66,112	$	66,757

4. Revenues, net

Adoption of ASU 2014-09 Topic 606, “Revenue from Contracts with Customers”

On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method and applied its guidance to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 605.The Company recorded a net addition to opening equity of $454 as of January 1, 2018 due to the cumulative impact of adopting Topic 606, primarily due to contract acquisition costs.

15

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

The adoption of Topic 606 did not have a significant impact on the measurement or recognition of revenues during the three and six months ended June 30, 2018.

Refer to Note 3 to the unaudited consolidated financial statements for revenues disaggregated by reportable segments and geography.

Contract balances

The following table provides information about accounts receivable and contract liabilities from contracts with customers:

	As of
	June 30, 2018		December 31, 2017
Accounts receivable, net	$	147,099	$	135,705
Contract liabilities
Deferred revenue (advance payments portion)	$	9,969	$	9,311

Accounts receivable includes $58,339 and $49,125 as of June 30, 2018 and December 31, 2017, respectively, representing amounts not billed to customers. The Company has accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers and considers no significant performance risk associated with its unbilled receivables.

Contract liabilities represents that portion of deferred revenue for which payments have been received in advance from customers and are included within current liabilities. Contract liabilities are recognized; as revenue as (or when) we perform under the contract.

Revenue recognized from the carrying value of contract liabilities as of December 31, 2017 during the three and six months ended June 30, 2018 was $2,671 and $6,381, respectively.

Contract acquisition costs

As of January 1, 2018, we capitalized $454 as contract acquisition costs related to contracts that were not completed. Further, we capitalized an additional nil and $672 during the three and six months ended June 30, 2018, respectively, and amortized $80 and $153 during the three and six months ended June 30, 2018, respectively. There was no impairment loss in relation to costs capitalized. The capitalized costs will be amortized on a straight line basis over the life of contract.

Contract fulfillment costs

The Company has deferred contract fulfillment costs relating to transition activities amounting to $3,058 and $2,769 as of June 30, 2018 and December 31, 2017, respectively. In addition, we capitalized an additional $65 and $685 during the three and six months ended June 30, 2018, respectively, and amortized $254 and $395 during the three and six months ended June 30, 2018, respectively. There was no impairment loss in relation to costs capitalized. The capitalized costs will be amortized on a straight line basis over the life of contract.

Consideration received from customers, if any, relating to such transition activities are classified under Contract Liabilities and are recognized ratably over the period in which the related performance obligations are fulfilled.

5. Earnings Per Share

Basic earnings per share is computed by dividing net income to common stockholders by the weighted average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted average number of common shares plus the potentially dilutive effect of common stock equivalents (outstanding stock options, restricted stock and restricted stock units) issued and outstanding at the reporting date, using the treasury stock method. Stock options, restricted stock and restricted stock units that are anti-dilutive are excluded from the computation of weighted average shares outstanding.

16

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Numerator:
Net income	$	14,462	$	20,378	$	37,620	$	37,166
Denominators:
Basic weighted average common shares outstanding	34,511,777		33,819,320		34,479,202		33,833,153
Dilutive effect of share based awards	630,611		1,173,906		743,636		1,218,614
Diluted weighted average common shares outstanding	35,142,388		34,993,226		35,222,838		35,051,767
Earnings per share attributable to ExlService Holdings Inc. stockholders:
Basic	$	0.42	$	0.60	$	1.09	$	1.10
Diluted	$	0.41	$	0.58	$	1.07	$	1.06
Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share	336,599		2,893		242,561		227,941

6. Cash, Cash Equivalents and Restricted Cash

For the purpose of unaudited statements of cash flows, cash, cash equivalents and restricted cash comprise of the following:

	As of
	June 30, 2018		June 30, 2017
Cash and cash equivalents	$	84,091	$	89,414
Restricted cash (current)	2,256		1,898
Restricted cash (non-current)	3,645		3,692
	$	89,992	$	95,004

7. Other Income, net

Other income, net consists of the following:

	Three months ended June 30,					Six months ended June 30,
	2018		2017			2018		2017
Interest and dividend income	$	329	$	323		$	637	$	995
Gain on sale of mutual funds	1,694		2,438			4,827		4,221
Others, net	209		(249		)	302		482
Other income, net	$	2,232	$	2,512		$	5,766	$	5,698

17

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

8. Property and Equipment, net

Property and equipment, net consist of the following:

	Estimated useful lives	As of
	(Years)	June 30, 2018			December 31, 2017
Owned Assets:
Network equipment and computers	3-5	$	77,183		$	77,587
Software	3-5	63,827			59,325
Leasehold improvements	3-8	37,506			38,857
Office furniture and equipment	3-8	19,823			19,667
Motor vehicles	2-5	597			638
Buildings	30	1,162			1,245
Land	—	760			815
Capital work in progress	—	8,402			9,184
		209,260			207,318
Less: Accumulated depreciation and amortization		(143,553		)	(141,059		)
		$	65,707		$	66,259
Assets under capital leases:
Leasehold improvements		$	812		$	941
Office furniture and equipment		77			167
Motor vehicles		612			710
		1,501			1,818
Less: Accumulated depreciation and amortization		(1,096		)	(1,320		)
		$	405		$	498
Property and equipment, net		$	66,112		$	66,757

Capital work in progress represents advances paid towards acquisition of property and equipment and cost incurred to develop software not yet ready to be placed in service.

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,
	2018		2017		2018		2017
Depreciation and amortization expense	$	6,821	$	6,028	$	13,378	$	11,902

Effective January 1, 2017, the depreciation and amortization expenses set forth above includes the effect of foreign exchange gain upon settlement of cash flow hedges, amounting to $42 and $102 for the three months ended and $193 and $156 for the six months ended June 30, 2018 and 2017, respectively. Refer to Note 17 to the unaudited consolidated financial statements for further details.

18

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

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

	As of
	June 30, 2018		December 31, 2017
Cost	$	7,625	$	2,571
Less : Accumulated amortization	1,448		976
	$	6,177	$	1,595

9. Business Combinations, Goodwill and Intangible Assets

Health Integrated, Inc.

On December 22, 2017, a wholly owned subsidiary of the Company entered into an Asset Purchase Agreement to acquire substantially all the assets and assumed certain liabilities of Health Integrated, Inc. (“Health Integrated”), a company based in Tampa, Florida. The initial purchase price consisted of $22,577 in cash including working capital adjustment. The purchase agreement allows sellers the ability to earn up to $5,000 as earn-out, based on the achievement of certain performance goals by the acquired Health Integrated business during the 2018 calendar year. The earn-out was fair valued at $920 as of December 31, 2017. As of June 30, 2018 fair value of earn-out is Nil.

A portion of the purchase price otherwise payable was placed into escrow as security for the post-closing working capital adjustments and the indemnification obligations under the Asset Purchase Agreement.

Health Integrated provides dedicated care management services on behalf of health plans. Its services include case management, utilization management, disease management, special needs programs and multichronic care management. Health Integrated serves millions of lives in the Medicaid, Medicare, and dual eligible populations. It is known for its strong capabilities in improving member health status through behavioral change. Accordingly, the Company paid a premium for the acquisition, which is reflected in the goodwill recognized from the purchase price allocation. The acquisition of Health Integrated is included in the Healthcare reportable segment.

The Company finalized its purchase price allocation for the acquisition based on their fair values as set forth below:

	Amount
Tangible Assets	$	5,475
Liabilities	(5,733		)
Identifiable Intangible Assets:
Customer relationships	6,760
Developed technology	1,510
Trade names and trademarks	570
Goodwill	14,229
Total purchase price	$	22,811

The amount of goodwill recognized from the Health Integrated acquisition is deductible for tax purposes.

The customer relationships from the Health Integrated acquisition are being amortized over the weighted average useful life of 7.0 years and developed technology and trademarks are being amortized over the useful life of 1.0 year and 2.0 years, respectively.

19

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

Goodwill

The following table sets forth details of the Company’s goodwill balance as of June 30, 2018:

	Insurance			Healthcare			TT&L			F&A			All Other		Analytics		Total
Balance as at January 1, 2017	$	38,110		$	19,276		$	12,983		$	47,537		$	5,326	$	63,538	$	186,770
Acquisitions	—			15,957			—			—			—		—		15,957
Currency translation adjustments	223			—			696			835			—		—		1,754
Balance as at December 31, 2017	$	38,333		$	35,233		$	13,679		$	48,372		$	5,326	$	63,538	$	204,481
Measurement period adjustments*	—			(1,728		)	—			—			—		—		(1,728		)
Currency translation adjustments	(56		)	—			(780		)	(936		)	—		—		(1,772		)
Balance as at June 30, 2018	$	38,277		$	33,505		$	12,899		$	47,436		$	5,326	$	63,538	$	200,981

* Subsequent to December 31, 2017, adjustments of $1,728 have been made to the amounts of net tangible assets acquired and the earn-out with the corresponding offsets to goodwill. These adjustments are within the measurement period and have been accounted for prospectively. These adjustments did not have a significant impact on the Company’s unaudited consolidated statements of income, balance sheets or cash flows.

20

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

Intangible Assets

Information regarding the Company’s intangible assets is set forth below:

	As of June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	82,063	$	(48,842	)	$	33,221
Leasehold benefits	2,694		(2,518		)	176
Developed technology	15,800		(10,657		)	5,143
Non-compete agreements	2,045		(1,861		)	184
Trade names and trademarks	5,945		(4,399		)	1,546
	$	108,547	$	(68,277	)	$	40,270
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	109,447	$	(68,277	)	$	41,170

	As of December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	82,165	$	(43,667	)	$	38,498
Leasehold benefits	2,888		(2,596		)	292
Developed technology	15,835		(8,749		)	7,086
Non-compete agreements	2,045		(1,780		)	265
Trade names and trademarks	5,951		(4,034		)	1,917
	$	108,884	$	(60,826	)	$	48,058
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	109,784	$	(60,826	)	$	48,958

The amortization expense for the period is as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Amortization expense	$	3,761	$	3,507	$	7,708	$	7,005

The remaining weighted average life of intangible assets is as follows:

	(in years)
Customer relationships	5.13
Leasehold benefits	0.92
Developed technology	3.00
Non-compete agreements	1.22
Trade names and trademarks (Finite lived)	4.20

21

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

Estimated amortization of intangible assets during the next twelve months ending June 30,
2019	$	13,815
2020	9,001
2021	4,359
2022	3,583
2023	3,065
2024 and thereafter	6,447
Total	$	40,270

10. Investment in equity affiliate

On December 12, 2017, the Company acquired preferred stock in Corridor Platform Inc. (“Corridor”), a big data credit risk management platform for $3,000. The Company has determined that based on its ownership interest and other rights, Corridor is an equity affiliate. The Company has the right and option to acquire additional preferred stock from Corridor as per the terms of the agreement. The Company's proportionate share of net loss for the three months and six months ended June 30, 2018 was $58 and $114, respectively.

11. Other current assets

Other current assets consist of the following:

	As of
	June 30, 2018		December 31, 2017
Derivative instruments	$	4,787	$	10,938
Advances to suppliers	2,710		2,451
Receivables from statutory authorities	9,670		7,598
Others	5,835		8,595
Other current assets	$	23,002	$	29,582

12. Other assets

Other assets consist of the following:

	As of
	June 30, 2018		December 31, 2017
Lease deposits	$	8,522	$	8,776
Derivative instruments	1,128		7,361
Deposits with statutory authorities	6,378		6,492
Term deposits	9,015		6,909
Others	10,990		6,831
Other assets	$	36,033	$	36,369

22

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

13. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

	As of
	June 30, 2018		December 31, 2017
Accrued expenses	$	43,440	$	43,235
Derivative instruments	4,390		555
Client liabilities	5,107		8,982
Other current liabilities	6,945		8,594
Accrued expenses and other current liabilities	$	59,882	$	61,366

14. Other non-current liabilities

Other non-current liabilities consist of the following:

	As of
	June 30, 2018		December 31, 2017
Derivative instruments	$	5,788	$	322
Unrecognized tax benefits	892		892
Deferred rent	7,632		8,176
Retirement benefits	3,363		3,377
Other non-current liabilities	1,155		3,435
Non-current liabilities	$	18,830	$	16,202

15. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of amortization of actuarial gain/(loss) on retirement benefits and changes in the cumulative foreign currency translation adjustments. In addition, the Company enters into foreign currency exchange contracts, which are designated as cash flow hedges in accordance with ASC topic 815. Changes in the fair values of contracts are recognized in accumulated other comprehensive loss on the Company's consolidated balance sheet until the settlement of those contracts. The balances as of June 30, 2018 and December 31, 2017 are as follows:

	As of
	June 30, 2018			December 31, 2017
Cumulative foreign currency translation (loss)	$	(84,435	)	$	(58,405	)
Unrealized (loss)/gain on cash flow hedges, net of taxes of ($657) and $4,918, respectively	(3,874		)	11,932
Retirement benefits, net of taxes of ($76) and ($74), respectively	688			763
Accumulated other comprehensive loss	$	(87,621	)	$	(45,710	)

23

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

16. Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets and liabilities that were accounted for at fair value as of June 30, 2018 and December 31, 2017. The table excludes accounts receivable, accounts payable and accrued expenses for which fair values approximate their carrying amounts.

As of June 30, 2018	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds*	$	128,563	$	—	$	—	$	128,563
Derivative financial instruments	—		5,915		—		$	5,915
Total	$	128,563	$	5,915	$	—	$	134,478
Liabilities
Derivative financial instruments	$	—	$	10,178	$	—	$	10,178
Total	$	—	$	10,178	$	—	$	10,178
As of December 31, 2017	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds*	$	162,906	$	—	$	—	$	162,906
Derivative financial instruments	—		18,298		—		18,298
Total	$	162,906	$	18,298	$	—	$	181,204
Liabilities
Derivative financial instruments	$	—	$	877	$	—	$	877
Fair value of earn-out consideration	—		—		920		920
Total	$	—	$	877	$	920	$	1,797

* Represents short-term investments carried on fair value option under ASC 825 “Financial Instruments” as of June 30, 2018 and December 31, 2017.

Derivative Financial Instruments: The Company’s derivative financial instruments consist of foreign currency forward exchange contracts. Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. Refer to Note 17 to the unaudited consolidated financial statements for further details.

Fair value of earn-out consideration: The fair value measurement of earn-out consideration is determined using Level 3 inputs. The Company’s earn-out consideration represents a component of the total purchase consideration for its acquisition of Health Integrated. The measurement was calculated using unobservable inputs based on the Company’s own assessment of achievement of certain performance goals by Health Integrated during the 2018 calendar year. The earn-out was fair valued at $920 as of December 31, 2017. As of June 30, 2018, fair value of earn-out is Nil.

24

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

17. 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 and 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 $353,225 as of June 30, 2018 and $300,757 as of December 31, 2017.

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 Company early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Pursuant to this adoption, effective January 1, 2017, the resultant foreign exchange gain/(loss) are recorded along with the underlying hedged item in the same line of consolidated statements of income as either part of “Cost of revenues”, “General and administrative expenses”, “Selling and marketing expenses”, “Depreciation and amortization”, as applicable.

Prior to January 1, 2017, the resultant foreign exchange gain/(loss) on settlement of cash flow hedges and changes in the fair value of cash flow hedges deemed ineffective were recorded in “Foreign exchange gain, net” in the consolidated statements of income.

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. 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 foreign exchange gain/(loss). The Company’s primary exchange rate exposure is with the Indian Rupee, the U.K. pound sterling and the Philippine peso. The Company also has exposure to Colombian pesos, Czech Koruna, the Euro, South African ZAR and other local currencies in which it operates. Outstanding foreign currency forward contracts amounted to $124,691 and GBP 19,111 as of June 30, 2018 and amounted to $98,967 and GBP 17,947 as of December 31, 2017.

The Company estimates that approximately $245 of net derivative gains included in accumulated other comprehensive loss (“AOCI”) could be reclassified into earnings within the next twelve months based on exchange rates prevailing as of June 30, 2018. At June 30, 2018, the maximum outstanding term of the cash flow hedges was 45 months.

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 following tables set forth the fair value of the foreign currency exchange contracts and their location on the consolidated financial statements:

Derivatives designated as hedging instruments :	As of
Foreign currency exchange contracts	June 30, 2018		December 31, 2017
Other current assets	$	4,635	$	10,892
Other assets	$	1,128	$	7,360
Accrued expense and other current liabilities	$	4,390	$	481
Other non-current liabilities	$	5,788	$	322
Derivatives not designated as hedging instruments :	As of
Foreign currency exchange contracts	June 30, 2018		December 31, 2017
Other current assets	$	152	$	46
Accrued expense and other current liabilities	$	—	$	74

25

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

The following tables set forth the effect of foreign currency exchange contracts on the unaudited consolidated statements of income and accumulated other comprehensive loss for the three and six months ended June 30, 2018 and 2017:

	Three months ended June 30,					Six months ended June 30,
Forward Exchange Contracts :	2018		2017			2018		2017
(Gain)/loss recognized in AOCI
Derivatives in cash flow hedging relationships	$	12,229	$	(2,243	)	$	17,243	$	(11,272	)
(Gain)/loss recognized in unaudited consolidated statements of income
Derivatives not designated as hedging instruments	$	2,641	$	(151	)	$	5,569	$	(2,773	)

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,
	2018						2017
	As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts			As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts
Cash flow hedging relationships
Location in unaudited consolidated statements of income where (gain)/loss was reclassed from AOCI
Cost of revenues	$	139,649		$	(1,191	)	$	123,734		$	(1,566	)
General and administrative expenses	$	27,640		(180		)	$	24,425		(288		)
Selling & marketing expenses	$	15,151		(17		)	$	13,095		(30		)
Depreciation & amortization	$	10,582		(79		)	$	9,535		(99		)
				$	(1,467	)				$	(1,983	)
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where (gain)/loss was recognized
Foreign exchange (gain)/loss, net	$	(1,414	)	$	2,641		$	(886	)	$	(151	)
	$	(1,414	)	$	2,641		$	(886	)	$	(151	)

26

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

	Six months ended June 30,
	2018						2017
	As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts			As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts
Cash flow hedging relationships
Location in unaudited consolidated statements of income where (gain)/loss was reclassed from AOCI
Cost of revenues	$	277,750		$	(3,336	)	$	242,806		$	(2,296	)
General & administrative expenses	$	56,906		(511		)	$	48,462		(429		)
Selling & marketing expenses	$	29,103		(50		)	$	26,435		(48		)
Depreciation & amortization	$	21,086		(241		)	$	18,907		(140		)
				$	(4,138	)				$	(2,913	)
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where (gain)/loss was recognized
Foreign exchange (gain)/loss, net	$	(2,029	)	$	5,569		$	(1,268	)	$	(2,773	)
	$	(2,029	)	$	5,569		$	(1,268	)	$	(2,773	)

18. Borrowings

On October 24, 2014, the Company entered into a credit agreement that provided for a $50,000 revolving credit facility (the “Credit Facility”). On February 23, 2015, the Company increased the commitments under the Credit Facility by up to an additional $50,000. The Credit Facility had a maturity date of October 24, 2019 and was voluntarily pre-payable from time to time without premium or penalty. On November 21, 2017, the Company prepaid all outstanding amounts, including accrued interest and fees, and terminated all commitments, under the Credit Agreement. The Credit Facility carried an effective interest rate of 2.7% per annum and 2.6% per annum during the three months and six months ended June 30, 2017, respectively.

On November 21, 2017, the Company and each of the Company’s wholly owned material domestic subsidiaries entered into a Credit Agreement with certain lenders, and Citibank, N.A. as Administrative Agent (the “New Credit Agreement”). The New Credit Agreement provides for a $200,000 revolving credit facility (the “New Credit Facility”) with an option to increase the commitments by up to $100,000, subject to certain approvals and conditions as set forth in the New Credit Agreement. The New Credit Agreement also includes a letter of credit sub facility. The New Credit Facility has a maturity date of November 21, 2022 and is voluntarily pre-payable from time to time without premium or penalty. Borrowings under the New Credit Agreement were used to repay amounts outstanding under the Credit Facility and may otherwise be used for working capital and general corporate purposes, including permitted acquisitions.

Depending on the type of borrowing, loans under the New Credit Agreement bear interest at a rate equal to the specified prime rate (alternate base rate) or adjusted LIBO rate, plus, in each case, an applicable margin. The applicable margin is tied to the Company’s total net leverage ratio and ranges from 0% to 0.75% per annum with respect to loans pegged to the specified prime rate, and 1.00% to 1.75% per annum on loans pegged to the adjusted LIBO rate. The revolving credit commitments under the New Credit Agreement are subject to a commitment fee, which is also tied to the Company’s total net leverage ratio, and ranges from 0.15% to 0.30% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of

27

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

outstanding revolving loans and letter of credit obligations. The New Credit Facility carried an effective interest rate of 3.8% and 3.6% per annum during the three months and the six months ended June 30, 2018, respectively.

Obligations under the New Credit Agreement are guaranteed by the Company’s material domestic subsidiaries and are secured by all or substantially all of the assets of the Company and our material domestic subsidiaries. The New Credit Agreement contains affirmative and negative covenants, including, but not limited to, restrictions on the ability to incur indebtedness, create liens, make certain investments, make certain dividends and related distributions, enter into, or undertake, certain liquidations, mergers, consolidations or acquisitions and dispose of assets or subsidiaries. In addition, the New Credit Agreement contains a covenant to not permit the interest coverage ratio or the total net leverage ratio, both as defined for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.5 to 1.0 or more than 3.0 to 1.0, respectively. As of June 30, 2018, the Company was in compliance with all financial and non-financial covenants listed under the New Credit Agreement.

As of June 30, 2018, we had outstanding debt of $67,000, of which $10,000 is expected to be repaid within the next twelve months and is included under “current portion of long-term borrowings” and of which $57,000 is included under “long-term borrowings” in the unaudited consolidated balance sheets. As of December 31, 2017, we had an outstanding debt of $60,000, of which $10,000 was included under “current portion of long-term borrowings,” and the balance of $50,000 was included under “long-term borrowings” in the consolidated balance sheets.

In connection with the New Credit Agreement, the Company incurred issuance costs of $790, which are deferred and amortized as an adjustment to interest expense over the term of the New Credit Facility. The unamortized debt issuance costs as of June 30, 2018 and December 31, 2017 was $694 and $773, respectively, and is included under "other current assets" and “other assets” in the consolidated balance sheets.

Borrowings also includes structured payables which are in the nature of debt, amounting to $644 and $709 as of June 30, 2018 and December 31, 2017 respectively, of which $318 and $318 is included under "current portion of long-term borrowings", $326 and $391 under "long-term borrowings", respectively, in the consolidated balance sheet.

19. Capital Structure

Common Stock

The Company has one class of common stock outstanding.

During the three months ended June 30, 2018 and 2017, the Company acquired 3,835 and 2,219 shares of common stock, respectively, from employees in connection with withholding tax payments related to the vesting of restricted stock for a total consideration of $226 and $103, respectively. The weighted average purchase price per share of $58.82 and $46.51, respectively, was the average of the high and low price of the Company's share of common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.

During the six months ended June 30, 2018 and 2017, the Company acquired 45,646 and 65,003 shares of common stock, respectively, from employees in connection with withholding tax payments related to the vesting of restricted stock for a total consideration of $2,790 and $3,016, respectively. The weighted average purchase price per share of $61.12 and $46.40, respectively, was the average of the high and low price of the Company's share of common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.

On December 30, 2014, the Company’s Board of Directors authorized a common stock repurchase program (the “2014 Repurchase Program”), under which shares were authorized to be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2015 through 2017 up to an annual amount of $20,000.

On February 28, 2017, the Company’s Board of Directors authorized an additional common stock repurchase program (the “2017 Repurchase Program”), under which shares may be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2017 through 2019 up to an aggregate additional amount of $100,000. The approval increased the 2017 authorization from $20,000 to $40,000 and authorizes stock repurchases of up to $40,000 in each of 2018 and 2019.

28

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

During the three and six months ended June 30, 2018, the Company purchased 165,000 and 347,182 shares of its common stock, respectively, for an aggregate purchase price of approximately $9,407 and $20,346, respectively, including commissions, representing an average purchase price per share of $57.01 and $58.60, respectively, under the 2017 Repurchase Program.

During the three and six months ended June 30, 2017, the Company purchased 230,022 and 423,984 shares of its common stock, respectively, for an aggregate purchase price of approximately $11,316 and $20,316, respectively, including commissions, representing an average purchase price per share of $49.20 and $47.92, respectively, under the 2014 and 2017 Repurchase Programs.

Repurchased shares have been recorded as treasury shares and will be held until the Board of Directors designates that these shares be retired or used for other purposes.

20. 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 June 30,						Six months ended June 30,
	2018			2017			2018			2017
Service cost	$	423		$	494		$	862		$	978
Interest cost	173			166			353			328
Expected return on plan assets	(118		)	(111		)	(242		)	(218		)
Amortization of actuarial (gain)/loss	(38		)	71			(77		)	140
Net periodic benefit cost	$	440		$	620		$	896		$	1,228

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 costs 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”.

29

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

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 June 30, 2017							Six months ended June 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	$	123,734	$	123,846	$	(112	)	$	242,806	$	243,027	$	(221	)
General and administrative expenses	$	24,425	$	24,438	$	(13	)	$	48,462	$	48,489	$	(27	)
Selling and marketing expenses	$	13,095	$	13,096	$	(1	)	$	26,435	$	26,437	$	(2	)
Other income, net	$	2,512	$	2,638	$	(126	)	$	5,698	$	5,948	$	(250	)

* 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 June 30 of each year. The Company earned a return of approximately 7.8% per annum on these Gratuity Plans for the six months ended June 30, 2018.

Change in Plan Assets
Plan assets at January 1, 2018	$	6,915
Actual return	275
Employer contribution	—
Benefits paid	(576		)
Effect of exchange rate changes	(454		)
Plan assets at June 30, 2018	$	6,160

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 $755 and $496 for the three months ended June 30, 2018 and 2017, respectively, and $1,985 and $1,564 for the six months ended June 30, 2018 and 2017, respectively.

During the three months ended June 30, 2018 and 2017, the Company contributed $1,753 and $1,792, respectively, and during the six months ended June 30, 2018 and 2017, the Company contributed $3,667 and $3,505, respectively, for various defined contribution plans on behalf of its employees in India, the Philippines, Bulgaria, Romania, the Czech Republic, South Africa, Colombia, and Singapore.

30

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

21. Leases

The Company finances its use of certain motor vehicles and other equipment under various lease arrangements provided by financial institutions. Future minimum lease payments under these capital leases as of June 30, 2018 are as follows:

During the next twelve months ending June 30,
2019	$	273
2020	162
2021	101
2022	57
Total minimum lease payments	593
Less: amount representing interest	100
Present value of minimum lease payments	493
Less: current portion	223
Long term capital lease obligation	$	270

The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates. Future minimum lease payments under such agreements expiring after June 30, 2018 are set forth below:

During the next twelve months ending June 30,
2019	$	21,402
2020	17,854
2021	16,751
2022	13,675
2023	13,021
2024 and thereafter	36,164
	$	118,867

Rent expense

The operating leases are subject to renewal periodically and have scheduled rent increases. The Company recognizes rent expense on such leases on a straight-line basis over cancelable and non-cancelable lease period determined under ASC topic 840, Leases:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Rent expense	$	6,057	$	6,139	$	12,479	$	11,806

Deferred rent

	As of
	June 30, 2018		December 31, 2017
	(Unaudited)
Cancelable and non-cancelable operating leases	$	8,636	$	8,959

Deferred rent is included under “Accrued expenses and other current liabilities” and “Other non-current liabilities” in the consolidated balance sheets.

31

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

22. Income Taxes

The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates its estimate of annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

The Company recorded income tax expense of $5,510 and $823 for the three months ended June 30, 2018 and 2017, respectively. The effective tax rate increased from 3.9% during the three months ended June 30, 2017 to 27.5% during the three months ended June 30, 2018 primarily as a result of a: (i) reversal of an uncertain tax position of $3,153 during the three months ended June 30, 2017 and (ii) recording of excess tax benefit related to stock awards of $1,624 pursuant to ASU No. 2016-09 during the three months ended June 30, 2017 compared to $323 during the three months ended June 30, 2018.

The Company recorded income tax expense of $1,057 and $4,383 for the six months ended June 30, 2018 and 2017, respectively. The effective tax rate decreased from 10.5% during the six months ended June 30, 2017 to 2.7% during the six months ended June 30, 2018 primarily as a result of: (i) an adjustment of $4,836 reducing the provisional transition tax on the mandatory deemed repatriation of accumulated earnings and profits ("E&P") of foreign subsidiaries recognized during the year-ended December 31, 2017, (ii) a reduction in the U.S. federal corporate tax rate from 35.0% to 21.0% effective January 1, 2018, and (iii) excess tax benefits related to stock awards of $5,150 pursuant to ASU No. 2016-09 during the six months ended June 30, 2018 compared to $3,681 during the six months ended June 30, 2017, offset by reversal of uncertain tax position of $3,153 during the three months ended June 30, 2017.

The SEC staff issued Staff Accounting Bulletin ("SAB 118"), which provides guidance on accounting for the tax effects of the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”). SAB 118 provides a measurement period that should not extend beyond one year from the Tax Reform Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Reform Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Reform Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Reform Act.

The deemed repatriation transition tax (the “Transition Tax”) is a tax on certain previously untaxed accumulated and current E&P of the Company's foreign subsidiaries. The Company was able to reasonably estimate the Transition Tax and recorded an initial provisional Transition Tax obligation of $27,236, with a corresponding adjustment of $27,236 to income tax expense for the year ended December 31, 2017. On the basis of additional technical research and analysis, the Company recognized a measurement-period reduction of $4,836 to the Transition Tax obligation, with a corresponding adjustment of $4,836 to the income tax expense during the six months ended June 30, 2018. As of June 30, 2018, a total Transition Tax obligation of $22,400 has been recorded, with a corresponding adjustment of $22,400 to the income tax expense. However, the Company continues to gather additional information to more precisely compute the amount of the Transition Tax, and its accounting for this item is not yet complete because of, among other things, changes in the interpretations and assumptions, additional guidance that may be issued by the Internal Revenue Service ("I.R.S."), and actions the Company may take. The Company expects to complete its accounting within the prescribed measurement period.

This inclusion of foreign untaxed earnings resulted in previously taxed income (PTI) which may be subject to withholding taxes and currency gains or losses upon repatriation. The Company does not intend to distribute PTI of its foreign subsidiaries and has not recorded any deferred taxes related to its investment in foreign subsidiaries. The Company estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and has specific plans for use of the subsidiaries earnings. If, in the future, the Company changes its intention regarding the repatriation of PTI, additional taxes may be required and should be recorded in the period the intention changes.

As noted at year-end, the Company was able to reasonably estimate and record provisional adjustments associated with the corporate rate change in the amount of $1,949. The Company has not made any additional measurement period adjustment related to this item during the six months ended June 30, 2018 because it continues to evaluate potential method changes and implications of certain provisions of the Act, as well as additional guidance provided by the tax authorities. The Company continues to gather additional information and expects to complete its accounting within the prescribed measurement period.

32

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

23. Stock-Based Compensation

The following costs related to the Company’s stock-based compensation plans are included in the unaudited consolidated statements of income:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Cost of revenues	$	1,370	$	1,129	$	2,463	$	2,339
General and administrative expenses	3,099		2,344		5,349		4,940
Selling and marketing expenses	2,424		1,634		4,155		3,784
Total	$	6,893	$	5,107	$	11,967	$	11,063

As of June 30, 2018, the Company had 3,192,319 shares available for grant under the 2018 Omnibus Incentive Plan, which was adopted by the Company's stockholders in June 2018, at which time new awards under the Company's 2015 Amendment and Restatement of the 2006 Omnibus Award Plan were not permitted to be made.

Stock Options

Stock option activity under the Company’s stock-based compensation plans is shown below:

	Number of Options		Weighted Avg Exercise Price		Aggregate Intrinsic Value		Weighted Avg Remaining Contractual Life (Years)
Outstanding at December 31, 2017	259,563		$	18.03	$	10,985	2.76
Granted	—		—
Exercised	(25,000	)	17.22		1,092
Forfeited	—		—
Outstanding at June 30, 2018	234,563		$	18.12	$	9,029	2.35
Vested and exercisable at June 30, 2018	234,563		$	18.12	$	9,029	2.35

The unrecognized compensation cost for unvested options as of June 30, 2018 is Nil.

Restricted Stock and Restricted Stock Units

Restricted stock and restricted stock unit activity under the Company’s stock-based compensation plans is shown below:

	Restricted Stock				Restricted Stock Units
	Number		Weighted Average Fair Value		Number		Weighted Average Fair Value
Outstanding at December 31, 2017*	182,267		$	42.64	1,046,999		$	42.26
Granted	—		—		362,735		60.54
Vested	(36,639	)	35.91		(386,193	)	39.15
Forfeited	(14,620	)	47.86		(33,530	)	51.52
Outstanding at June 30, 2018*	131,008		$	43.94	990,011		$	49.86

* As of June 30, 2018 and December 31, 2017 restricted stock units vested for which the underlying common stock is yet to be issued are 155,753 and 146,112, respectively.

As of June 30, 2018, unrecognized compensation cost of $44,369 is expected to be expensed over a weighted average period of 2.74 years.

33

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

Performance Based Stock Awards

Performance based restricted stock unit (the “PRSUs”) activity under the Company’s stock-based compensation plans is shown below:

	Revenue Based PRSUs				Market Condition Based PRSUs
	Number		Weighted Average Fair Value		Number		Weighted Average Fair Value
Outstanding at December 31, 2017	113,190		$	48.13	113,174		$	60.80
Granted	55,268		60.58		55,262		70.97
Vested	—		—		—		—
Forfeited	(2,428	)	51.99		(2,427	)	64.16
Outstanding at June 30, 2018	166,030		$	52.22	166,009		$	64.14

As of June 30, 2018, unrecognized compensation cost of $12,444 is expected to be expensed over a weighted average period of 2.11 years.

24. Related Party Disclosures

The Company provides consulting services to PharmaCord, LLC.  One of the Company’s directors, Nitin Sahney, is the member-manager and chief executive officer of PharmaCord, LLC. The Company recognized revenue of $16 and $215 in the three months and six months ended June 30, 2018, respectively, and $328 and $805 in the three months and six months ended June 30, 2017, respectively, for services provided.

As of June 30, 2018 and December 31, 2017, the Company had accounts receivable of $6 and $140, respectively, related to these services.

25. Commitments and Contingencies

Fixed Asset Commitments

At June 30, 2018, the Company has committed to spend approximately $5,668 under agreements to purchase fixed assets. This amount is net of capital advances paid in respect of these purchases.

Other Commitments

Certain units of the Company’s Indian subsidiaries were established as 100% Export-Oriented units or under the Software Technology Parks of India (“STPI”) 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. The Company has 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. The Company’s management believes, however, that these units have in the past satisfied and will continue to satisfy the required conditions.

The Company’s operations centers in the Philippines are registered with the Philippine Economic Zone Authority (“PEZA”). The registration provides the Company with certain fiscal incentives on the import of capital goods and requires ExlService Philippines, Inc. to meet certain performance and investment criteria. The Company’s management believes that these centers have in the past satisfied and will continue to satisfy the required criteria.

Contingencies

U.S. and Indian transfer pricing regulations require that any international transaction involving associated enterprises be at an arm’s-length price. Accordingly, the Company determines the appropriate pricing for the international transactions among its associated enterprises on the basis of a detailed functional and economic analysis involving benchmarking against transactions among entities that are not under common control. The tax authorities have jurisdiction to review this arrangement and in the event that they determine that the transfer price applied was not appropriate, the Company may incur increased tax liability, including

34

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2018

(In thousands, except share and per share amounts)

accrued interest and penalties. The Company is currently involved in disputes with the Indian tax authorities over the application of some of its transfer pricing policies for some of its subsidiaries. Further, the Company and a U.S. subsidiary are engaged in tax litigation with the income-tax authorities in India on the issue of permanent establishment.

The aggregate disputed amount demanded by Indian tax authorities from the Company primarily related to its transfer pricing issues for years ranging from tax years 2003 to 2014 and its permanent establishment issues ranging from tax years 2003 to 2007 as of June 30, 2018 and December 31, 2017 is $17,370 and $18,065, respectively, of which the Company has made payments or provided bank guarantee to the extent $8,324 and $8,573, respectively. Amounts paid as deposits in respect of such assessments aggregating to $6,389 and $6,499 as of June 30, 2018 and December 31, 2017, respectively, are included in “Other assets” and amounts for bank guarantees aggregating to $1,935 and $2,074 as of June 30, 2018 and December 31, 2017, respectively, are included in “Restricted cash” in the non-current assets section of the Company’s consolidated balance sheets as of June 30, 2018 and December 31, 2017.

Based on the facts underlying the Company’s position and its experience with these types of assessments, the Company believes that its position will more likely than not be sustained upon final examination by the tax authorities based on its technical merits as of the reporting date and accordingly has not accrued any amount with respect to these matters in its consolidated financial statements. The Company does not expect any impact from these assessments on its future income tax expense. It is possible that the Company might receive similar orders or assessments from tax authorities for subsequent years. Accordingly even if these disputes are resolved, the Indian tax authorities may still serve additional orders or assessments.

In March 2017, the Company was named in a putative class action lawsuit filed in California, which included several causes of action seeking damages but did not include a monetary demand. The Company filed its answer in April 2017 vigorously denying the allegations. Both parties agreed to participate in a court-approved mediation which occurred in March 2018. The parties reached an agreement in principle whereby the Company, without any admission of wrongdoing or liability, would pay $2,400 to settle the litigation, which amount has been accrued under “General and administrative expenses” for the six months ended June 30, 2018. The agreement remains subject to final court approval, which is expected to occur in the fourth quarter of 2018 although there can be no guarantee as to approval or timing.

26. Subsequent Event

On July 1, 2018, the Company, through its wholly owned subsidiary ExlService.com, LLC, completed the acquisition of SCIOInspire Holdings Inc. (“SCIO”) pursuant to its previously announced Agreement of Merger dated April 28, 2018.

The aggregate purchase consideration for the acquisition was $236,500, subject to certain post-closing adjustments. Immediately prior to the consummation of the merger, certain members of the senior management team of SCIO exchanged approximately $4,080 in shares of SCIO for 69,459 newly-issued shares of restricted common stock of ExlService Holdings in a private exchange.

SCIO is a health analytics solution and services company serving over 100 healthcare organizations representing over 130 million covered lives across the continuum including providers, health plans, PBMs, employers, health services and global life sciences companies. This strategic acquisition is expected to significantly strengthen Company’s strategic focus areas of growth in Payment Integrity and Care Management.

The Company funded the acquisition with $233,000 from the New Credit Facility and remainder from available cash on hand. On July 2, 2018, the Company exercised its option under the New Credit Agreement to increase the commitments by $100,000 thereby utilizing the entire revolver under the New Credit Facility of $300,000, so as to be able to fund the acquisition. The incremental commitments were made pursuant to (and constitute part of) the existing commitments and shall be subject to the terms and conditions applicable to the existing commitments as set forth in the New Credit Agreement.

Due to the closing of this acquisition subsequent to the period end, the Company is currently determining the fair value of assets acquired and liabilities assumed necessary to develop the purchase price allocation. Therefore, disclosure of the purchase price allocation to the tangible and intangible assets acquired and liabilities assumed and supplemental pro forma information is not practicable. The pro forma revenue and earnings of the combined financial results will be included in the Company's Form 10-Q for the quarter ended September 30, 2018.

35

ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

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, 2017. Some of the statements in the following discussion are forward looking statements. Dollar amounts within Item 2 are presented as actual, approximated, dollar amounts.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. 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. These factors include but are not limited to:

• 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;

• 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;

• our ability to withstand the loss of a significant customer;

• 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;

• 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, 2017. 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.

36

Executive Overview

We are an operations management and analytics company that helps businesses enhance revenue growth and improve profitability. Using proprietary platforms, methodologies, and our full range of digital capabilities, we look deeper to help companies transform their businesses, functions and operations, to help them deliver better customer experience and business outcomes, while managing risk and compliance. We serve our customers in the insurance, healthcare, travel, transportation and logistics, banking and financial services and utilities industries, among others.

We operate in the business process management (“BPM”) industry and we provide operations management and analytics services. Our eight operating segments are strategic business units that align our products and services with how we manage our business, approach our key markets and interact with our clients. Six of those operating segments provide BPM or “operations management” services, five of which are industry focused operating segments (Insurance, Healthcare, Travel, Transportation and Logistics, Banking and Financial Services, and Utilities) and one of which is a “capability” operating segment (Finance and Accounting) that provides services to clients in our industry-focused segments as well as clients across other industries. In each of these six operating segments we provide operations management services, which typically involve transfer to the Company of the business operations of a client, after which we administer and manage those operations for our client on an ongoing basis. Our remaining two operating segments are Consulting, which provides industry-specific digital transformational services related to operations management services, and Analytics, which provides services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business.

We present information for the following reportable segments:

• Insurance,

• Healthcare,

• Travel, Transportation and Logistics,

• Finance and Accounting,

• Analytics, and

• All Other (consisting of our remaining operating segments, which are our Banking and Financial services, Utilities and Consulting operating segments).

Our global delivery network, which include 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 U.S., the Philippines, Bulgaria, Colombia, South Africa, Romania and the Czech Republic.

Consistent with our growth strategy, on December 22, 2017, we acquired substantially all of the assets and assumed certain liabilities related thereto of Health Integrated, Inc. (“Health Integrated”).

The acquisition of Health Integrated is included in the Healthcare reportable segment. Health Integrated provides dedicated care management services on behalf of health plans. Its services include case management, utilization management, disease management, special needs programs and multichronic care management. Health Integrated serves millions of lives in the Medicaid, Medicare, and dual eligible populations.

Revenues

For the three months ended June 30, 2018, we had revenues of $210.1 million compared to revenues of $189.1 million for the three months ended June 30, 2017, an increase of $21.0 million, or 11.1%. For the six months ended June 30, 2018, we had revenues of $417.1 million compared to revenues of $372.1 million for the six months ended June 30, 2017, an increase of $45.0 million, or 12.1%.

We serve clients mainly in the U.S. and the U.K., with these two regions generating 82.9% and 13.1%, respectively, of our total revenues for the three months ended June 30, 2018, and 81.4% and 15.3%, respectively, of our revenues for the three months ended June 30, 2017. For the six months ended June 30, 2018, these two regions generated 82.8% and 13.3%, respectively, of our total revenues and 81.7% and 14.8%, respectively, of our total revenues for the six months ended June 30, 2017.

For the three months ended June 30, 2018 and 2017, our total revenues from our top ten clients accounted for 39.0% and 39.1% of our total revenues, respectively. For the six months ended June 30, 2018 and 2017, our total revenues from our top ten clients accounted for 39.3% and 39.0% of our total revenues, respectively. Our revenue concentration with our top clients remains 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 ten largest clients could have a material adverse effect on our financial performance.

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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 U.S., Europe and Australia.

Operations Management Services: We provide our clients with a range of operations management services principally in the insurance, healthcare, travel, transportation and logistics, banking and financial services and utilities sectors, among others, as well as cross-industry operations management services, such as finance and accounting services. We also provide services related to operations management, through our Consulting services that provide advice regarding transformational initiatives.

Our operations management solutions typically involve the transfer to the Company business operations of a client such as claims processing, clinical operations, or financial transaction processing, after which we administer and manage the operations for our client 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 on the scope, deliverables and complexity of the engagement.

We have been observing a shift in industry pricing models toward transaction-based pricing, outcome-based pricing and other pricing models. We believe this trend will continue and we have begun to use such alternative pricing models with some of our current clients and are seeking to move certain other clients from a billing rate model to a transaction-based or other pricing model. These pricing models place the focus on operating efficiency in order to maintain our gross margins. In addition, 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.

Our existing agreements with original terms of three or more years 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.

Analytics: Our Analytics services focus on driving improved business outcomes for our customers by generating data-driven insights across all parts of our customers’ business. 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, and data management. We actively cross-sell and, where appropriate, integrate our Analytics services with other operations management services as part of a comprehensive offering set for our clients.

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

Critical Accounting Policies and Estimates

For a description of our critical accounting policies and estimates, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” and Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. For Revenue Recognition refer to Note 2 to the unaudited consolidated financial statements contained herein.

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Results of Operations

The following table summarizes our results of operations for the three and six months ended June 30, 2018 and 2017:

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
	(dollars in millions)						(dollars in millions)
Revenues, net	$	210.1		$	189.1		$	417.1		$	372.1
Cost of revenues(1)	139.6			123.7			277.8			242.8
Gross profit(1)	70.5			65.4			139.3			129.3
Operating expenses:
General and administrative expenses	27.6			24.4			56.9			48.5
Selling and marketing expenses	15.2			13.1			29.1			26.4
Depreciation and amortization	10.6			9.6			21.1			18.9
Total operating expenses	53.4			47.1			107.1			93.8
Income from operations	17.1			18.3			32.2			35.5
Foreign exchange gain, net	1.4			0.9			2.0			1.3
Interest expense	(0.7		)	(0.5		)	(1.2		)	(0.9		)
Other income, net	2.2			2.5			5.8			5.7
Income before income tax expense	20.0			21.2			38.8			41.6
Income tax expense	5.5			0.8			1.1			4.4
Loss from equity-method investment	0.1			—			0.1			—
Net income attributable to ExlService Holdings, Inc. stockholders	$	14.4		$	20.4		$	37.6		$	37.2

(1) Exclusive of depreciation and amortization.

39

Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

Revenues.

The following table summarizes our revenues by reportable segments for the three months ended June 30, 2018 and 2017:

	Three months ended June 30,						Percentage change
	2018		2017		Change
	(dollars in millions)
Insurance	$	64.8	$	58.3	$	6.5	11.3	%
Healthcare	19.8		18.9		0.9		4.7	%
Travel, Transportation and Logistics	18.6		17.8		0.8		4.0	%
Finance and Accounting	24.2		21.0		3.2		15.2	%
All Other	23.1		21.5		1.6		7.7	%
Analytics	59.6		51.6		8.0		15.6	%
Total revenues, net	$	210.1	$	189.1	$	21.0	11.1	%

Revenues for the three months ended June 30, 2018 were $210.1 million, up $21.0 million or 11.1%, compared to the three months ended June 30, 2017.

Revenue growth in Insurance of $6.5 million was primarily driven by expansion of business from our new and existing clients. Insurance revenues were 30.8% of our total revenues in the three months ended June 30, 2018 and also in the three months ended June 30, 2017.

Revenue growth in Healthcare of $0.9 million was primarily driven by our acquisition of Health Integrated in 2017, contributing $3.5 million. This was partially offset by lower revenues of $2.6 million due to the termination of certain client contracts. Healthcare revenues were 9.4% and 10.0% of our total revenues in the three months ended June 30, 2018 and June 30, 2017, respectively.

Revenue growth in Travel, Transportation and Logistics ("TT&L") of $0.8 million was primarily driven by net volume increases from our new and existing clients. TT&L revenues were 8.8% and 9.4% of our total revenues in three months ended June 30, 2018 and June 30, 2017, respectively.

Revenue growth in Finance and Accounting ("F&A") of $3.2 million was driven by net volume increases from our new and existing clients. F&A revenues were 11.5% and 11.1% of our total revenues in the three months ended June 30, 2018 and June 30, 2017, respectively.

Revenue growth in All Other of $1.6 million was primarily driven by higher revenues of $3.2 million in the Consulting operating segment, partially offset by lower revenues of $0.9 million in our Utilities operating segment, $0.4 million in our Banking and Financial Services operating segment, and net impact of foreign exchange loss of $0.2 million primarily due to the depreciation of the Indian rupee against the U.S. dollar. All Other revenues were 11.0% and 11.3% of our total revenues in the three months ended June 30, 2018 and June 30, 2017, respectively.

Revenue growth in Analytics of $8.0 million was primarily driven by our recurring and project based engagements from our new and existing clients. Analytics revenues were 28.4% and 27.3% of our total revenues in the three months ended June 30, 2018 and June 30, 2017, 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
	Three months ended June 30,				Change		Percentage change		Three months ended June 30,				Change
	2018		2017						2018		2017
	(dollars in millions)
Insurance	$	44.0	$	40.5	$	3.5	8.8	%	32.1	%	30.5	%	1.6	%
Healthcare	16.7		12.3		4.4		35.8	%	15.7	%	35.0	%	(19.3	)%
TT&L	10.6		10.3		0.3		2.9	%	42.7	%	42.1	%	0.6	%
F&A	14.5		12.3		2.2		17.9	%	40.0	%	41.4	%	(1.4	)%
All Other	15.1		14.6		0.5		3.0	%	34.7	%	31.7	%	3.0	%
Analytics	38.7		33.7		5.0		14.9	%	35.2	%	34.7	%	0.5	%
Total	$	139.6	$	123.7	$	15.9	12.9	%	33.5	%	34.6	%	(1.1	)%

For the three months ended June 30, 2018, cost of revenues was $139.6 million compared to $123.7 million for the three months ended June 30, 2017, an increase of $15.9 million, or 12.9%. Our gross margin for the three months ended June 30, 2018 was 33.5% compared to 34.6% for three months ended June 30, 2017, a decrease of 110 basis points (“bps”).

The increase in cost of revenues in Insurance of $3.5 million was primarily due to an increase in employee-related costs of $3.9 million on account of higher headcount and wage inflation, technology and infrastructure costs of $0.3 million and other operating costs of $0.7 million, partially offset by lower travel costs, professional fees of $1.2 million and currency movements net of hedging of $0.2 million. Gross margin in Insurance increased by 160 bps during the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to higher revenues and margin expansion in existing clients.

The increase in cost of revenues in Healthcare of $4.4 million was primarily due to an increase in employee-related costs of $3.8 million and technology costs of $0.6 million related to our acquisition of Health Integrated in 2017, partially offset by currency movements net of hedging of $0.2 million. Gross margin in Healthcare decreased by 1,930 bps during the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to the impact of acquisition of Health Integrated and the termination of certain client contracts.

The increase in cost of revenues in TT&L of $0.3 million was primarily due to an increase in employee-related costs of $0.4 million and other operating costs of $0.1 million during the three months ended June 30, 2018 compared to the three months ended June 30, 2017, partially offset by currency movements net of hedging of $0.2 million. Gross margin in TT&L increased by 60 bps during the three months ended June 30, 2018 compared to the three months ended June 30, 2017.

The increase in cost of revenues in F&A of $2.2 million was primarily due to an increase in employee-related costs of $1.4 million on account of higher headcount and wage inflation, travel costs of $0.6 million and technology and infrastructure costs of $0.3 million. Gross margin in F&A decreased by 140 bps during the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to higher operating expenses associated with the initiation of services for new clients.

The increase in cost of revenues in All Other of $0.5 million was primarily due to an increase in employee-related costs of $0.5 million on account of higher headcount and wage inflation and travel costs of $0.3 million, partially offset by currency movements net of hedging of $0.2 million. Gross margin in All Other increased by 300 bps during the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to higher revenues in our Consulting operating segment.

The increase in cost of revenues in Analytics of $5.0 million was primarily due to an increase in employee-related costs of $3.8 million on account of higher headcount and wage inflation, technology and infrastructure costs of $0.4 million and other operating costs of $1.0 million, partially offset by currency movements net of hedging of $0.2 million. Gross margin in Analytics increased by 50 bps during the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily due to lower operating costs.

41

Selling, General and Administrative (“SG&A”) Expenses.

	Three months ended June 30,						Change		Percentage change
	2018			2017
	(dollars in millions)
General and administrative expenses	$	27.6		$	24.4		$	3.2	13.2	%
Selling and marketing expenses	15.2			13.1			2.1		15.7	%
Selling, general and administrative expenses	$	42.8		$	37.5		$	5.3	14.0	%
As a percentage of revenues	20.4		%	19.8		%

The increase in SG&A expenses of $5.3 million was primarily due to an increase in employee-related costs of $4.6 million, including incremental costs of $1.6 million relating to our Health Integrated acquisition in 2017. There was a further increase of $1.5 million due to continued investments in strategic initiatives, product development, digital technology, advance automation and robotics, partially offset by lower technology and infrastructure costs of $0.7 million and currency movements net of hedging of $0.2 million.

Depreciation and Amortization.

	Three months ended June 30,						Change		Percentage change
	2018			2017
	(dollars in millions)
Depreciation expense	$	6.8		$	6.1		$	0.7	13.2	%
Intangible amortization expense	3.8			3.5			0.3		7.2	%
Depreciation and amortization expense	$	10.6		$	9.6		$	1.0	11.0	%
As a percentage of revenues	5.0		%	5.0		%

The increase in intangibles amortization expense of $0.3 million was primarily due to amortization of intangibles associated with our Health Integrated acquisition in 2017. The increase in depreciation expense of $0.7 million was due to depreciation related to our new operating centers commenced during 2017 to support our business growth.

Income from Operations. Income from operations decreased by $1.2 million, or 6.4%, from $18.3 million for the three months ended June 30, 2017 to $17.1 million for the three months ended June 30, 2018. As a percentage of revenues, income from operations decreased from 9.7% for the three months ended June 30, 2017 to 8.1% for the three months ended June 30, 2018.

Foreign Exchange Gain/(Loss). Net foreign exchange gains and losses are primarily attributable to movement of the U.S. dollar against the Indian rupee, the U.K. pound sterling and the Philippine peso during the three months ended June 30, 2018. The average exchange rate of the U.S. dollar against the Indian rupee increased from 64.45 during the three months ended June 30, 2017 to 67.51 during the three months ended June 30, 2018. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.29 during the three months ended June 30, 2017 to 1.34 during the three months ended June 30, 2018. The average exchange rate of the U.S. dollar against the Philippine peso increased from 50.06 during the three months ended June 30, 2017 to 52.53 during the three months ended June 30, 2018.

We recorded a net foreign exchange gain of $1.4 million for the three months ended June 30, 2018 compared to the net foreign exchange gain of $0.9 million for the three months ended June 30, 2017.

Interest expense. Interest expense increased from $0.5 million for the three months ended June 30, 2017 to $0.7 million for the three months ended June 30, 2018 primarily due to higher borrowings and higher interest rates under our New Credit Facility (as defined below in “Liquidity and Capital Resources-Financing Arrangements”).

42

Other Income, net.

	Three months ended June 30,								Percentage change
	2018		2017			Change
	(dollars in millions)
Interest and dividend income	$	0.3	$	0.3		$	—		1.9	%
Gain on mutual fund investments	1.7		2.4			(0.7		)	(30.5	)%
Other, net	0.2		(0.2		)	0.4			183.9	%
Other income, net	$	2.2	$	2.5		$	(0.3	)	(11.1	)%

Other income, net decreased by $0.3 million, from $2.5 million for the three months ended June 30, 2017 to $2.2 million for the three months ended June 30, 2018, primarily due to a lower gain from mutual fund investments of $0.7 million during the three months ended June 30, 2018 compared to three months ended June 30, 2017 due to lower yields on our mutual fund investments. This decrease was partially offset by an increase in other income, net of $0.4 million.

Income Tax Expense. The effective tax rate increased from 3.9% for the three months ended June 30, 2017 to 27.5% for the three months ended June 30, 2018 primarily as a result of a: (i) reversal of an uncertain tax position of $3.2 million during the three months ended June 30, 2017, and (ii) recording of excess tax benefits related to stock awards of $1.6 million pursuant to ASU No. 2016-09 during the three months ended June 30, 2017 compared to $0.3 million during the three months ended June 30, 2018.

Net Income. Net income decreased from $20.4 million for the three months ended June 30, 2017 to $14.4 million for the three months ended June 30, 2018, primarily due to higher income tax expense of $4.7 million, decrease in income from operations of $1.2 million, higher interest expense $0.2 million, lower other income of $0.3 million, partially offset by a higher foreign exchange gain of $0.5 million. As a percentage of revenues, net income decreased from 10.8% for the three months ended June 30, 2017 to 6.9% for the three months ended June 30, 2018.

43

Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017

Revenues.

The following table summarizes our revenues by reportable segment for the six months ended June 30, 2018 and 2017:

	Six months ended June 30,						Percentage change
	2018		2017		Change
	(dollars in millions)
Insurance	$	128.7	$	114.2	$	14.5	12.7	%
Healthcare	42.6		37.8		4.8		12.6	%
Travel, Transportation and Logistics	36.1		34.9		1.2		3.4	%
Finance and Accounting	48.2		42.0		6.2		14.6	%
All Other	44.8		42.6		2.2		5.2	%
Analytics	116.7		100.6		16.1		16.1	%
Total revenues, net	$	417.1	$	372.1	$	45.0	12.1	%

Revenues for the six months ended June 30, 2018 were $417.1 million, up $45.0 million or 12.1%, compared to the six months ended June 30, 2017.

Revenue growth in Insurance of $14.5 million was driven by expansion of business from our new and existing clients of $14.0 million. The remaining increase of $0.5 million was attributable to the net impact of the appreciation of the U.K. pound sterling and South African Rand against the U.S. dollar during the six months ended June 30, 2018 compared to the six months ended June 30, 2017. Insurance revenues were 30.9% and 30.7% of our total revenues in the six months ended June 30, 2018 and June 30, 2017, respectively.

Revenue growth in Healthcare of $4.8 million was primarily driven by our acquisition of Health Integrated in 2017 contributing $9.9 million. This was partially offset by lower revenues of $5.1 million due to the termination of certain client contracts. Healthcare revenues were 10.2% of our total revenues in each of the six months ended June 30, 2018 and June 30, 2017, respectively.

Revenue growth in TT&L of $1.2 million was primarily driven by net volume increases from our new and existing clients. TT&L revenues were 8.6% and 9.4% of our total revenues in six months ended June 30, 2018 and June 30, 2017, respectively.

Revenue growth in F&A of $6.2 million was driven by net volume increases from our new and existing clients of $5.6 million. The remaining increase of $0.6 million was due to the net impact of the appreciation of the U.K. pound sterling against the U.S. dollar during the six months ended June 30, 2018 compared to the six months ended June 30, 2017. F&A revenues were 11.6% and 11.3% of our total revenues in the six months ended June 30, 2018 and June 30, 2017, respectively.

Revenue growth in All Other of $2.2 million was primarily driven by higher revenues of $5.6 million in the Consulting operating segment, partially offset by lower revenues in our Utilities operating segment of $2.6 million and Banking and Financial Services operating segment of $1.2 million. The remaining increase of $0.4 million was primarily due to the net impact of the appreciation of the U.K. pound sterling against the U.S. dollar during the six months ended June 30, 2018 compared to the six months ended June 30, 2017. All Other revenues were 10.7% and 11.4% of our total revenues in the six months ended June 30, 2018 and June 30, 2017, respectively.

Revenue growth in Analytics of $16.1 million was driven by our recurring and project-based engagements from our new and existing clients of $15.7 million. The remaining increase of $0.5 million was due to the net impact of the appreciation of U.K. pound sterling against U.S. dollar during the six months ended June 30, 2018 compared to the six months ended June 30, 2017. Analytics revenues were 28.0% and 27.0% of our total revenues in the six months ended June 30, 2018 and June 30, 2017, respectively.

44

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,				Change		Percentage change		Six months ended June 30,				Change
	2018		2017						2018		2017
	(dollars in millions)
Insurance	$	86.5	$	78.5	$	8.0	10.1	%	32.8	%	31.2	%	1.6	%
Healthcare	34.0		24.6		9.4		37.9	%	20.3	%	35.0	%	(14.7	)%
TT&L	21.1		20.5		0.6		3.0	%	41.6	%	41.3	%	0.3	%
F&A	29.3		24.7		4.6		18.2	%	39.3	%	41.1	%	(1.8	)%
All Other	30.2		29.1		1.1		4.2	%	32.4	%	31.7	%	0.7	%
Analytics	76.7		65.4		11.3		17.3	%	34.3	%	35.0	%	(0.7	)%
Total	$	277.8	$	242.8	$	35.0	14.4	%	33.4	%	34.7	%	(1.3	)%

For the six months ended June 30, 2018, cost of revenues was $277.8 million compared to $242.8 million for the six months ended June 30, 2017, an increase of $35.0 million, or 14.4%. Our gross margin for the six months ended June 30, 2018 was 33.4% compared to 34.7% for six months ended June 30, 2017, a decrease of 130 basis points (“bps”).

The increase in cost of revenues in Insurance of $8.0 million was primarily due to an increase in employee-related costs of $6.4 million on account of higher headcount and wage inflation, technology and infrastructure costs of $0.8 million, travel and other operating costs of $0.7 million and currency movements net of hedging of $0.1 million. Gross margin in Insurance increased by 160 bps during the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to higher revenues and margin expansion in existing clients.

The increase in cost of revenues in Healthcare of $9.4 million was primarily due to an increase in employee-related costs of $7.7 million and other operating costs of $1.9 million, primarily on account of our acquisition of Health Integrated in 2017, partially offset by currency movements net of hedging of $0.3 million. Gross margin in Healthcare decreased by 1,470 bps during the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to the impact of acquisition of Health Integrated and the termination of client contracts.

The increase in cost of revenues in TT&L of $0.6 million was primarily due to an increase in employee-related costs of $0.4 million and other operating costs of $0.3 million, partially offset by currency movements net of hedging of $0.2 million. Gross margin in TT&L increased by 30 bps during the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

The increase in cost of revenues in F&A of $4.6 million was primarily due to an increase in employee-related costs of $2.9 million on account of higher headcount and wage inflation, technology and infrastructure costs of $0.8 million, travel costs of $0.7 million and other operating costs of $0.2 million. Gross margin in F&A decreased by 180 bps during the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to higher operating expenses associated with the initiation of services for new clients.

The increase in cost of revenues in All Other of $1.1 million was primarily due to an increase in employee-related costs of $0.8 million on account of higher headcount and wage inflation, travel costs of $0.4 million and currency movements net of hedging of $0.2 million. Gross margin in All Other increased by 70 bps during the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to higher revenues in our Consulting operating segment.

The increase in cost of revenues in Analytics of $11.3 million was primarily due to an increase in employee-related costs of $7.6 million on account of higher headcount and wage inflation, infrastructure costs of $0.7 million, technology costs of $0.4 million, travel costs of $0.3 million, other operating costs of $2.1 million and currency movements net of hedging of $0.1 million. Gross margin in Analytics decreased by 70 bps during the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to higher operating costs.

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Selling, General and Administrative (“SG&A”) Expenses.

	Six months ended June 30,						Change		Percentage change
	2018			2017
	(dollars in millions)
General and administrative expenses	$	56.9		$	48.5		$	8.4	17.4	%
Selling and marketing expenses	29.1			26.4			2.7		10.1	%
Selling, general and administrative expenses	$	86.0		$	74.9		$	11.1	14.8	%
As a percentage of revenues	20.6		%	20.1		%

The increase in SG&A expenses of $11.1 million was primarily due to an increase in employee-related costs of $6.3 million related to our Health Integrated acquisition in 2017 and an increase of $2.4 million due to the recognition of a claim for litigation settlement during the six months ended June 30, 2018. There was a further increase of $2.4 million due to continued investments in strategic initiatives, product development, digital technology, advance automation and robotics.

Depreciation and Amortization.

	Six months ended June 30,						Change		Percentage change
	2018			2017
	(dollars in millions)
Depreciation expense	$	13.4		$	11.9		$	1.5	12.4	%
Intangible amortization expense	7.7			7.0			0.7		10.0	%
Depreciation and amortization expense	$	21.1		$	18.9		$	2.2	11.5	%
As a percentage of revenues	5.1		%	5.1		%

The increase in depreciation expense of $1.5 million was due to depreciation related to our new operating centers commenced during 2017 to support our business growth. The increase in intangibles amortization expense of $0.7 million was primarily due to amortization of intangibles associated with our Health Integrated acquisition in 2017.

Income from Operations. Income from operations decreased by $3.3 million, or 9.1%, from $35.5 million for the six months ended June 30, 2017 to $32.2 million for the six months ended June 30, 2018. As a percentage of revenues, income from operations decreased from 9.5% for the six months ended June 30, 2017 to 7.7% for the six months ended June 30, 2018.

Foreign Exchange Gain/(Loss). Net foreign exchange gains and losses are primarily attributable to movement of the U.S. dollar against the Indian rupee, the U.K. pound sterling and the Philippine peso during the six months ended June 30, 2018. The average exchange rate of the U.S. dollar against the Indian rupee increased from 65.46 during the six months ended June 30, 2017 to 66.08 during the six months ended June 30, 2018. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.27 during the six months ended June 30, 2017 to 1.37 during the six months ended June 30, 2018. The average exchange rate of the U.S. dollar against the Philippine peso increased from 50.05 during the six months ended June 30, 2017 to 52.19 during the six months ended June 30, 2018.

We recorded a net foreign exchange gain of $2.0 million for the six months ended June 30, 2018 compared to the net foreign exchange gain of $1.3 million for the six months ended June 30, 2017.

Interest expense. Interest expense increased from $0.9 million for the six months ended June 30, 2017 to $1.2 million for the six months ended June 30, 2018 primarily due to higher borrowings and higher interest rates under our New Credit Facility.

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Other Income, net.

	Six months ended June 30,							Percentage change
	2018		2017		Change
	(dollars in millions)
Interest and dividend income	$	0.7	$	1.0	$	(0.3	)	(36.0	)%
Gain on mutual fund investments	4.8		4.2		0.6			14.4	%
Other, net	0.3		0.5		(0.2		)	(37.3	)%
Other income, net	$	5.8	$	5.7	$	0.1		1.2	%

Other income, net increased by $0.1 million, from $5.7 million for the six months ended June 30, 2017 to $5.8 million for the six months ended June 30, 2018 primarily due to a higher gain from mutual fund investments of $0.6 million during the six months ended June 30, 2018 compared to six months ended June 30, 2017. This increase was partially offset by a decrease in interest and dividend income of $0.3 million and other income, net of $0.2 million.

Income Tax Expense. The effective tax rate decreased from 10.5% for the six months ended June 30, 2017 to 2.7% for the six months ended June 30, 2018, primarily as a result of: (i) adjustment of $4.8 million reducing the provisional transition tax on the mandatory deemed repatriation of accumulated earnings and profits ("E&P") of foreign subsidiaries recognized during the year-ended December 31, 2017, (ii) reduction in the U.S. federal corporate tax rate from 35.0% to 21.0% effective January 1, 2018, and (iii) excess tax benefits related to stock awards of $5.2 million pursuant to ASU No. 2016-09 during the six months ended June 30, 2018 compared to $3.7 million during the six months ended June 30, 2017, offset by reversal of uncertain tax position of $3.2 million during the three months ended June 30, 2017.

Net Income. Net income increased from $37.2 million for the six months ended June 30, 2017 to $37.6 million for the six months ended June 30, 2018, primarily due to lower income tax expense of $3.3 million, higher foreign exchange gain of $0.7 million and other income of $0.1 million, partially offset by a decrease in income from operations of $3.3 million and higher interest expense of $0.3 million. As a percentage of revenues, net income decreased from 10.0% for the six months ended June 30, 2017 to 9.0% for the six months ended June 30, 2018.

Liquidityand Capital Resources

	Six months ended June 30,
	2018			2017
	(dollars in millions)
Opening cash, cash equivalents and restricted cash	$	94.3		$	220.4
Net cash provided by operating activities	13.8			45.1
Net cash (used for)/provided by investing activities	0.4			(150.4		)
Net cash used for financing activities	(15.9		)	(21.7		)
Effect of exchange rate changes	(2.6		)	1.6
Closing cash, cash equivalents and restricted cash	$	90.0		$	95.0

As of June 30, 2018 and 2017, we had $90.0 million and $95.0 million, respectively, in cash, cash equivalents and restricted cash. We have not determined the extent, if any, to which we may repatriate funds held by our foreign subsidiaries in light of the current regulatory environment (including under the U.S. Tax Cuts and Jobs Act of 2017 ("Tax Reform Act")) and because our future growth depends in part upon continued infrastructure and technology investments, geographical expansions and acquisitions outside of the U.S. Not all of our undistributed foreign earnings may be available for repatriation due to foreign legal restrictions that require minimum reserves to be maintained in those countries. However, in light of the Tax Reform Act, such earnings have been subject to U.S. federal tax as a result of the mandatory repatriation provision. If we decide to repatriate such earnings, we may have to accrue further taxes associated with such earnings in accordance with local tax laws, rules and regulations in the relevant jurisdictions.

Operating Activities: Cash flows provided by operating activities were $13.8 million for the six months ended June 30, 2018 as compared to cash flows provided by operating activities of $45.1 million during the six months ended June 30, 2017. Generally, factors that affect our earnings—including pricing, volume of services, costs and productivity—affect our cash flows used or provided from operations in a similar manner. However, while management of working capital, including timing of collections and payments affects operating results only indirectly, the impact on the working capital and cash flows provided by operating activities can be significant.

47

Cash flows generated from operating activities decreased by $31.3 million from $45.1 million for the six months ended on June 30, 2017 to $13.8 million for the six months ended June 30, 2018. This decrease was primarily due to an increase in working capital of $45.5 million during the six months ended June 30, 2018 as compared to $18.5 million during the six months ended June 30, 2017. The increase in working capital was primarily due to an increase in advance tax, prepaid expenses, other current assets, accounts receivable and a decrease in accrued employee costs and accounts payable.

Investing Activities: Cash flows generated from investing activities were $0.4 million for the six months ended June 30, 2018 as compared to cash flows used for investing activities of $150.4 million for the six months ended June 30, 2017. The increase of $150.8 million was primarily due to higher proceeds from redemption of investments of $60.8 million during the six months ended June 30, 2018 as compared to $39.5 million during the six months ended June 30, 2017. Further, there was lower cash used for purchase of investments of $169.4 million during the six months ended June 30, 2017 as compared to $40.7 million during the six months ended June 30, 2018.

Financing Activities: Cash flows used for financing activities were $15.9 million during the six months ended June 30, 2018 as compared to cash flows used for financing activities of $21.7 million during the six months ended June 30, 2017. The decrease in cash flows used for financing activities was primarily due to net borrowings of $7.0 million (net of repayments) under our New Credit Facility (as described below in “Financing Arrangements”) during the six months ended June 30, 2018. This decrease was partially offset by lower proceeds from exercise of stock options of $0.4 million during the six months ended June 30, 2018 as compared to $1.8 million during the six months ended June 30, 2017.

We expect to use cash from operating activities to maintain and expand our business. As we have focused on expanding our cash flow from operating activities we expect to continue to make capital investments, primarily related to new facilities and capital expenditures associated with leasehold improvements to build our facilities, and purchase telecommunications equipment and computer hardware and software in connection with managing client operations. We incurred $19.3 million of capital expenditures in the six months ended June 30, 2018. We expect to incur capital expenditures of between $35.0 million to $40.0 million in 2018, 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 (refer to Note 25 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 smaller acquisitions, capital expenditures and working capital needs. If we have significant growth through acquisitions, we may need to obtain additional financing.

Financing Arrangements (Debt Facility)

On October 24, 2014, we entered into a Credit Agreement that provided for a $50.0 million revolving credit facility (“Credit Facility”). We had an option to increase the commitments under the Credit Facility by up to an additional $50.0 million which we exercised on February 23, 2015, via an amendment to the Credit Agreement under the same terms and conditions which were available in the Credit Agreement. The Credit Facility had a maturity date of October 24, 2019 and was voluntarily pre-payable from time to time without premium or penalty. On November 21, 2017, we prepaid all outstanding amounts, including accrued interest and fees, and terminated all commitments under, the Credit Agreement.

On November 21, 2017, we and each of our wholly owned material domestic subsidiaries entered into a Credit Agreement with Citibank, N.A., PNC Bank, N.A., JPMorgan Chase Bank, N.A., Bank of America, N.A. and the lenders party thereto from time to time, with Citibank, N.A. serving as administrative agent (the “New Credit Agreement”). The New Credit Agreement provides for a $200.0 million revolving credit facility (the “New Credit Facility”). The Company has an option to increase the commitments under the New Credit Agreement by up to $100.0 million, subject to certain approvals and conditions as set forth in the New Credit Agreement. The New Credit Agreement also includes a letter of credit sub-facility. The New Credit Facility has a maturity date of November 21, 2022 and is voluntarily pre-payable from time to time without premium or penalty. Borrowings under the New Credit Agreement were used to refinance Credit Facility and may otherwise be used for working capital and general corporate purposes of the Company and its subsidiaries, including permitted acquisitions.

Refer to Note 18 to our unaudited consolidated financial statements herein for further details on our debt facilities.

48

As of June 30, 2018, we had outstanding debt of $67.0 million, of which $10.0 million is expected to be repaid within the next twelve months and is included under “current portion of long-term borrowings” and the balance of $57.0 million is included under “long-term borrowings” in the unaudited consolidated balance sheets. As of December 31, 2017, we had outstanding debt of $60.0 million, of which $10.0 million was presented under "current portion of long-term borrowings" and the balance of $50.0 million was presented under "long-term borrowings" in the unaudited consolidated balance sheets.

Off-Balance Sheet Arrangements

As of June 30, 2018, we had no off-balance sheet arrangements or obligations.

Contractual Obligations

The following table sets forth our contractual obligations as of June 30, 2018:

	Payment Due by Period
	Less than		1-3		4-5		After
	1 year		years		years		5 years		Total
	(dollars in millions)
Capital leases	$	0.3	$	0.3	$	0.1	$	—	$	0.7
Operating leases(a)	21.4		34.6		26.7		36.2		118.9
Purchase obligations	5.7		—		—		—		5.7
Other obligations(b)	2.0		3.3		2.3		3.2		10.8
Borrowings:
Principal payments	10.3		48.3		9.0		—		67.6
Interest payments(c)	2.2		2.6		0.5		—		5.3
Total contractual cash obligations(d)	$	41.9	$	89.1	$	38.6	$	39.4	$	209.0

(a) Represents minimum lease payments payable for cancellable and non-cancellable lease period.

(b) Represents estimated payments under the Gratuity Plan.

(c) Interest on borrowings is calculated based on the effective interest rate on the outstanding borrowings as of June 30, 2018.

(d) 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 “STPI” 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 “PEZA.” The registration provides us with certain fiscal incentives on the import of capital goods and requires that ExlService Philippines, Inc. 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, refer to Note 2—“Recent Accounting Pronouncements” to the unaudited consolidated financial statements contained herein.

49

ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk

During the three months ended June 30, 2018, there were no material changes in our market risk exposure. For a discussion of our market risk associated with exchange rate risk and interest rate risk, see Item 7A “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

ITEM 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosure. In connection with the preparation of this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of the CEO and CFO, of the effectiveness and operation of our disclosure controls and procedures as of June 30, 2018. Based upon that evaluation, the CEO and CFO have concluded that, as of June 30, 2018, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2018, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.     Other Information

ITEM 1.    Legal Proceedings

In the course of our normal business activities, various lawsuits, claims and proceedings may be instituted or asserted against us. We believe that the disposition of matters currently instituted or asserted will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. Please refer to Note 25 to the unaudited consolidated financial statements contained herein for details regarding certain contingent liabilities.

ITEM 1A.    Risk Factors

We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 a number of risks which may materially affect our business, financial condition or results of operations. You should carefully consider the “Risk Factors” set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us may also materially adversely affect our business, financial condition and/or results of operations.

ITEM 2.     Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Use of Proceeds

None.

50

Purchases of Equity Securities by the Issuer

During the three months ended June 30, 2018, purchases of common stock were as follows:

Period	Total Number of Shares Purchased	Average Price Paid per share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(2)
April 1, 2018 through April 30, 2018(1)	57,635	57.36	53,800	25,980,365
May 1, 2018 through May 31, 2018	58,400	55.21	58,400	22,756,273
June 1, 2018 through June 30, 2018	52,800	58.74	52,800	19,654,742
Total	168,835	57.05	165,000	—

(1) Includes 3,835 shares of the Company’s common stock acquired by the Company at an average price per share of $58.82 in connection with satisfaction of tax withholding obligations on vested restricted stock. The price paid per share for the restricted stock was the average of high and low price of common stock on the trading day prior to the vesting date of the restricted stock units.

(2) On February 28, 2017, the Company’s Board of Directors authorized an additional common stock repurchase program (the “2017 Repurchase Program”), under which shares may be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2017 through 2019 up to an aggregate additional amount of $100 million. The approval increases the 2017 authorization from $20 million to $40 million and authorizes stock repurchases of up to $40 million in each of 2018 and 2019.

ITEM 3.    Defaults Upon Senior Securities

None.

ITEM 4.    Mine Safety Disclosures

Not applicable.

ITEM 5.    Other Information

None.

51

ITEM 6.Exhibits

The following exhibits are being filed as part of this Quarterly Report on Form 10-Q:

2.1	Agreement of Merger, dated April 28, 2018, by and among ExlService.com, LLC, ExlService Cayman Merger Sub, and SCIOInspire Holdings Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on July 2, 2018). Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC, certain schedules to this agreement have been omitted. The Company hereby agrees to furnish supplementally to the SEC, upon its request, any or all of such omitted schedules.
3.1	Amended and Restated Certificate of Incorporation of the Company, as in effect on the date hereof (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on October 25, 2006).
3.2	Fourth Amended and Restated By-Laws of ExlService Holdings, Inc., as in effect on the date hereof (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on February 28, 2017).
10.1	ExlService Holdings, Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 20, 2018).
10.2	Form of Restricted Stock Unit Agreement (U.S. Executive Officers Combined) (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 20, 2018).
10.3	Form of Restricted Stock Unit Agreement (International Executive Officers) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 20, 2018).
10.4	Form of Restricted Stock Unit Agreement (Directors) (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 20, 2018).
31.1	Certification of the Chief Executive Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Scheme
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Extension Presentation Linkbase

52

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 2, 2018	EXLSERVICE HOLDINGS, INC.
	By:	/S/ VISHAL CHHIBBAR
		Vishal Chhibbar Chief Financial Officer (Duly Authorized Signatory, Principal Financial and Accounting Officer)

53

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Rohit Kapoor, certify that:

1. I have reviewed this Quarterly Report of ExlService Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2018	/s/ Rohit Kapoor
	Rohit Kapoor
	Vice-Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Vishal Chhibbar, certify that:

1. I have reviewed this Quarterly Report of ExlService Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2018	/s/ Vishal Chhibbar
	Vishal Chhibbar
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ExlService Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rohit Kapoor, Vice-Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Rohit Kapoor

Rohit Kapoor

Vice-Chairman and Chief Executive Officer

August 2, 2018

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ExlService Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Vishal Chhibbar, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Vishal Chhibbar

Vishal Chhibbar

Chief Financial Officer

August 2, 2018

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 31, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	ExlService Holdings, Inc.
Entity Central Index Key	0001297989
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Trading Symbol	EXLS
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		34,312,699

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 84,091	$ 86,795
Short-term investments	149,045	178,479
Restricted cash	2,256	3,674
Accounts receivable, net	147,099	135,705
Prepaid expenses	9,963	9,781
Advance income tax, net	11,278	8,801
Other current assets	23,002	29,582
Total current assets	426,734	452,817
Property and equipment, net	66,112	66,757
Restricted cash	3,645	3,808
Deferred taxes, net	12,702	8,585
Intangible assets, net	41,170	48,958
Goodwill	200,981	204,481
Other assets	36,033	36,369
Equity Method Investments	2,886	3,000
Total assets	790,263	824,775
Current liabilities:
Accounts payable	5,428	5,918
Current portion of long-term borrowings	10,318	10,318
Deferred revenue	10,448	10,716
Accrued employee costs	33,338	55,664
Accrued expenses and other current liabilities	59,882	61,366
Current portion of capital lease obligations	223	267
Total current liabilities	119,637	144,249
Long term borrowings	57,326	50,391
Capital lease obligations, less current portion	270	331
Income taxes payable	8,721	13,557
Other non-current liabilities	18,830	16,202
Total liabilities	204,784	224,730
Commitments and contingencies (Refer to Note 25)
Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued	0	0
ExlService Holdings, Inc. Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized, 37,583,160 shares issued and 34,288,314 shares outstanding as of June 30, 2018 and 36,790,751 shares issued and 33,888,733 shares outstanding as of December 31, 2017	38	37
Additional paid-in capital	334,643	322,246
Retained earnings	465,138	427,064
Accumulated other comprehensive loss	(87,621)	(45,710)
Total including shares held in treasury	712,198	703,637
Less: 3,294,846 shares as of June 30, 2018 and 2,902,018 shares as of December 31, 2017, held in treasury, at cost	(126,952)	(103,816)
Stockholders’ equity	585,246	599,821
Non-controlling interest	233	224
Total equity	585,479	600,045
Total liabilities and equity	$ 790,263	$ 824,775

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	15,000,000	15,000,000
Preferred stock, issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	100,000,000	100,000,000
Common stock, issued (in shares)	37,583,160	36,790,751
Common stock, outstanding (in shares)	34,288,314	33,888,733
Treasury stock (in shares)	3,294,846	2,902,018

XML

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Revenues, net		$ 210,112	$ 189,057	$ 417,085	$ 372,090
Cost of revenues	[1]	139,649	123,734	277,750	242,806
Gross profit	[1]	70,463	65,323	139,335	129,284
Operating expenses:
General and administrative expenses		27,640	24,425	56,906	48,462
Selling and marketing expenses		15,151	13,095	29,103	26,435
Depreciation and amortization		10,582	9,535	21,086	18,907
Total operating expenses		53,373	47,055	107,095	93,804
Income from operations		17,090	18,268	32,240	35,480
Foreign exchange gain, net		1,414	886	2,029	1,268
Interest expense		(706)	(465)	(1,244)	(897)
Other income, net		2,232	2,512	5,766	5,698
Income before income tax expense		20,030	21,201	38,791	41,549
Income tax expense		5,510	823	1,057	4,383
Loss from equity-method investment		58	0	114	0
Net income attributable to ExlService Holdings, Inc. stockholders		$ 14,462	$ 20,378	$ 37,620	$ 37,166
Earnings per share attributable to ExlService Holdings, Inc. stockholders:
Basic (in dollars per share)		$ 0.42	$ 0.60	$ 1.09	$ 1.10
Diluted (in dollars per share)		$ 0.41	$ 0.58	$ 1.07	$ 1.06
Weighted-average number of shares used in computing earnings per share attributable to ExlService Holdings, Inc. stockholders:
Basic (in shares)		34,511,777	33,819,320	34,479,202	33,833,153
Diluted (in shares)		35,142,388	34,993,226	35,222,838	35,051,767

[1] Exclusive of depreciation and amortization.

XML

Consolidated Statements of Comprehensive (Loss)/Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income		$ 14,462	$ 20,378	$ 37,620	$ 37,166
Other comprehensive (loss)/income:
Unrealized (loss)/gain on effective cash flow hedges, net of taxes ($3,573), $1,536, ($4,373) and $3,580, respectively		(8,656)	707	(12,870)	7,692
Foreign currency translation (loss)/gain		(18,219)	2,200	(26,030)	13,843
Reclassification adjustments
Gain on cash flow hedges, net of taxes ($426), ($607), ($1,202) and ($891), respectively(1)	[1]	(1,041)	(1,376)	(2,936)	(2,022)
Retirement benefits, net of taxes ($3), $40, ($2) and $47, respectively(2)	[2]	(35)	31	(75)	93
Total other comprehensive (loss)/income		(27,951)	1,562	(41,911)	19,606
Total comprehensive (loss)/income		$ (13,489)	$ 21,940	$ (4,291)	$ 56,772

[1] These are reclassified to net income and are included either in cost of revenues, or operating expenses, as applicable in the unaudited consolidated statements of income. Refer to Note 17 to the unaudited consolidated financial statements.

[2] These are reclassified to net income and are included in other income, net in the unaudited consolidated statements of income. Refer to Note 20 to the unaudited consolidated financial statements.

XML

Unaudited Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Unrealized (loss)/gain on effective cash flow hedges, taxes	$ (3,573)	$ 1,536	$ (4,373)	$ 3,580
Realized gain on cash flow hedges, taxes	(426)	(607)	(1,202)	(891)
Retirement benefits, taxes	$ (3)	$ 40	$ (2)	$ 47

XML

Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive (Loss)	Treasury Stock	Non - Controlling Interest
Adjustments for new accounting pronouncements | Impact of adoption of ASU 2016-09	$ 1,453		$ 5,999	$ (4,546)
Adjusted equity balance	533,631	$ 36	290,645	378,176	$ (75,057)	$ (60,362)	$ 193
Beginning balance (in shares) at Dec. 31, 2016		35,699,819				(2,071,710)
Beginning balance at Dec. 31, 2016	532,178	$ 36	284,646	382,722	(75,057)	$ (60,362)	193
Stock issued on exercise/vesting of equity awards (in shares)		552,609
Stock issued on exercise/vesting of equity awards	1,778		1,778
Stock-based compensation	11,063		11,063
Acquisition of treasury stock (in shares)						(488,987)
Acquisition of treasury stock	(23,332)					$ (23,332)
Non-controlling interest	10						10
Other comprehensive loss	19,606				19,606
Net income	37,166			37,166
Ending balance (in shares) at Jun. 30, 2017		36,252,428				(2,560,697)
Ending balance at Jun. 30, 2017	579,922	$ 36	303,486	415,342	(55,451)	$ (83,694)	203
Adjustments for new accounting pronouncements | Impact of adoption of Topic 606	454			454
Adjusted equity balance	$ 600,499	$ 37	322,246	427,518	(45,710)	$ (103,816)	224
Beginning balance (in shares) at Dec. 31, 2017	33,888,733	36,790,751				(2,902,018)
Beginning balance at Dec. 31, 2017	$ 600,045	$ 37	322,246	427,064	(45,710)	$ (103,816)	224
Stock issued on exercise/vesting of equity awards (in shares)		792,409
Stock issued on exercise/vesting of equity awards	431	$ 1	430
Stock-based compensation	11,967		11,967
Acquisition of treasury stock (in shares)						(392,828)
Acquisition of treasury stock	(23,136)					$ (23,136)
Non-controlling interest	9						9
Other comprehensive loss	(41,911)				(41,911)
Net income	$ 37,620			37,620
Ending balance (in shares) at Jun. 30, 2018	34,288,314	37,583,160				(3,294,846)
Ending balance at Jun. 30, 2018	$ 585,479	$ 38	$ 334,643	$ 465,138	$ (87,621)	$ (126,952)	$ 233

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net income	$ 37,620	$ 37,166
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,279	19,063
Stock-based compensation expense	11,967	11,063
Unrealized gain on short term investments	(3,940)	(2,246)
Unrealized foreign exchange (gain)/loss	(7,782)	1,643
Deferred income tax expense/(benefit)	543	(3,118)
Allowances for doubtful accounts receivable	(590)	0
Loss from equity-method investment	114	0
Others, net	123	27
Change in operating assets and liabilities:
Accounts receivable	(11,719)	(9,775)
Prepaid expenses and other current assets	(2,430)	7,161
Accounts payable	(1,343)	5,295
Deferred revenue	(199)	(2,367)
Accrued employee costs	(20,711)	(11,612)
Accrued expenses and other liabilities	2,753	(6,074)
Advance income tax, net	(7,605)	(1,117)
Other assets	(4,287)	(36)
Net cash provided by operating activities	13,793	45,073
Cash flows from investing activities:
Purchase of property and equipment	(19,296)	(20,447)
Business acquisition (net of cash acquired)	(495)	0
Purchase of investments	(40,663)	(169,422)
Proceeds from redemption of investments	60,811	39,475
Net cash provided by/(used for) investing activities	357	(150,394)
Cash flows from financing activities:
Principal payments on capital lease obligations	(83)	(94)
Proceeds from borrowings	12,000	0
Repayments of borrowings	(5,065)	0
Acquisition of treasury stock	(23,136)	(23,332)
Proceeds from exercise of stock options	431	1,778
Net cash used for financing activities	(15,853)	(21,648)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2,582)	1,579
Net decrease in cash, cash equivalents, and restricted cash	(4,285)	(125,390)
Cash, cash equivalents, and restricted cash at beginning of period	94,277	220,394
Cash, cash equivalents, and restricted cash at end of period	$ 89,992	$ 95,004

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Organization

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the state of Delaware. ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), operates in the Business Process Management (“BPM”) industry providing operations management services and analytics services that help businesses enhance revenue growth and improve profitability. Using its proprietary platforms, methodologies and tools, the Company looks deeper to help companies improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. The Company’s clients are located principally in the United States of America (“U.S.”) and the United Kingdom (“U.K”)

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(a) Basis of Preparation and Principles of Consolidation

The unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“US GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

The unaudited consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intra-group balances and transactions, and income and expenses arising from intra-group transactions, are eliminated while preparing those financial statements. The un-realized gains resulting from intra-group transactions are also eliminated. Similarly, the un-realized losses are eliminated, unless the transaction provides evidence as to impairment of the asset transferred.

Accounting policies of the respective individual subsidiary and associate are aligned, wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under US GAAP.

The Company’s investments in equity affiliates are initially recorded at cost and any excess cost over proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill. The proportionate share of net income or loss of the investee is recognized in the unaudited consolidated statements of income.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to the parent and it represents the minority partner’s interest in the operations of ExlService Colombia S.A.S. Non-controlling interest consists of the amount of such interest at the date of obtaining control over the subsidiary, and the non-controlling interest's share of changes in equity since that date. The non-controlling interest in the operations for all periods presented were insignificant and is included under general and administrative expenses in the unaudited consolidated statements of income.

(b) Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the unaudited consolidated statements of income during the reporting period. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates and assumptions that affect the financial statements include, but are not limited to, allowance for doubtful receivables, recoverability of service tax receivables, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, assumptions used to calculate stock-based compensation expense, depreciation and amortization periods, purchase price allocation, recoverability of long-term assets including goodwill and intangibles, and estimated costs to complete fixed price contracts.

(c) Employee Benefits

Contributions to defined contribution plans are charged to the consolidated statements of income in the period in which services are rendered by the covered employees. Current service costs for defined benefit plans are accrued in the period to which they relate. The liability in respect of defined benefit plans is calculated annually by the Company using the projected unit credit method. Prior service cost, if any, resulting from an amendment to a plan is recognized and amortized over the remaining period of service of the covered employees.

The Company recognizes its liabilities for compensated absences depending on whether the obligation is attributable to employee services already rendered, relates to rights that vest or accumulate and payment is probable and estimable.

Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2017-07, Compensation -Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post Retirement Benefit Cost. Pursuant to this, the Company retrospectively adopted the presentation of service cost separate from other components of net periodic costs for each period presented. The interest cost, expected return on plan assets and amortization of actuarial gains / loss, have been reclassified from “Cost of revenues”, “General and administrative expenses” and “Selling and marketing expenses” to “Other income, net”. Refer to Note 20 to the unaudited consolidated financial statements for details.

(d) Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity of ninety days or less to be cash equivalents. Pursuant to the Company’s investment policy, surplus funds are invested in highly-rated debt mutual funds, money market accounts and time deposits to reduce its exposure to market risk with regard to these funds.

Restricted cash represents amounts on deposit with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax assessments (refer to Note 25 to the unaudited consolidated financial statements for details). These deposits with banks have maturity dates after June 30, 2019. Restricted cash presented under current assets represents funds held on behalf of clients in dedicated bank accounts.

Effective January 1, 2018, the Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash. Pursuant to this adoption, for the purpose of unaudited statements of cash flows, the Company includes in its cash and cash-equivalent balances those amounts that have been classified as restricted cash and restricted cash equivalents for each period presented.

(e) Revenue Recognition

Revenue is recognized when services are provided to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for our services.

Revenue is measured based on consideration specified in a contract with a customer and excludes discounts and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by providing services to a customer.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Adoption of ASU 2014-09 Topic 606, “Revenue from Contracts with Customers” (Topic 606)

On January 1, 2018, the date of initial application, the Company adopted Topic 606 using the modified retrospective method by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity, resulting in an increase of $454, primarily due to new contract acquisition costs. The initial application scopes in those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Company’s historical accounting under Topic 605. The key area impacted upon adoption of Topic 606 relates to the accounting for sales commissions costs. Specifically, under Topic 606 a portion of sales commissions costs have been recorded as an asset and recognized as an operating expense on a straight line basis over the life of the contract. Prior to adoption, the Company was expensing sales commission costs as incurred.

Nature of services

The Company derives its revenues from operations management and analytics services. The Company operates in the business process management (“BPM”) industry providing operations management and analytics services helping businesses enhance revenue growth and improve profitability. The Company provides BPM or “operations management” services, which typically involve transfer to the Company of business operations of a client, after which it administers and manages those operations for its client on an ongoing basis. The Company also provides industry-specific digital transformational services related to operations management services, and analytics services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business.

Arrangements with Multiple Performance Obligations

The Company’s contracts with customers do not generally bundle different services together except for software and related services contracts, which are not significant, involving implementation services and post contract maintenance services. In such software and related services contracts, revenue is allocated to each performance obligation based on the relative standalone selling price.

A separate contract is generally drafted for each type of service sold, even if to the same customer. The typical length of a contract is 3 to 5 years.

Type of Contracts

i. a) Revenues under time-and-material, transaction and outcome-based contracts are recognized as the services are performed. When the terms of the client contract specify service level parameters that must be met (such as turnaround time or accuracy), the Company monitors such service level parameters to determine if any service credits or penalties have been incurred. Revenues are recognized net of any penalties or service credits that are due to a client.

b) In respect of arrangements involving subcontracting, in part or whole of the assigned work, the Company evaluates revenues to be recognized under Accounting Standard Codification ("ASC") topic 606-10-55-36 and 37, “Principal versus agent considerations”.

ii. Revenues for Company’s fixed-price contracts are recognized using the time-elapsed output method because the Company transfers control evenly during execution of its projects. Determining a measure of progress requires management to make judgments that affect the timing of revenue recognized. The Company regularly monitors its estimates for progress on completion of a project and records changes in the period in which a change in an estimate is determined. If a change in an estimate results in a projected loss on a project, such loss is recognized in the period in which it is first identified.

iii. Revenues from the Company's software and related services contracts, which are not significant, are primarily related to maintenance renewals or incremental license fees for additional users. Maintenance revenues are generally recognized on a straight-line basis over the annual contract term. Fees for incremental license fees without any associated services are recognized upon delivery of the related incremental license.

The Company accrues revenues for services rendered between the last billing date and the balance sheet date. Accordingly amounts for services, that the Company has performed and for which an invoice has not yet been issued to the client are presented as a part of contract assets as receivables.

The Company defers the revenues and related cost of revenue during the period while production set-ups are underway and recognize such revenues and costs ratably over the period during which the related services are expected to be performed. The deferred costs are limited to the amounts of the deferred revenues. Deferred revenue also includes the amount for which the services have been rendered but the other conditions of revenue recognition are not met, for example where the Company does not have the persuasive evidence of the arrangements.

Reimbursements of out-of-pocket expenses received from clients are included as part of revenues.

Payment terms

All Contracts entered into by the Company specify the payment terms. Usual payment terms range between 30-60 days. The Company does not have any extended payment terms clauses in existing contracts. At times the Company does enter into fixed price contracts and software licenses involving significant implementation wherein the milestones are defined such that the Company can recover the costs with a reasonable margin. The payment terms do not have any linkage to segment or types of contracts, as they are defined for each contract separately.

Variable Consideration

Variability in the transaction price arises primarily due to service level agreements, cost of living adjustments, and pre-payment and volume discounts.

The Company considers its experience with similar transactions and expectations regarding the contract in estimating the amount of variable consideration that should be recognized during a period.

The Company believes that the expected value method is most appropriate for determining the variable consideration since the company has large number of contracts with similar nature of transactions/services.

Allocation of transaction price to performance obligations

The transaction price is allocated to performance obligations on a relative standalone selling price basis. Standalone selling prices are estimated by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract.  In assessing whether to allocate variable consideration to a specific part of the contract, the Company considers the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract.

Practical expedients and exemptions

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

(f) Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-02, Leases (Topic 842), which requires the identification of arrangements that should be accounted for as leases. In general, lease arrangements exceeding a twelve months term should be recognized as assets with corresponding liabilities on the balance sheet of the lessee. This ASU requires recording a right-of-use asset and lease obligation for all leases, whether operating or finance, while the income statement will reflect lease expense for operating leases and amortization and interest expense for finance leases. The balance sheet amount recorded for existing leases at the date of adoption of this ASU must be calculated using the applicable incremental borrowing rate. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and the implementation approach to be used.

In June 2016, FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is to be deducted from the amortized cost of the financial asset(s) so as to present the net carrying value at the amount expected to be collected on the financial asset. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendment should be applied through a modified retrospective approach. Early adoption as of the fiscal years beginning after December 15, 2018 is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In June 2018, FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting. This ASU involves several aspects of the accounting for non-employee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non employees. The amendments in this ASU affect all entities that enter into share-based payment transactions for acquiring goods and services from non employees. This ASU is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.  Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The adoption of this ASU is not expected to have any material effect on the Company’s consolidated financial statements.

(g) Recently Adopted Accounting Pronouncements

In May 2014, FASB issued ASU No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. Refer to Note 4 to the unaudited consolidated financial statements for details.

In August 2016, FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments apply to all entities that are required to present a statement of cash flows under Topic 230. The amendments are an improvement to US GAAP because they provide guidance for each of the eight issues, thereby reducing the current and potential future diversity in practice. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company has adopted the guidance retrospectively to each period presented. The adoption does not have any material effect on the presentation of its unaudited consolidated statements of cash flows.

In November 2016, FASB issued ASU No. 2016-18, Statement of cash flows (Topic 230) - Restricted cash. The amendments apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. The amendments in this update require that a statement of cash flows should explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. Early adoption is permitted with an adjustment reflected as of the beginning of the fiscal year in which the amendment is adopted. The Company has adopted the guidance retrospectively to each period presented. The adoption does not have any material effect on the presentation of its unaudited consolidated statements of cash flows. Refer to Note 6 to the unaudited consolidated financial statements for details.

In January 2017, FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively. The Company has adopted the guidance effective January 1, 2018. The adoption does not have any material effect on its unaudited consolidated financial statements.

In March, 2017, FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. The ASU amends ASC 715, Compensation — Retirement Benefits, to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic post-retirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in non-operating expenses. The update also stipulates that only the service cost component of net benefit cost is eligible for capitalization. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company has adopted the guidance retrospectively to each period presented. Refer to Note 2(c) and Note 20 to the unaudited consolidated financial statements for details.

In May 2017, FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company has adopted the guidance effective January 1, 2018. The adoption does not have any material effect on its unaudited consolidated financial statements.

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Segment and Geographical Information

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment and Geographical Information

Segment and Geographical Information

The Company operates in the BPM industry and is a provider of operations management and analytics services. The Company has eight operating segments, which are strategic business units that align its products and services with how it manages its business, approaches its key markets and interacts with its clients. Six of those operating segments provide BPM or “operations management” services, five of which are industry-focused operating segments (Insurance, Healthcare, Travel, Transportation and Logistics, Banking and Financial Services, and Utilities) and one of which is a “capability” operating segment (Finance and Accounting) that provides services to clients in our industry-focused segments as well as clients across other industries. In each of these six operating segments, the Company provides operations management services, which typically involve transfer to the Company of the business operations of a client, after which it administers and manages those operations for its client on an ongoing basis. The remaining two operating segments are Consulting, which provides industry-specific transformational services related to operations management services, and Analytics, which provides services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business.

The Company presents information for the following reportable segments:

• Insurance

• Healthcare

• Travel, Transportation and Logistics (“TT&L”)

• Finance and Accounting (“F&A”)

• Analytics, and

• All Other (consisting of the Company's remaining operating segments, which are the Banking and Financial Services, Utilities and Consulting operating segments).

The chief operating decision maker (“CODM”) generally reviews financial information such as revenues, cost of revenues and gross profit, disaggregated by the operating segments to allocate an overall budget among the operating segments.

The Company does not allocate and therefore the CODM does not evaluate other operating expenses, interest expense or income taxes by segment. Many of the Company’s assets are shared by multiple operating segments. The Company manages these assets on a total Company basis, not by operating segment, and therefore asset information and capital expenditures by operating segment are not presented.

Revenues and cost of revenues for the three months ended June 30, 2018 and 2017, respectively, for each of the reportable segments, are as follows:

	Three months ended June 30, 2018
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	64,812	$	19,817	$	18,549	$	24,228	$	23,088	$	59,618	$	210,112
Cost of revenues(1)	44,033		16,713		10,625		14,543		15,079		38,656		139,649
Gross profit(1)	$	20,779	$	3,104	$	7,924	$	9,685	$	8,009	$	20,962	$	70,463
Operating expenses													53,373
Foreign exchange gain, interest expense and other income, net													2,940
Income tax expense													5,510
Loss from equity-method investment													58
Net income													$	14,462

⁽¹⁾ Exclusive of depreciation and amortization.

	Three months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	58,255	$	18,923	$	17,835	$	21,038	$	21,447	$	51,559	$	189,057
Cost of revenues(1)*	40,471		12,306		10,323		12,338		14,645		33,651		123,734
Gross profit(1)*	$	17,784	$	6,617	$	7,512	$	8,700	$	6,802	$	17,908	$	65,323
Operating expenses*													47,055
Foreign exchange gain, interest expense and other income, net*													2,933
Income tax expense													823
Net income													$	20,378

⁽¹⁾ Exclusive of depreciation and amortization.

Revenues and cost of revenues for the six months ended June 30, 2018 and 2017, respectively, for each of the reportable segments, are as follows:

	Six months ended June 30, 2018
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	128,715	$	42,614	$	36,048	$	48,200	$	44,788	$	116,720	$	417,085
Cost of revenues(1)	86,460		33,955		21,068		29,272		30,264		76,731		277,750
Gross profit(1)	$	42,255	$	8,659	$	14,980	$	18,928	$	14,524	$	39,989	$	139,335
Operating expenses													107,095
Foreign exchange gain, interest expense and other income, net													6,551
Income tax expense													1,057
Loss from equity-method investment													114
Net income													$	37,620

⁽¹⁾ Exclusive of depreciation and amortization.

	Six months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	114,176	$	37,855	$	34,878	$	42,052	$	42,563	$	100,566	$	372,090
Cost of revenues(1)*	78,501		24,615		20,461		24,764		29,058		65,407		242,806
Gross profit(1)*	$	35,675	$	13,240	$	14,417	$	17,288	$	13,505	$	35,159	$	129,284
Operating expenses*													93,804
Foreign exchange gain, interest expense and other income, net*													6,069
Income tax expense													4,383
Net income													$	37,166

⁽¹⁾ Exclusive of depreciation and amortization.

*The Company early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Pursuant to this adoption, effective January 1, 2017, the resultant foreign exchange gain/(loss) upon settlement of cash flow hedges are recorded along with the underlying hedged item in the same income statement line as either part of “Cost of revenues”, “General and administrative expenses”, “Selling and marketing expenses”, "Depreciation and Amortization”, as applicable. Refer to Note 17 to the unaudited consolidated financial statements for details.

Revenues, net of the Company by service type, were as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
BPM and related services(1)	$	150,494	$	137,498	$	300,365	$	271,524
Analytics services	59,618		51,559		116,720		100,566
Total	$	210,112	$	189,057	$	417,085	$	372,090

⁽¹⁾ BPM and related services include revenues of the Company's five industry-focused operating segments, one capability operating segment and the consulting operating segment, which provides services related to operations management services. See segment disclosure above.

The Company attributes the revenues to regions based upon the location of its customers.

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Revenues, net
United States	$	174,087	$	153,894	$	345,285	$	304,175
Non-United States
United Kingdom	27,480		28,951		55,496		55,033
Rest of World	8,545		6,212		16,304		12,882
Total Non-United States	36,025		35,163		71,800		67,915
	$	210,112	$	189,057	$	417,085	$	372,090

Property and equipment, net by geographic area, were as follows:

	As of
	June 30, 2018		December 31, 2017
Property and equipment, net
India	$	35,060	$	39,143
United States	21,182		16,371
Philippines	6,748		8,217
Rest of World	3,122		3,026
	$	66,112	$	66,757

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Revenues, net

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenues, net

Revenues, net

Adoption of ASU 2014-09 Topic 606, “Revenue from Contracts with Customers”

On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method and applied its guidance to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 605.The Company recorded a net addition to opening equity of $454 as of January 1, 2018 due to the cumulative impact of adopting Topic 606, primarily due to contract acquisition costs.

The adoption of Topic 606 did not have a significant impact on the measurement or recognition of revenues during the three and six months ended June 30, 2018.

Refer to Note 3 to the unaudited consolidated financial statements for revenues disaggregated by reportable segments and geography.

Contract balances

The following table provides information about accounts receivable and contract liabilities from contracts with customers:

	As of
	June 30, 2018		December 31, 2017
Accounts receivable, net	$	147,099	$	135,705
Contract liabilities
Deferred revenue (advance payments portion)	$	9,969	$	9,311

Accounts receivable includes $58,339 and $49,125 as of June 30, 2018 and December 31, 2017, respectively, representing amounts not billed to customers. The Company has accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers and considers no significant performance risk associated with its unbilled receivables.

Contract liabilities represents that portion of deferred revenue for which payments have been received in advance from customers and are included within current liabilities. Contract liabilities are recognized; as revenue as (or when) we perform under the contract.

Revenue recognized from the carrying value of contract liabilities as of December 31, 2017 during the three and six months ended June 30, 2018 was $2,671 and $6,381, respectively.

Contract acquisition costs

As of January 1, 2018, we capitalized $454 as contract acquisition costs related to contracts that were not completed. Further, we capitalized an additional nil and $672 during the three and six months ended June 30, 2018, respectively, and amortized $80 and $153 during the three and six months ended June 30, 2018, respectively. There was no impairment loss in relation to costs capitalized. The capitalized costs will be amortized on a straight line basis over the life of contract.

Contract fulfillment costs

The Company has deferred contract fulfillment costs relating to transition activities amounting to $3,058 and $2,769 as of June 30, 2018 and December 31, 2017, respectively. In addition, we capitalized an additional $65 and $685 during the three and six months ended June 30, 2018, respectively, and amortized $254 and $395 during the three and six months ended June 30, 2018, respectively. There was no impairment loss in relation to costs capitalized. The capitalized costs will be amortized on a straight line basis over the life of contract.

Consideration received from customers, if any, relating to such transition activities are classified under Contract Liabilities and are recognized ratably over the period in which the related performance obligations are fulfilled.

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Earnings Per Share

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing net income to common stockholders by the weighted average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted average number of common shares plus the potentially dilutive effect of common stock equivalents (outstanding stock options, restricted stock and restricted stock units) issued and outstanding at the reporting date, using the treasury stock method. Stock options, restricted stock and restricted stock units that are anti-dilutive are excluded from the computation of weighted average shares outstanding.

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Numerator:
Net income	$	14,462	$	20,378	$	37,620	$	37,166
Denominators:
Basic weighted average common shares outstanding	34,511,777		33,819,320		34,479,202		33,833,153
Dilutive effect of share based awards	630,611		1,173,906		743,636		1,218,614
Diluted weighted average common shares outstanding	35,142,388		34,993,226		35,222,838		35,051,767
Earnings per share attributable to ExlService Holdings Inc. stockholders:
Basic	$	0.42	$	0.60	$	1.09	$	1.10
Diluted	$	0.41	$	0.58	$	1.07	$	1.06
Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share	336,599		2,893		242,561		227,941

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Cash, Cash Equivalents and Restricted Cash

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

For the purpose of unaudited statements of cash flows, cash, cash equivalents and restricted cash comprise of the following:

	As of
	June 30, 2018		June 30, 2017
Cash and cash equivalents	$	84,091	$	89,414
Restricted cash (current)	2,256		1,898
Restricted cash (non-current)	3,645		3,692
	$	89,992	$	95,004

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Other Income, net

6 Months Ended

Jun. 30, 2018

Other Income and Expenses [Abstract]

Other Income, net

Other Income, net

Other income, net consists of the following:

	Three months ended June 30,					Six months ended June 30,
	2018		2017			2018		2017
Interest and dividend income	$	329	$	323		$	637	$	995
Gain on sale of mutual funds	1,694		2,438			4,827		4,221
Others, net	209		(249		)	302		482
Other income, net	$	2,232	$	2,512		$	5,766	$	5,698

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Property and Equipment, net

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and Equipment, net

Property and equipment, net consist of the following:

	Estimated useful lives	As of
	(Years)	June 30, 2018			December 31, 2017
Owned Assets:
Network equipment and computers	3-5	$	77,183		$	77,587
Software	3-5	63,827			59,325
Leasehold improvements	3-8	37,506			38,857
Office furniture and equipment	3-8	19,823			19,667
Motor vehicles	2-5	597			638
Buildings	30	1,162			1,245
Land	—	760			815
Capital work in progress	—	8,402			9,184
		209,260			207,318
Less: Accumulated depreciation and amortization		(143,553		)	(141,059		)
		$	65,707		$	66,259
Assets under capital leases:
Leasehold improvements		$	812		$	941
Office furniture and equipment		77			167
Motor vehicles		612			710
		1,501			1,818
Less: Accumulated depreciation and amortization		(1,096		)	(1,320		)
		$	405		$	498
Property and equipment, net		$	66,112		$	66,757

Capital work in progress represents advances paid towards acquisition of property and equipment and cost incurred to develop software not yet ready to be placed in service.

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,
	2018		2017		2018		2017
Depreciation and amortization expense	$	6,821	$	6,028	$	13,378	$	11,902

Effective January 1, 2017, the depreciation and amortization expenses set forth above includes the effect of foreign exchange gain upon settlement of cash flow hedges, amounting to $42 and $102 for the three months ended and $193 and $156 for the six months ended June 30, 2018 and 2017, respectively. Refer to Note 17 to the unaudited consolidated financial statements for further details.

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

	As of
	June 30, 2018		December 31, 2017
Cost	$	7,625	$	2,571
Less : Accumulated amortization	1,448		976
	$	6,177	$	1,595

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Business Combinations, Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2018

Business Combination, Goodwill And Intangible Assets Disclosure [Abstract]

Business Combinations, Goodwill and Intangible Assets

Business Combinations, Goodwill and Intangible Assets

Health Integrated, Inc.

On December 22, 2017, a wholly owned subsidiary of the Company entered into an Asset Purchase Agreement to acquire substantially all the assets and assumed certain liabilities of Health Integrated, Inc. (“Health Integrated”), a company based in Tampa, Florida. The initial purchase price consisted of $22,577 in cash including working capital adjustment. The purchase agreement allows sellers the ability to earn up to $5,000 as earn-out, based on the achievement of certain performance goals by the acquired Health Integrated business during the 2018 calendar year. The earn-out was fair valued at $920 as of December 31, 2017. As of June 30, 2018 fair value of earn-out is Nil.

A portion of the purchase price otherwise payable was placed into escrow as security for the post-closing working capital adjustments and the indemnification obligations under the Asset Purchase Agreement.

Health Integrated provides dedicated care management services on behalf of health plans. Its services include case management, utilization management, disease management, special needs programs and multichronic care management. Health Integrated serves millions of lives in the Medicaid, Medicare, and dual eligible populations. It is known for its strong capabilities in improving member health status through behavioral change. Accordingly, the Company paid a premium for the acquisition, which is reflected in the goodwill recognized from the purchase price allocation. The acquisition of Health Integrated is included in the Healthcare reportable segment.

The Company finalized its purchase price allocation for the acquisition based on their fair values as set forth below:

	Amount
Tangible Assets	$	5,475
Liabilities	(5,733		)
Identifiable Intangible Assets:
Customer relationships	6,760
Developed technology	1,510
Trade names and trademarks	570
Goodwill	14,229
Total purchase price	$	22,811

The amount of goodwill recognized from the Health Integrated acquisition is deductible for tax purposes.

The customer relationships from the Health Integrated acquisition are being amortized over the weighted average useful life of 7.0 years and developed technology and trademarks are being amortized over the useful life of 1.0 year and 2.0 years, respectively.

Goodwill

The following table sets forth details of the Company’s goodwill balance as of June 30, 2018:

	Insurance			Healthcare			TT&L			F&A			All Other		Analytics		Total
Balance as at January 1, 2017	$	38,110		$	19,276		$	12,983		$	47,537		$	5,326	$	63,538	$	186,770
Acquisitions	—			15,957			—			—			—		—		15,957
Currency translation adjustments	223			—			696			835			—		—		1,754
Balance as at December 31, 2017	$	38,333		$	35,233		$	13,679		$	48,372		$	5,326	$	63,538	$	204,481
Measurement period adjustments*	—			(1,728		)	—			—			—		—		(1,728		)
Currency translation adjustments	(56		)	—			(780		)	(936		)	—		—		(1,772		)
Balance as at June 30, 2018	$	38,277		$	33,505		$	12,899		$	47,436		$	5,326	$	63,538	$	200,981

* Subsequent to December 31, 2017, adjustments of $1,728 have been made to the amounts of net tangible assets acquired and the earn-out with the corresponding offsets to goodwill. These adjustments are within the measurement period and have been accounted for prospectively. These adjustments did not have a significant impact on the Company’s unaudited consolidated statements of income, balance sheets or cash flows.

Intangible Assets

Information regarding the Company’s intangible assets is set forth below:

	As of June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	82,063	$	(48,842	)	$	33,221
Leasehold benefits	2,694		(2,518		)	176
Developed technology	15,800		(10,657		)	5,143
Non-compete agreements	2,045		(1,861		)	184
Trade names and trademarks	5,945		(4,399		)	1,546
	$	108,547	$	(68,277	)	$	40,270
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	109,447	$	(68,277	)	$	41,170

	As of December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	82,165	$	(43,667	)	$	38,498
Leasehold benefits	2,888		(2,596		)	292
Developed technology	15,835		(8,749		)	7,086
Non-compete agreements	2,045		(1,780		)	265
Trade names and trademarks	5,951		(4,034		)	1,917
	$	108,884	$	(60,826	)	$	48,058
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	109,784	$	(60,826	)	$	48,958

The amortization expense for the period is as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Amortization expense	$	3,761	$	3,507	$	7,708	$	7,005

The remaining weighted average life of intangible assets is as follows:

	(in years)
Customer relationships	5.13
Leasehold benefits	0.92
Developed technology	3.00
Non-compete agreements	1.22
Trade names and trademarks (Finite lived)	4.20

Estimated amortization of intangible assets during the next twelve months ending June 30,
2019	$	13,815
2020	9,001
2021	4,359
2022	3,583
2023	3,065
2024 and thereafter	6,447
Total	$	40,270

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Investment in equity affiliate

6 Months Ended

Jun. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Investment in equity affiliate

Investment in equity affiliate

On December 12, 2017, the Company acquired preferred stock in Corridor Platform Inc. (“Corridor”), a big data credit risk management platform for $3,000. The Company has determined that based on its ownership interest and other rights, Corridor is an equity affiliate. The Company has the right and option to acquire additional preferred stock from Corridor as per the terms of the agreement. The Company's proportionate share of net loss for the three months and six months ended June 30, 2018 was $58 and $114, respectively.

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Other current assets

6 Months Ended

Jun. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other current assets

Other current assets

Other current assets consist of the following:

	As of
	June 30, 2018		December 31, 2017
Derivative instruments	$	4,787	$	10,938
Advances to suppliers	2,710		2,451
Receivables from statutory authorities	9,670		7,598
Others	5,835		8,595
Other current assets	$	23,002	$	29,582

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Other Assets

6 Months Ended

Jun. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

Other assets

Other assets consist of the following:

	As of
	June 30, 2018		December 31, 2017
Lease deposits	$	8,522	$	8,776
Derivative instruments	1,128		7,361
Deposits with statutory authorities	6,378		6,492
Term deposits	9,015		6,909
Others	10,990		6,831
Other assets	$	36,033	$	36,369

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Accrued expenses and other current liabilities

6 Months Ended

Jun. 30, 2018

Payables and Accruals [Abstract]

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

	As of
	June 30, 2018		December 31, 2017
Accrued expenses	$	43,440	$	43,235
Derivative instruments	4,390		555
Client liabilities	5,107		8,982
Other current liabilities	6,945		8,594
Accrued expenses and other current liabilities	$	59,882	$	61,366

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Other non-current liabilities

6 Months Ended

Jun. 30, 2018

Liabilities, Noncurrent [Abstract]

Other non-current liabilities

Other non-current liabilities

Other non-current liabilities consist of the following:

	As of
	June 30, 2018		December 31, 2017
Derivative instruments	$	5,788	$	322
Unrecognized tax benefits	892		892
Deferred rent	7,632		8,176
Retirement benefits	3,363		3,377
Other non-current liabilities	1,155		3,435
Non-current liabilities	$	18,830	$	16,202

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of amortization of actuarial gain/(loss) on retirement benefits and changes in the cumulative foreign currency translation adjustments. In addition, the Company enters into foreign currency exchange contracts, which are designated as cash flow hedges in accordance with ASC topic 815. Changes in the fair values of contracts are recognized in accumulated other comprehensive loss on the Company's consolidated balance sheet until the settlement of those contracts. The balances as of June 30, 2018 and December 31, 2017 are as follows:

	As of
	June 30, 2018			December 31, 2017
Cumulative foreign currency translation (loss)	$	(84,435	)	$	(58,405	)
Unrealized (loss)/gain on cash flow hedges, net of taxes of ($657) and $4,918, respectively	(3,874		)	11,932
Retirement benefits, net of taxes of ($76) and ($74), respectively	688			763
Accumulated other comprehensive loss	$	(87,621	)	$	(45,710	)

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Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets and liabilities that were accounted for at fair value as of June 30, 2018 and December 31, 2017. The table excludes accounts receivable, accounts payable and accrued expenses for which fair values approximate their carrying amounts.

As of June 30, 2018	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds*	$	128,563	$	—	$	—	$	128,563
Derivative financial instruments	—		5,915		—		$	5,915
Total	$	128,563	$	5,915	$	—	$	134,478
Liabilities
Derivative financial instruments	$	—	$	10,178	$	—	$	10,178
Total	$	—	$	10,178	$	—	$	10,178
As of December 31, 2017	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds*	$	162,906	$	—	$	—	$	162,906
Derivative financial instruments	—		18,298		—		18,298
Total	$	162,906	$	18,298	$	—	$	181,204
Liabilities
Derivative financial instruments	$	—	$	877	$	—	$	877
Fair value of earn-out consideration	—		—		920		920
Total	$	—	$	877	$	920	$	1,797

* Represents short-term investments carried on fair value option under ASC 825 “Financial Instruments” as of June 30, 2018 and December 31, 2017.

Derivative Financial Instruments: The Company’s derivative financial instruments consist of foreign currency forward exchange contracts. Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. Refer to Note 17 to the unaudited consolidated financial statements for further details.

Fair value of earn-out consideration: The fair value measurement of earn-out consideration is determined using Level 3 inputs. The Company’s earn-out consideration represents a component of the total purchase consideration for its acquisition of Health Integrated. The measurement was calculated using unobservable inputs based on the Company’s own assessment of achievement of certain performance goals by Health Integrated during the 2018 calendar year. The earn-out was fair valued at $920 as of December 31, 2017. As of June 30, 2018, fair value of earn-out is Nil.

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Derivatives and Hedge Accounting

6 Months Ended

Jun. 30, 2018

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 and 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 $353,225 as of June 30, 2018 and $300,757 as of December 31, 2017.

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 Company early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Pursuant to this adoption, effective January 1, 2017, the resultant foreign exchange gain/(loss) are recorded along with the underlying hedged item in the same line of consolidated statements of income as either part of “Cost of revenues”, “General and administrative expenses”, “Selling and marketing expenses”, “Depreciation and amortization”, as applicable.

Prior to January 1, 2017, the resultant foreign exchange gain/(loss) on settlement of cash flow hedges and changes in the fair value of cash flow hedges deemed ineffective were recorded in “Foreign exchange gain, net” in the consolidated statements of income.

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. 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 foreign exchange gain/(loss). The Company’s primary exchange rate exposure is with the Indian Rupee, the U.K. pound sterling and the Philippine peso. The Company also has exposure to Colombian pesos, Czech Koruna, the Euro, South African ZAR and other local currencies in which it operates. Outstanding foreign currency forward contracts amounted to $124,691 and GBP 19,111 as of June 30, 2018 and amounted to $98,967 and GBP 17,947 as of December 31, 2017.

The Company estimates that approximately $245 of net derivative gains included in accumulated other comprehensive loss (“AOCI”) could be reclassified into earnings within the next twelve months based on exchange rates prevailing as of June 30, 2018. At June 30, 2018, the maximum outstanding term of the cash flow hedges was 45 months.

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 following tables set forth the fair value of the foreign currency exchange contracts and their location on the consolidated financial statements:

Derivatives designated as hedging instruments :	As of
Foreign currency exchange contracts	June 30, 2018		December 31, 2017
Other current assets	$	4,635	$	10,892
Other assets	$	1,128	$	7,360
Accrued expense and other current liabilities	$	4,390	$	481
Other non-current liabilities	$	5,788	$	322
Derivatives not designated as hedging instruments :	As of
Foreign currency exchange contracts	June 30, 2018		December 31, 2017
Other current assets	$	152	$	46
Accrued expense and other current liabilities	$	—	$	74

The following tables set forth the effect of foreign currency exchange contracts on the unaudited consolidated statements of income and accumulated other comprehensive loss for the three and six months ended June 30, 2018 and 2017:

	Three months ended June 30,					Six months ended June 30,
Forward Exchange Contracts :	2018		2017			2018		2017
(Gain)/loss recognized in AOCI
Derivatives in cash flow hedging relationships	$	12,229	$	(2,243	)	$	17,243	$	(11,272	)
(Gain)/loss recognized in unaudited consolidated statements of income
Derivatives not designated as hedging instruments	$	2,641	$	(151	)	$	5,569	$	(2,773	)

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,
	2018						2017
	As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts			As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts
Cash flow hedging relationships
Location in unaudited consolidated statements of income where (gain)/loss was reclassed from AOCI
Cost of revenues	$	139,649		$	(1,191	)	$	123,734		$	(1,566	)
General and administrative expenses	$	27,640		(180		)	$	24,425		(288		)
Selling & marketing expenses	$	15,151		(17		)	$	13,095		(30		)
Depreciation & amortization	$	10,582		(79		)	$	9,535		(99		)
				$	(1,467	)				$	(1,983	)
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where (gain)/loss was recognized
Foreign exchange (gain)/loss, net	$	(1,414	)	$	2,641		$	(886	)	$	(151	)
	$	(1,414	)	$	2,641		$	(886	)	$	(151	)

	Six months ended June 30,
	2018						2017
	As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts			As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts
Cash flow hedging relationships
Location in unaudited consolidated statements of income where (gain)/loss was reclassed from AOCI
Cost of revenues	$	277,750		$	(3,336	)	$	242,806		$	(2,296	)
General & administrative expenses	$	56,906		(511		)	$	48,462		(429		)
Selling & marketing expenses	$	29,103		(50		)	$	26,435		(48		)
Depreciation & amortization	$	21,086		(241		)	$	18,907		(140		)
				$	(4,138	)				$	(2,913	)
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where (gain)/loss was recognized
Foreign exchange (gain)/loss, net	$	(2,029	)	$	5,569		$	(1,268	)	$	(2,773	)
	$	(2,029	)	$	5,569		$	(1,268	)	$	(2,773	)

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Borrowings

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Borrowings

Borrowings

On October 24, 2014, the Company entered into a credit agreement that provided for a $50,000 revolving credit facility (the “Credit Facility”). On February 23, 2015, the Company increased the commitments under the Credit Facility by up to an additional $50,000. The Credit Facility had a maturity date of October 24, 2019 and was voluntarily pre-payable from time to time without premium or penalty. On November 21, 2017, the Company prepaid all outstanding amounts, including accrued interest and fees, and terminated all commitments, under the Credit Agreement. The Credit Facility carried an effective interest rate of 2.7% per annum and 2.6% per annum during the three months and six months ended June 30, 2017, respectively.

On November 21, 2017, the Company and each of the Company’s wholly owned material domestic subsidiaries entered into a Credit Agreement with certain lenders, and Citibank, N.A. as Administrative Agent (the “New Credit Agreement”). The New Credit Agreement provides for a $200,000 revolving credit facility (the “New Credit Facility”) with an option to increase the commitments by up to $100,000, subject to certain approvals and conditions as set forth in the New Credit Agreement. The New Credit Agreement also includes a letter of credit sub facility. The New Credit Facility has a maturity date of November 21, 2022 and is voluntarily pre-payable from time to time without premium or penalty. Borrowings under the New Credit Agreement were used to repay amounts outstanding under the Credit Facility and may otherwise be used for working capital and general corporate purposes, including permitted acquisitions.

Depending on the type of borrowing, loans under the New Credit Agreement bear interest at a rate equal to the specified prime rate (alternate base rate) or adjusted LIBO rate, plus, in each case, an applicable margin. The applicable margin is tied to the Company’s total net leverage ratio and ranges from 0% to 0.75% per annum with respect to loans pegged to the specified prime rate, and 1.00% to 1.75% per annum on loans pegged to the adjusted LIBO rate. The revolving credit commitments under the New Credit Agreement are subject to a commitment fee, which is also tied to the Company’s total net leverage ratio, and ranges from 0.15% to 0.30% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations. The New Credit Facility carried an effective interest rate of 3.8% and 3.6% per annum during the three months and the six months ended June 30, 2018, respectively.

Obligations under the New Credit Agreement are guaranteed by the Company’s material domestic subsidiaries and are secured by all or substantially all of the assets of the Company and our material domestic subsidiaries. The New Credit Agreement contains affirmative and negative covenants, including, but not limited to, restrictions on the ability to incur indebtedness, create liens, make certain investments, make certain dividends and related distributions, enter into, or undertake, certain liquidations, mergers, consolidations or acquisitions and dispose of assets or subsidiaries. In addition, the New Credit Agreement contains a covenant to not permit the interest coverage ratio or the total net leverage ratio, both as defined for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.5 to 1.0 or more than 3.0 to 1.0, respectively. As of June 30, 2018, the Company was in compliance with all financial and non-financial covenants listed under the New Credit Agreement.

As of June 30, 2018, we had outstanding debt of $67,000, of which $10,000 is expected to be repaid within the next twelve months and is included under “current portion of long-term borrowings” and of which $57,000 is included under “long-term borrowings” in the unaudited consolidated balance sheets. As of December 31, 2017, we had an outstanding debt of $60,000, of which $10,000 was included under “current portion of long-term borrowings,” and the balance of $50,000 was included under “long-term borrowings” in the consolidated balance sheets.

In connection with the New Credit Agreement, the Company incurred issuance costs of $790, which are deferred and amortized as an adjustment to interest expense over the term of the New Credit Facility. The unamortized debt issuance costs as of June 30, 2018 and December 31, 2017 was $694 and $773, respectively, and is included under "other current assets" and “other assets” in the consolidated balance sheets.

Borrowings also includes structured payables which are in the nature of debt, amounting to $644 and $709 as of June 30, 2018 and December 31, 2017 respectively, of which $318 and $318 is included under "current portion of long-term borrowings", $326 and $391 under "long-term borrowings", respectively, in the consolidated balance sheet.

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Capital Structure

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Capital Structure

Capital Structure

Common Stock

The Company has one class of common stock outstanding.

During the three months ended June 30, 2018 and 2017, the Company acquired 3,835 and 2,219 shares of common stock, respectively, from employees in connection with withholding tax payments related to the vesting of restricted stock for a total consideration of $226 and $103, respectively. The weighted average purchase price per share of $58.82 and $46.51, respectively, was the average of the high and low price of the Company's share of common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.

During the six months ended June 30, 2018 and 2017, the Company acquired 45,646 and 65,003 shares of common stock, respectively, from employees in connection with withholding tax payments related to the vesting of restricted stock for a total consideration of $2,790 and $3,016, respectively. The weighted average purchase price per share of $61.12 and $46.40, respectively, was the average of the high and low price of the Company's share of common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.

On December 30, 2014, the Company’s Board of Directors authorized a common stock repurchase program (the “2014 Repurchase Program”), under which shares were authorized to be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2015 through 2017 up to an annual amount of $20,000.

On February 28, 2017, the Company’s Board of Directors authorized an additional common stock repurchase program (the “2017 Repurchase Program”), under which shares may be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years 2017 through 2019 up to an aggregate additional amount of $100,000. The approval increased the 2017 authorization from $20,000 to $40,000 and authorizes stock repurchases of up to $40,000 in each of 2018 and 2019.

During the three and six months ended June 30, 2018, the Company purchased 165,000 and 347,182 shares of its common stock, respectively, for an aggregate purchase price of approximately $9,407 and $20,346, respectively, including commissions, representing an average purchase price per share of $57.01 and $58.60, respectively, under the 2017 Repurchase Program.

During the three and six months ended June 30, 2017, the Company purchased 230,022 and 423,984 shares of its common stock, respectively, for an aggregate purchase price of approximately $11,316 and $20,316, respectively, including commissions, representing an average purchase price per share of $49.20 and $47.92, respectively, under the 2014 and 2017 Repurchase Programs.

Repurchased shares have been recorded as treasury shares and will be held until the Board of Directors designates that these shares be retired or used for other purposes.

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Employee Benefit Plans

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 June 30,						Six months ended June 30,
	2018			2017			2018			2017
Service cost	$	423		$	494		$	862		$	978
Interest cost	173			166			353			328
Expected return on plan assets	(118		)	(111		)	(242		)	(218		)
Amortization of actuarial (gain)/loss	(38		)	71			(77		)	140
Net periodic benefit cost	$	440		$	620		$	896		$	1,228

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 costs 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 June 30, 2017							Six months ended June 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	$	123,734	$	123,846	$	(112	)	$	242,806	$	243,027	$	(221	)
General and administrative expenses	$	24,425	$	24,438	$	(13	)	$	48,462	$	48,489	$	(27	)
Selling and marketing expenses	$	13,095	$	13,096	$	(1	)	$	26,435	$	26,437	$	(2	)
Other income, net	$	2,512	$	2,638	$	(126	)	$	5,698	$	5,948	$	(250	)

* 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 June 30 of each year. The Company earned a return of approximately 7.8% per annum on these Gratuity Plans for the six months ended June 30, 2018.

Change in Plan Assets
Plan assets at January 1, 2018	$	6,915
Actual return	275
Employer contribution	—
Benefits paid	(576		)
Effect of exchange rate changes	(454		)
Plan assets at June 30, 2018	$	6,160

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 $755 and $496 for the three months ended June 30, 2018 and 2017, respectively, and $1,985 and $1,564 for the six months ended June 30, 2018 and 2017, respectively.

During the three months ended June 30, 2018 and 2017, the Company contributed $1,753 and $1,792, respectively, and during the six months ended June 30, 2018 and 2017, the Company contributed $3,667 and $3,505, respectively, for various defined contribution plans on behalf of its employees in India, the Philippines, Bulgaria, Romania, the Czech Republic, South Africa, Colombia, and Singapore.

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Leases

6 Months Ended

Jun. 30, 2018

Leases [Abstract]

Leases

Leases

The Company finances its use of certain motor vehicles and other equipment under various lease arrangements provided by financial institutions. Future minimum lease payments under these capital leases as of June 30, 2018 are as follows:

During the next twelve months ending June 30,
2019	$	273
2020	162
2021	101
2022	57
Total minimum lease payments	593
Less: amount representing interest	100
Present value of minimum lease payments	493
Less: current portion	223
Long term capital lease obligation	$	270

The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates. Future minimum lease payments under such agreements expiring after June 30, 2018 are set forth below:

During the next twelve months ending June 30,
2019	$	21,402
2020	17,854
2021	16,751
2022	13,675
2023	13,021
2024 and thereafter	36,164
	$	118,867

Rent expense

The operating leases are subject to renewal periodically and have scheduled rent increases. The Company recognizes rent expense on such leases on a straight-line basis over cancelable and non-cancelable lease period determined under ASC topic 840, Leases:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Rent expense	$	6,057	$	6,139	$	12,479	$	11,806

Deferred rent

	As of
	June 30, 2018		December 31, 2017
	(Unaudited)
Cancelable and non-cancelable operating leases	$	8,636	$	8,959

Deferred rent is included under “Accrued expenses and other current liabilities” and “Other non-current liabilities” in the consolidated balance sheets.

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates its estimate of annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

The Company recorded income tax expense of $5,510 and $823 for the three months ended June 30, 2018 and 2017, respectively. The effective tax rate increased from 3.9% during the three months ended June 30, 2017 to 27.5% during the three months ended June 30, 2018 primarily as a result of a: (i) reversal of an uncertain tax position of $3,153 during the three months ended June 30, 2017 and (ii) recording of excess tax benefit related to stock awards of $1,624 pursuant to ASU No. 2016-09 during the three months ended June 30, 2017 compared to $323 during the three months ended June 30, 2018.

The Company recorded income tax expense of $1,057 and $4,383 for the six months ended June 30, 2018 and 2017, respectively. The effective tax rate decreased from 10.5% during the six months ended June 30, 2017 to 2.7% during the six months ended June 30, 2018 primarily as a result of: (i) an adjustment of $4,836 reducing the provisional transition tax on the mandatory deemed repatriation of accumulated earnings and profits ("E&P") of foreign subsidiaries recognized during the year-ended December 31, 2017, (ii) a reduction in the U.S. federal corporate tax rate from 35.0% to 21.0% effective January 1, 2018, and (iii) excess tax benefits related to stock awards of $5,150 pursuant to ASU No. 2016-09 during the six months ended June 30, 2018 compared to $3,681 during the six months ended June 30, 2017, offset by reversal of uncertain tax position of $3,153 during the three months ended June 30, 2017.

The SEC staff issued Staff Accounting Bulletin ("SAB 118"), which provides guidance on accounting for the tax effects of the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”). SAB 118 provides a measurement period that should not extend beyond one year from the Tax Reform Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Reform Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Reform Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Reform Act.

The deemed repatriation transition tax (the “Transition Tax”) is a tax on certain previously untaxed accumulated and current E&P of the Company's foreign subsidiaries. The Company was able to reasonably estimate the Transition Tax and recorded an initial provisional Transition Tax obligation of $27,236, with a corresponding adjustment of $27,236 to income tax expense for the year ended December 31, 2017. On the basis of additional technical research and analysis, the Company recognized a measurement-period reduction of $4,836 to the Transition Tax obligation, with a corresponding adjustment of $4,836 to the income tax expense during the six months ended June 30, 2018. As of June 30, 2018, a total Transition Tax obligation of $22,400 has been recorded, with a corresponding adjustment of $22,400 to the income tax expense. However, the Company continues to gather additional information to more precisely compute the amount of the Transition Tax, and its accounting for this item is not yet complete because of, among other things, changes in the interpretations and assumptions, additional guidance that may be issued by the Internal Revenue Service ("I.R.S."), and actions the Company may take. The Company expects to complete its accounting within the prescribed measurement period.

This inclusion of foreign untaxed earnings resulted in previously taxed income (PTI) which may be subject to withholding taxes and currency gains or losses upon repatriation. The Company does not intend to distribute PTI of its foreign subsidiaries and has not recorded any deferred taxes related to its investment in foreign subsidiaries. The Company estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and has specific plans for use of the subsidiaries earnings. If, in the future, the Company changes its intention regarding the repatriation of PTI, additional taxes may be required and should be recorded in the period the intention changes.

As noted at year-end, the Company was able to reasonably estimate and record provisional adjustments associated with the corporate rate change in the amount of $1,949. The Company has not made any additional measurement period adjustment related to this item during the six months ended June 30, 2018 because it continues to evaluate potential method changes and implications of certain provisions of the Act, as well as additional guidance provided by the tax authorities. The Company continues to gather additional information and expects to complete its accounting within the prescribed measurement period.

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Stock Based Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

Stock-Based Compensation

The following costs related to the Company’s stock-based compensation plans are included in the unaudited consolidated statements of income:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Cost of revenues	$	1,370	$	1,129	$	2,463	$	2,339
General and administrative expenses	3,099		2,344		5,349		4,940
Selling and marketing expenses	2,424		1,634		4,155		3,784
Total	$	6,893	$	5,107	$	11,967	$	11,063

As of June 30, 2018, the Company had 3,192,319 shares available for grant under the 2018 Omnibus Incentive Plan, which was adopted by the Company's stockholders in June 2018, at which time new awards under the Company's 2015 Amendment and Restatement of the 2006 Omnibus Award Plan were not permitted to be made.

Stock Options

Stock option activity under the Company’s stock-based compensation plans is shown below:

	Number of Options		Weighted Avg Exercise Price		Aggregate Intrinsic Value		Weighted Avg Remaining Contractual Life (Years)
Outstanding at December 31, 2017	259,563		$	18.03	$	10,985	2.76
Granted	—		—
Exercised	(25,000	)	17.22		1,092
Forfeited	—		—
Outstanding at June 30, 2018	234,563		$	18.12	$	9,029	2.35
Vested and exercisable at June 30, 2018	234,563		$	18.12	$	9,029	2.35

The unrecognized compensation cost for unvested options as of June 30, 2018 is Nil.

Restricted Stock and Restricted Stock Units

Restricted stock and restricted stock unit activity under the Company’s stock-based compensation plans is shown below:

	Restricted Stock				Restricted Stock Units
	Number		Weighted Average Fair Value		Number		Weighted Average Fair Value
Outstanding at December 31, 2017*	182,267		$	42.64	1,046,999		$	42.26
Granted	—		—		362,735		60.54
Vested	(36,639	)	35.91		(386,193	)	39.15
Forfeited	(14,620	)	47.86		(33,530	)	51.52
Outstanding at June 30, 2018*	131,008		$	43.94	990,011		$	49.86

* As of June 30, 2018 and December 31, 2017 restricted stock units vested for which the underlying common stock is yet to be issued are 155,753 and 146,112, respectively.

As of June 30, 2018, unrecognized compensation cost of $44,369 is expected to be expensed over a weighted average period of 2.74 years.

Performance Based Stock Awards

Performance based restricted stock unit (the “PRSUs”) activity under the Company’s stock-based compensation plans is shown below:

	Revenue Based PRSUs				Market Condition Based PRSUs
	Number		Weighted Average Fair Value		Number		Weighted Average Fair Value
Outstanding at December 31, 2017	113,190		$	48.13	113,174		$	60.80
Granted	55,268		60.58		55,262		70.97
Vested	—		—		—		—
Forfeited	(2,428	)	51.99		(2,427	)	64.16
Outstanding at June 30, 2018	166,030		$	52.22	166,009		$	64.14

As of June 30, 2018, unrecognized compensation cost of $12,444 is expected to be expensed over a weighted average period of 2.11 years.

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Related Party Disclosures

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Related Party Disclosures

Related Party Disclosures

The Company provides consulting services to PharmaCord, LLC.  One of the Company’s directors, Nitin Sahney, is the member-manager and chief executive officer of PharmaCord, LLC. The Company recognized revenue of $16 and $215 in the three months and six months ended June 30, 2018, respectively, and $328 and $805 in the three months and six months ended June 30, 2017, respectively, for services provided.

As of June 30, 2018 and December 31, 2017, the Company had accounts receivable of $6 and $140, respectively, related to these services.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Fixed Asset Commitments

At June 30, 2018, the Company has committed to spend approximately $5,668 under agreements to purchase fixed assets. This amount is net of capital advances paid in respect of these purchases.

Other Commitments

Certain units of the Company’s Indian subsidiaries were established as 100% Export-Oriented units or under the Software Technology Parks of India (“STPI”) 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. The Company has 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. The Company’s management believes, however, that these units have in the past satisfied and will continue to satisfy the required conditions.

The Company’s operations centers in the Philippines are registered with the Philippine Economic Zone Authority (“PEZA”). The registration provides the Company with certain fiscal incentives on the import of capital goods and requires ExlService Philippines, Inc. to meet certain performance and investment criteria. The Company’s management believes that these centers have in the past satisfied and will continue to satisfy the required criteria.

Contingencies

U.S. and Indian transfer pricing regulations require that any international transaction involving associated enterprises be at an arm’s-length price. Accordingly, the Company determines the appropriate pricing for the international transactions among its associated enterprises on the basis of a detailed functional and economic analysis involving benchmarking against transactions among entities that are not under common control. The tax authorities have jurisdiction to review this arrangement and in the event that they determine that the transfer price applied was not appropriate, the Company may incur increased tax liability, including accrued interest and penalties. The Company is currently involved in disputes with the Indian tax authorities over the application of some of its transfer pricing policies for some of its subsidiaries. Further, the Company and a U.S. subsidiary are engaged in tax litigation with the income-tax authorities in India on the issue of permanent establishment.

The aggregate disputed amount demanded by Indian tax authorities from the Company primarily related to its transfer pricing issues for years ranging from tax years 2003 to 2014 and its permanent establishment issues ranging from tax years 2003 to 2007 as of June 30, 2018 and December 31, 2017 is $17,370 and $18,065, respectively, of which the Company has made payments or provided bank guarantee to the extent $8,324 and $8,573, respectively. Amounts paid as deposits in respect of such assessments aggregating to $6,389 and $6,499 as of June 30, 2018 and December 31, 2017, respectively, are included in “Other assets” and amounts for bank guarantees aggregating to $1,935 and $2,074 as of June 30, 2018 and December 31, 2017, respectively, are included in “Restricted cash” in the non-current assets section of the Company’s consolidated balance sheets as of June 30, 2018 and December 31, 2017.

Based on the facts underlying the Company’s position and its experience with these types of assessments, the Company believes that its position will more likely than not be sustained upon final examination by the tax authorities based on its technical merits as of the reporting date and accordingly has not accrued any amount with respect to these matters in its consolidated financial statements. The Company does not expect any impact from these assessments on its future income tax expense. It is possible that the Company might receive similar orders or assessments from tax authorities for subsequent years. Accordingly even if these disputes are resolved, the Indian tax authorities may still serve additional orders or assessments.

In March 2017, the Company was named in a putative class action lawsuit filed in California, which included several causes of action seeking damages but did not include a monetary demand. The Company filed its answer in April 2017 vigorously denying the allegations. Both parties agreed to participate in a court-approved mediation which occurred in March 2018. The parties reached an agreement in principle whereby the Company, without any admission of wrongdoing or liability, would pay $2,400 to settle the litigation, which amount has been accrued under “General and administrative expenses” for the six months ended June 30, 2018. The agreement remains subject to final court approval, which is expected to occur in the fourth quarter of 2018 although there can be no guarantee as to approval or timing.

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Subsequent Event

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On July 1, 2018, the Company, through its wholly owned subsidiary ExlService.com, LLC, completed the acquisition of SCIOInspire Holdings Inc. (“SCIO”) pursuant to its previously announced Agreement of Merger dated April 28, 2018.

The aggregate purchase consideration for the acquisition was $236,500, subject to certain post-closing adjustments. Immediately prior to the consummation of the merger, certain members of the senior management team of SCIO exchanged approximately $4,080 in shares of SCIO for 69,459 newly-issued shares of restricted common stock of ExlService Holdings in a private exchange.

SCIO is a health analytics solution and services company serving over 100 healthcare organizations representing over 130 million covered lives across the continuum including providers, health plans, PBMs, employers, health services and global life sciences companies. This strategic acquisition is expected to significantly strengthen Company’s strategic focus areas of growth in Payment Integrity and Care Management.

The Company funded the acquisition with $233,000 from the New Credit Facility and remainder from available cash on hand. On July 2, 2018, the Company exercised its option under the New Credit Agreement to increase the commitments by $100,000 thereby utilizing the entire revolver under the New Credit Facility of $300,000, so as to be able to fund the acquisition. The incremental commitments were made pursuant to (and constitute part of) the existing commitments and shall be subject to the terms and conditions applicable to the existing commitments as set forth in the New Credit Agreement.

Due to the closing of this acquisition subsequent to the period end, the Company is currently determining the fair value of assets acquired and liabilities assumed necessary to develop the purchase price allocation. Therefore, disclosure of the purchase price allocation to the tangible and intangible assets acquired and liabilities assumed and supplemental pro forma information is not practicable. The pro forma revenue and earnings of the combined financial results will be included in the Company's Form 10-Q for the quarter ended September 30, 2018.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Preparation

The unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“US GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

The unaudited consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

Principles of Consolidation

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intra-group balances and transactions, and income and expenses arising from intra-group transactions, are eliminated while preparing those financial statements. The un-realized gains resulting from intra-group transactions are also eliminated. Similarly, the un-realized losses are eliminated, unless the transaction provides evidence as to impairment of the asset transferred.

Accounting policies of the respective individual subsidiary and associate are aligned, wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under US GAAP.

The Company’s investments in equity affiliates are initially recorded at cost and any excess cost over proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill. The proportionate share of net income or loss of the investee is recognized in the unaudited consolidated statements of income.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to the parent and it represents the minority partner’s interest in the operations of ExlService Colombia S.A.S. Non-controlling interest consists of the amount of such interest at the date of obtaining control over the subsidiary, and the non-controlling interest's share of changes in equity since that date. The non-controlling interest in the operations for all periods presented were insignificant and is included under general and administrative expenses in the unaudited consolidated statements of income.

Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the unaudited consolidated statements of income during the reporting period. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates and assumptions that affect the financial statements include, but are not limited to, allowance for doubtful receivables, recoverability of service tax receivables, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, assumptions used to calculate stock-based compensation expense, depreciation and amortization periods, purchase price allocation, recoverability of long-term assets including goodwill and intangibles, and estimated costs to complete fixed price contracts.

Employee Benefits

Contributions to defined contribution plans are charged to the consolidated statements of income in the period in which services are rendered by the covered employees. Current service costs for defined benefit plans are accrued in the period to which they relate. The liability in respect of defined benefit plans is calculated annually by the Company using the projected unit credit method. Prior service cost, if any, resulting from an amendment to a plan is recognized and amortized over the remaining period of service of the covered employees.

The Company recognizes its liabilities for compensated absences depending on whether the obligation is attributable to employee services already rendered, relates to rights that vest or accumulate and payment is probable and estimable.

Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2017-07, Compensation -Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post Retirement Benefit Cost. Pursuant to this, the Company retrospectively adopted the presentation of service cost separate from other components of net periodic costs for each period presented. The interest cost, expected return on plan assets and amortization of actuarial gains / loss, have been reclassified from “Cost of revenues”, “General and administrative expenses” and “Selling and marketing expenses” to “Other income, net”. Refer to Note 20 to the unaudited consolidated financial statements for details.

Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity of ninety days or less to be cash equivalents. Pursuant to the Company’s investment policy, surplus funds are invested in highly-rated debt mutual funds, money market accounts and time deposits to reduce its exposure to market risk with regard to these funds.

Restricted cash represents amounts on deposit with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax assessments (refer to Note 25 to the unaudited consolidated financial statements for details). These deposits with banks have maturity dates after June 30, 2019. Restricted cash presented under current assets represents funds held on behalf of clients in dedicated bank accounts.

Effective January 1, 2018, the Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash. Pursuant to this adoption, for the purpose of unaudited statements of cash flows, the Company includes in its cash and cash-equivalent balances those amounts that have been classified as restricted cash and restricted cash equivalents for each period presented.

Revenue recognition, sales of services

Revenue is recognized when services are provided to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for our services.

Revenue is measured based on consideration specified in a contract with a customer and excludes discounts and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by providing services to a customer.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Adoption of ASU 2014-09 Topic 606, “Revenue from Contracts with Customers” (Topic 606)

On January 1, 2018, the date of initial application, the Company adopted Topic 606 using the modified retrospective method by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity, resulting in an increase of $454, primarily due to new contract acquisition costs. The initial application scopes in those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Company’s historical accounting under Topic 605. The key area impacted upon adoption of Topic 606 relates to the accounting for sales commissions costs. Specifically, under Topic 606 a portion of sales commissions costs have been recorded as an asset and recognized as an operating expense on a straight line basis over the life of the contract. Prior to adoption, the Company was expensing sales commission costs as incurred.

Nature of services

The Company derives its revenues from operations management and analytics services. The Company operates in the business process management (“BPM”) industry providing operations management and analytics services helping businesses enhance revenue growth and improve profitability. The Company provides BPM or “operations management” services, which typically involve transfer to the Company of business operations of a client, after which it administers and manages those operations for its client on an ongoing basis. The Company also provides industry-specific digital transformational services related to operations management services, and analytics services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business.

Arrangements with Multiple Performance Obligations

The Company’s contracts with customers do not generally bundle different services together except for software and related services contracts, which are not significant, involving implementation services and post contract maintenance services. In such software and related services contracts, revenue is allocated to each performance obligation based on the relative standalone selling price.

A separate contract is generally drafted for each type of service sold, even if to the same customer. The typical length of a contract is 3 to 5 years.

Type of Contracts

i. a) Revenues under time-and-material, transaction and outcome-based contracts are recognized as the services are performed. When the terms of the client contract specify service level parameters that must be met (such as turnaround time or accuracy), the Company monitors such service level parameters to determine if any service credits or penalties have been incurred. Revenues are recognized net of any penalties or service credits that are due to a client.

b) In respect of arrangements involving subcontracting, in part or whole of the assigned work, the Company evaluates revenues to be recognized under Accounting Standard Codification ("ASC") topic 606-10-55-36 and 37, “Principal versus agent considerations”.

ii. Revenues for Company’s fixed-price contracts are recognized using the time-elapsed output method because the Company transfers control evenly during execution of its projects. Determining a measure of progress requires management to make judgments that affect the timing of revenue recognized. The Company regularly monitors its estimates for progress on completion of a project and records changes in the period in which a change in an estimate is determined. If a change in an estimate results in a projected loss on a project, such loss is recognized in the period in which it is first identified.

iii. Revenues from the Company's software and related services contracts, which are not significant, are primarily related to maintenance renewals or incremental license fees for additional users. Maintenance revenues are generally recognized on a straight-line basis over the annual contract term. Fees for incremental license fees without any associated services are recognized upon delivery of the related incremental license.

The Company accrues revenues for services rendered between the last billing date and the balance sheet date. Accordingly amounts for services, that the Company has performed and for which an invoice has not yet been issued to the client are presented as a part of contract assets as receivables.

The Company defers the revenues and related cost of revenue during the period while production set-ups are underway and recognize such revenues and costs ratably over the period during which the related services are expected to be performed. The deferred costs are limited to the amounts of the deferred revenues. Deferred revenue also includes the amount for which the services have been rendered but the other conditions of revenue recognition are not met, for example where the Company does not have the persuasive evidence of the arrangements.

Reimbursements of out-of-pocket expenses received from clients are included as part of revenues.

Payment terms

All Contracts entered into by the Company specify the payment terms. Usual payment terms range between 30-60 days. The Company does not have any extended payment terms clauses in existing contracts. At times the Company does enter into fixed price contracts and software licenses involving significant implementation wherein the milestones are defined such that the Company can recover the costs with a reasonable margin. The payment terms do not have any linkage to segment or types of contracts, as they are defined for each contract separately.

Variable Consideration

Variability in the transaction price arises primarily due to service level agreements, cost of living adjustments, and pre-payment and volume discounts.

The Company considers its experience with similar transactions and expectations regarding the contract in estimating the amount of variable consideration that should be recognized during a period.

The Company believes that the expected value method is most appropriate for determining the variable consideration since the company has large number of contracts with similar nature of transactions/services.

Allocation of transaction price to performance obligations

The transaction price is allocated to performance obligations on a relative standalone selling price basis. Standalone selling prices are estimated by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract.  In assessing whether to allocate variable consideration to a specific part of the contract, the Company considers the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract.

Practical expedients and exemptions

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Recent Accounting Pronouncements and Recently Adopted Accounting Pronouncements

(f) Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-02, Leases (Topic 842), which requires the identification of arrangements that should be accounted for as leases. In general, lease arrangements exceeding a twelve months term should be recognized as assets with corresponding liabilities on the balance sheet of the lessee. This ASU requires recording a right-of-use asset and lease obligation for all leases, whether operating or finance, while the income statement will reflect lease expense for operating leases and amortization and interest expense for finance leases. The balance sheet amount recorded for existing leases at the date of adoption of this ASU must be calculated using the applicable incremental borrowing rate. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and the implementation approach to be used.

In June 2016, FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is to be deducted from the amortized cost of the financial asset(s) so as to present the net carrying value at the amount expected to be collected on the financial asset. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendment should be applied through a modified retrospective approach. Early adoption as of the fiscal years beginning after December 15, 2018 is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In June 2018, FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting. This ASU involves several aspects of the accounting for non-employee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non employees. The amendments in this ASU affect all entities that enter into share-based payment transactions for acquiring goods and services from non employees. This ASU is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.  Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The adoption of this ASU is not expected to have any material effect on the Company’s consolidated financial statements.

(g) Recently Adopted Accounting Pronouncements

In May 2014, FASB issued ASU No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. Refer to Note 4 to the unaudited consolidated financial statements for details.

In August 2016, FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments apply to all entities that are required to present a statement of cash flows under Topic 230. The amendments are an improvement to US GAAP because they provide guidance for each of the eight issues, thereby reducing the current and potential future diversity in practice. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company has adopted the guidance retrospectively to each period presented. The adoption does not have any material effect on the presentation of its unaudited consolidated statements of cash flows.

In November 2016, FASB issued ASU No. 2016-18, Statement of cash flows (Topic 230) - Restricted cash. The amendments apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. The amendments in this update require that a statement of cash flows should explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. Early adoption is permitted with an adjustment reflected as of the beginning of the fiscal year in which the amendment is adopted. The Company has adopted the guidance retrospectively to each period presented. The adoption does not have any material effect on the presentation of its unaudited consolidated statements of cash flows. Refer to Note 6 to the unaudited consolidated financial statements for details.

In January 2017, FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively. The Company has adopted the guidance effective January 1, 2018. The adoption does not have any material effect on its unaudited consolidated financial statements.

In March, 2017, FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. The ASU amends ASC 715, Compensation — Retirement Benefits, to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic post-retirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in non-operating expenses. The update also stipulates that only the service cost component of net benefit cost is eligible for capitalization. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company has adopted the guidance retrospectively to each period presented. Refer to Note 2(c) and Note 20 to the unaudited consolidated financial statements for details.

In May 2017, FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company has adopted the guidance effective January 1, 2018. The adoption does not have any material effect on its unaudited consolidated financial statements.

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Segment and Geographical Information (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Revenues and Cost of Revenues for Company's Reportable Segments

Revenues and cost of revenues for the three months ended June 30, 2018 and 2017, respectively, for each of the reportable segments, are as follows:

	Three months ended June 30, 2018
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	64,812	$	19,817	$	18,549	$	24,228	$	23,088	$	59,618	$	210,112
Cost of revenues(1)	44,033		16,713		10,625		14,543		15,079		38,656		139,649
Gross profit(1)	$	20,779	$	3,104	$	7,924	$	9,685	$	8,009	$	20,962	$	70,463
Operating expenses													53,373
Foreign exchange gain, interest expense and other income, net													2,940
Income tax expense													5,510
Loss from equity-method investment													58
Net income													$	14,462

⁽¹⁾ Exclusive of depreciation and amortization.

	Three months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	58,255	$	18,923	$	17,835	$	21,038	$	21,447	$	51,559	$	189,057
Cost of revenues(1)*	40,471		12,306		10,323		12,338		14,645		33,651		123,734
Gross profit(1)*	$	17,784	$	6,617	$	7,512	$	8,700	$	6,802	$	17,908	$	65,323
Operating expenses*													47,055
Foreign exchange gain, interest expense and other income, net*													2,933
Income tax expense													823
Net income													$	20,378

⁽¹⁾ Exclusive of depreciation and amortization.

Revenues and cost of revenues for the six months ended June 30, 2018 and 2017, respectively, for each of the reportable segments, are as follows:

	Six months ended June 30, 2018
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	128,715	$	42,614	$	36,048	$	48,200	$	44,788	$	116,720	$	417,085
Cost of revenues(1)	86,460		33,955		21,068		29,272		30,264		76,731		277,750
Gross profit(1)	$	42,255	$	8,659	$	14,980	$	18,928	$	14,524	$	39,989	$	139,335
Operating expenses													107,095
Foreign exchange gain, interest expense and other income, net													6,551
Income tax expense													1,057
Loss from equity-method investment													114
Net income													$	37,620

⁽¹⁾ Exclusive of depreciation and amortization.

	Six months ended June 30, 2017
	Insurance		Healthcare		TT&L		F&A		All Other		Analytics		Total
Revenues, net	$	114,176	$	37,855	$	34,878	$	42,052	$	42,563	$	100,566	$	372,090
Cost of revenues(1)*	78,501		24,615		20,461		24,764		29,058		65,407		242,806
Gross profit(1)*	$	35,675	$	13,240	$	14,417	$	17,288	$	13,505	$	35,159	$	129,284
Operating expenses*													93,804
Foreign exchange gain, interest expense and other income, net*													6,069
Income tax expense													4,383
Net income													$	37,166

⁽¹⁾ Exclusive of depreciation and amortization.

*The Company early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Pursuant to this adoption, effective January 1, 2017, the resultant foreign exchange gain/(loss) upon settlement of cash flow hedges are recorded along with the underlying hedged item in the same income statement line as either part of “Cost of revenues”, “General and administrative expenses”, “Selling and marketing expenses”, "Depreciation and Amortization”, as applicable. Refer to Note 17 to the unaudited consolidated financial statements for details.

Revenues, net of the Company by service type, were as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
BPM and related services(1)	$	150,494	$	137,498	$	300,365	$	271,524
Analytics services	59,618		51,559		116,720		100,566
Total	$	210,112	$	189,057	$	417,085	$	372,090

⁽¹⁾ BPM and related services include revenues of the Company's five industry-focused operating segments, one capability operating segment and the consulting operating segment, which provides services related to operations management services. See segment disclosure above.

Revenues Based on Geographical Information

The Company attributes the revenues to regions based upon the location of its customers.

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Revenues, net
United States	$	174,087	$	153,894	$	345,285	$	304,175
Non-United States
United Kingdom	27,480		28,951		55,496		55,033
Rest of World	8,545		6,212		16,304		12,882
Total Non-United States	36,025		35,163		71,800		67,915
	$	210,112	$	189,057	$	417,085	$	372,090

Property, Plant and Equipment based on Geographical Information

Property and equipment, net by geographic area, were as follows:

	As of
	June 30, 2018		December 31, 2017
Property and equipment, net
India	$	35,060	$	39,143
United States	21,182		16,371
Philippines	6,748		8,217
Rest of World	3,122		3,026
	$	66,112	$	66,757

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Revenues, net (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Contracts with Customer, Receivables and Liabilities

The following table provides information about accounts receivable and contract liabilities from contracts with customers:

	As of
	June 30, 2018		December 31, 2017
Accounts receivable, net	$	147,099	$	135,705
Contract liabilities
Deferred revenue (advance payments portion)	$	9,969	$	9,311

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Numerator:
Net income	$	14,462	$	20,378	$	37,620	$	37,166
Denominators:
Basic weighted average common shares outstanding	34,511,777		33,819,320		34,479,202		33,833,153
Dilutive effect of share based awards	630,611		1,173,906		743,636		1,218,614
Diluted weighted average common shares outstanding	35,142,388		34,993,226		35,222,838		35,051,767
Earnings per share attributable to ExlService Holdings Inc. stockholders:
Basic	$	0.42	$	0.60	$	1.09	$	1.10
Diluted	$	0.41	$	0.58	$	1.07	$	1.06
Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share	336,599		2,893		242,561		227,941

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Cash, Cash Equivalents and Restricted Cash (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

For the purpose of unaudited statements of cash flows, cash, cash equivalents and restricted cash comprise of the following:

	As of
	June 30, 2018		June 30, 2017
Cash and cash equivalents	$	84,091	$	89,414
Restricted cash (current)	2,256		1,898
Restricted cash (non-current)	3,645		3,692
	$	89,992	$	95,004

Restrictions on Cash and Cash Equivalents

For the purpose of unaudited statements of cash flows, cash, cash equivalents and restricted cash comprise of the following:

	As of
	June 30, 2018		June 30, 2017
Cash and cash equivalents	$	84,091	$	89,414
Restricted cash (current)	2,256		1,898
Restricted cash (non-current)	3,645		3,692
	$	89,992	$	95,004

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Other Income, net (Tables)

6 Months Ended

Jun. 30, 2018

Other Income and Expenses [Abstract]

Summary of Other Income, net

Other income, net consists of the following:

	Three months ended June 30,					Six months ended June 30,
	2018		2017			2018		2017
Interest and dividend income	$	329	$	323		$	637	$	995
Gain on sale of mutual funds	1,694		2,438			4,827		4,221
Others, net	209		(249		)	302		482
Other income, net	$	2,232	$	2,512		$	5,766	$	5,698

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Property and Equipment, net (Tables)

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment, net consist of the following:

	Estimated useful lives	As of
	(Years)	June 30, 2018			December 31, 2017
Owned Assets:
Network equipment and computers	3-5	$	77,183		$	77,587
Software	3-5	63,827			59,325
Leasehold improvements	3-8	37,506			38,857
Office furniture and equipment	3-8	19,823			19,667
Motor vehicles	2-5	597			638
Buildings	30	1,162			1,245
Land	—	760			815
Capital work in progress	—	8,402			9,184
		209,260			207,318
Less: Accumulated depreciation and amortization		(143,553		)	(141,059		)
		$	65,707		$	66,259
Assets under capital leases:
Leasehold improvements		$	812		$	941
Office furniture and equipment		77			167
Motor vehicles		612			710
		1,501			1,818
Less: Accumulated depreciation and amortization		(1,096		)	(1,320		)
		$	405		$	498
Property and equipment, net		$	66,112		$	66,757

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,
	2018		2017		2018		2017
Depreciation and amortization expense	$	6,821	$	6,028	$	13,378	$	11,902

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

	As of
	June 30, 2018		December 31, 2017
Cost	$	7,625	$	2,571
Less : Accumulated amortization	1,448		976
	$	6,177	$	1,595

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Business Combinations, Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Business Combination, Goodwill And Intangible Assets Disclosure [Abstract]

Allocation of Purchase Price to Assets Acquired and Liabilities Assumed

	Amount
Tangible Assets	$	5,475
Liabilities	(5,733		)
Identifiable Intangible Assets:
Customer relationships	6,760
Developed technology	1,510
Trade names and trademarks	570
Goodwill	14,229
Total purchase price	$	22,811

Summary of Company's Goodwill

The following table sets forth details of the Company’s goodwill balance as of June 30, 2018:

	Insurance			Healthcare			TT&L			F&A			All Other		Analytics		Total
Balance as at January 1, 2017	$	38,110		$	19,276		$	12,983		$	47,537		$	5,326	$	63,538	$	186,770
Acquisitions	—			15,957			—			—			—		—		15,957
Currency translation adjustments	223			—			696			835			—		—		1,754
Balance as at December 31, 2017	$	38,333		$	35,233		$	13,679		$	48,372		$	5,326	$	63,538	$	204,481
Measurement period adjustments*	—			(1,728		)	—			—			—		—		(1,728		)
Currency translation adjustments	(56		)	—			(780		)	(936		)	—		—		(1,772		)
Balance as at June 30, 2018	$	38,277		$	33,505		$	12,899		$	47,436		$	5,326	$	63,538	$	200,981

* Subsequent to December 31, 2017, adjustments of $1,728 have been made to the amounts of net tangible assets acquired and the earn-out with the corresponding offsets to goodwill. These adjustments are within the measurement period and have been accounted for prospectively. These adjustments did not have a significant impact on the Company’s unaudited consolidated statements of income, balance sheets or cash flows.

Schedule of Indefinite-Lived Intangible Assets

Information regarding the Company’s intangible assets is set forth below:

	As of June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	82,063	$	(48,842	)	$	33,221
Leasehold benefits	2,694		(2,518		)	176
Developed technology	15,800		(10,657		)	5,143
Non-compete agreements	2,045		(1,861		)	184
Trade names and trademarks	5,945		(4,399		)	1,546
	$	108,547	$	(68,277	)	$	40,270
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	109,447	$	(68,277	)	$	41,170

	As of December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	82,165	$	(43,667	)	$	38,498
Leasehold benefits	2,888		(2,596		)	292
Developed technology	15,835		(8,749		)	7,086
Non-compete agreements	2,045		(1,780		)	265
Trade names and trademarks	5,951		(4,034		)	1,917
	$	108,884	$	(60,826	)	$	48,058
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	109,784	$	(60,826	)	$	48,958

Schedule of Finite Lived Intangibles Assets and Weighted Average Life

The remaining weighted average life of intangible assets is as follows:

	(in years)
Customer relationships	5.13
Leasehold benefits	0.92
Developed technology	3.00
Non-compete agreements	1.22
Trade names and trademarks (Finite lived)	4.20

Information regarding the Company’s intangible assets is set forth below:

	As of June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	82,063	$	(48,842	)	$	33,221
Leasehold benefits	2,694		(2,518		)	176
Developed technology	15,800		(10,657		)	5,143
Non-compete agreements	2,045		(1,861		)	184
Trade names and trademarks	5,945		(4,399		)	1,546
	$	108,547	$	(68,277	)	$	40,270
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	109,447	$	(68,277	)	$	41,170

	As of December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	82,165	$	(43,667	)	$	38,498
Leasehold benefits	2,888		(2,596		)	292
Developed technology	15,835		(8,749		)	7,086
Non-compete agreements	2,045		(1,780		)	265
Trade names and trademarks	5,951		(4,034		)	1,917
	$	108,884	$	(60,826	)	$	48,058
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	109,784	$	(60,826	)	$	48,958

Amortization of Intangible Assets

The amortization expense for the period is as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Amortization expense	$	3,761	$	3,507	$	7,708	$	7,005

Estimated Future Amortization of Intangible Assets

Estimated amortization of intangible assets during the next twelve months ending June 30,
2019	$	13,815
2020	9,001
2021	4,359
2022	3,583
2023	3,065
2024 and thereafter	6,447
Total	$	40,270

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Other current assets (Tables)

6 Months Ended

Jun. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Current Assets

Other current assets consist of the following:

	As of
	June 30, 2018		December 31, 2017
Derivative instruments	$	4,787	$	10,938
Advances to suppliers	2,710		2,451
Receivables from statutory authorities	9,670		7,598
Others	5,835		8,595
Other current assets	$	23,002	$	29,582

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Other Assets (Tables)

6 Months Ended

Jun. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Assets

Other assets consist of the following:

	As of
	June 30, 2018		December 31, 2017
Lease deposits	$	8,522	$	8,776
Derivative instruments	1,128		7,361
Deposits with statutory authorities	6,378		6,492
Term deposits	9,015		6,909
Others	10,990		6,831
Other assets	$	36,033	$	36,369

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Accrued expenses and other current liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

	As of
	June 30, 2018		December 31, 2017
Accrued expenses	$	43,440	$	43,235
Derivative instruments	4,390		555
Client liabilities	5,107		8,982
Other current liabilities	6,945		8,594
Accrued expenses and other current liabilities	$	59,882	$	61,366

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Other non-current liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Liabilities, Noncurrent [Abstract]

Summary of Other Non-Current Liabilities

Other non-current liabilities consist of the following:

	As of
	June 30, 2018		December 31, 2017
Derivative instruments	$	5,788	$	322
Unrecognized tax benefits	892		892
Deferred rent	7,632		8,176
Retirement benefits	3,363		3,377
Other non-current liabilities	1,155		3,435
Non-current liabilities	$	18,830	$	16,202

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Loss

The balances as of June 30, 2018 and December 31, 2017 are as follows:

	As of
	June 30, 2018			December 31, 2017
Cumulative foreign currency translation (loss)	$	(84,435	)	$	(58,405	)
Unrealized (loss)/gain on cash flow hedges, net of taxes of ($657) and $4,918, respectively	(3,874		)	11,932
Retirement benefits, net of taxes of ($76) and ($74), respectively	688			763
Accumulated other comprehensive loss	$	(87,621	)	$	(45,710	)

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets and liabilities that were accounted for at fair value as of June 30, 2018 and December 31, 2017. The table excludes accounts receivable, accounts payable and accrued expenses for which fair values approximate their carrying amounts.

As of June 30, 2018	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds*	$	128,563	$	—	$	—	$	128,563
Derivative financial instruments	—		5,915		—		$	5,915
Total	$	128,563	$	5,915	$	—	$	134,478
Liabilities
Derivative financial instruments	$	—	$	10,178	$	—	$	10,178
Total	$	—	$	10,178	$	—	$	10,178
As of December 31, 2017	Level 1		Level 2		Level 3		Total
Assets
Money market and mutual funds*	$	162,906	$	—	$	—	$	162,906
Derivative financial instruments	—		18,298		—		18,298
Total	$	162,906	$	18,298	$	—	$	181,204
Liabilities
Derivative financial instruments	$	—	$	877	$	—	$	877
Fair value of earn-out consideration	—		—		920		920
Total	$	—	$	877	$	920	$	1,797

* Represents short-term investments carried on fair value option under ASC 825 “Financial Instruments” as of June 30, 2018 and December 31, 2017.

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Derivatives and Hedge Accounting (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Fair Value of Foreign Currency Exchange Contracts

The following tables set forth the fair value of the foreign currency exchange contracts and their location on the consolidated financial statements:

Derivatives designated as hedging instruments :	As of
Foreign currency exchange contracts	June 30, 2018		December 31, 2017
Other current assets	$	4,635	$	10,892
Other assets	$	1,128	$	7,360
Accrued expense and other current liabilities	$	4,390	$	481
Other non-current liabilities	$	5,788	$	322
Derivatives not designated as hedging instruments :	As of
Foreign currency exchange contracts	June 30, 2018		December 31, 2017
Other current assets	$	152	$	46
Accrued expense and other current liabilities	$	—	$	74

Summary of Effect of Foreign Currency Exchange Contracts on Consolidated Statements of Income

The following tables set forth the effect of foreign currency exchange contracts on the unaudited consolidated statements of income and accumulated other comprehensive loss for the three and six months ended June 30, 2018 and 2017:

	Three months ended June 30,					Six months ended June 30,
Forward Exchange Contracts :	2018		2017			2018		2017
(Gain)/loss recognized in AOCI
Derivatives in cash flow hedging relationships	$	12,229	$	(2,243	)	$	17,243	$	(11,272	)
(Gain)/loss recognized in unaudited consolidated statements of income
Derivatives not designated as hedging instruments	$	2,641	$	(151	)	$	5,569	$	(2,773	)

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,
	2018						2017
	As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts			As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts
Cash flow hedging relationships
Location in unaudited consolidated statements of income where (gain)/loss was reclassed from AOCI
Cost of revenues	$	139,649		$	(1,191	)	$	123,734		$	(1,566	)
General and administrative expenses	$	27,640		(180		)	$	24,425		(288		)
Selling & marketing expenses	$	15,151		(17		)	$	13,095		(30		)
Depreciation & amortization	$	10,582		(79		)	$	9,535		(99		)
				$	(1,467	)				$	(1,983	)
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where (gain)/loss was recognized
Foreign exchange (gain)/loss, net	$	(1,414	)	$	2,641		$	(886	)	$	(151	)
	$	(1,414	)	$	2,641		$	(886	)	$	(151	)

	Six months ended June 30,
	2018						2017
	As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts			As per unaudited consolidated statements of income			(Gain)/loss on foreign currency exchange contracts
Cash flow hedging relationships
Location in unaudited consolidated statements of income where (gain)/loss was reclassed from AOCI
Cost of revenues	$	277,750		$	(3,336	)	$	242,806		$	(2,296	)
General & administrative expenses	$	56,906		(511		)	$	48,462		(429		)
Selling & marketing expenses	$	29,103		(50		)	$	26,435		(48		)
Depreciation & amortization	$	21,086		(241		)	$	18,907		(140		)
				$	(4,138	)				$	(2,913	)
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where (gain)/loss was recognized
Foreign exchange (gain)/loss, net	$	(2,029	)	$	5,569		$	(1,268	)	$	(2,773	)
	$	(2,029	)	$	5,569		$	(1,268	)	$	(2,773	)

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost

Components of net periodic benefit cost:

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
Service cost	$	423		$	494		$	862		$	978
Interest cost	173			166			353			328
Expected return on plan assets	(118		)	(111		)	(242		)	(218		)
Amortization of actuarial (gain)/loss	(38		)	71			(77		)	140
Net periodic benefit cost	$	440		$	620		$	896		$	1,228

Effect of Retrospective Presentation Change Related to the Net Periodic Cost of Defined Benefit Pension Plans on Consolidated Statements of Income

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 June 30, 2017							Six months ended June 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	$	123,734	$	123,846	$	(112	)	$	242,806	$	243,027	$	(221	)
General and administrative expenses	$	24,425	$	24,438	$	(13	)	$	48,462	$	48,489	$	(27	)
Selling and marketing expenses	$	13,095	$	13,096	$	(1	)	$	26,435	$	26,437	$	(2	)
Other income, net	$	2,512	$	2,638	$	(126	)	$	5,698	$	5,948	$	(250	)

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

Change in Plan Assets

Change in Plan Assets
Plan assets at January 1, 2018	$	6,915
Actual return	275
Employer contribution	—
Benefits paid	(576		)
Effect of exchange rate changes	(454		)
Plan assets at June 30, 2018	$	6,160

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Leases (Tables)

6 Months Ended

Jun. 30, 2018

Leases [Abstract]

Future Minimum Lease Payments under Capital Leases

Future minimum lease payments under these capital leases as of June 30, 2018 are as follows:

During the next twelve months ending June 30,
2019	$	273
2020	162
2021	101
2022	57
Total minimum lease payments	593
Less: amount representing interest	100
Present value of minimum lease payments	493
Less: current portion	223
Long term capital lease obligation	$	270

Future Minimum Lease Payments under Operating Lease Agreements

Future minimum lease payments under such agreements expiring after June 30, 2018 are set forth below:

During the next twelve months ending June 30,
2019	$	21,402
2020	17,854
2021	16,751
2022	13,675
2023	13,021
2024 and thereafter	36,164
	$	118,867

Schedule of Rent Expense

The Company recognizes rent expense on such leases on a straight-line basis over cancelable and non-cancelable lease period determined under ASC topic 840, Leases:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Rent expense	$	6,057	$	6,139	$	12,479	$	11,806

Schedule of Deferred Rent

	As of
	June 30, 2018		December 31, 2017
	(Unaudited)
Cancelable and non-cancelable operating leases	$	8,636	$	8,959

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Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Costs Related to Company's Stock-Based Compensation Plan

The following costs related to the Company’s stock-based compensation plans are included in the unaudited consolidated statements of income:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Cost of revenues	$	1,370	$	1,129	$	2,463	$	2,339
General and administrative expenses	3,099		2,344		5,349		4,940
Selling and marketing expenses	2,424		1,634		4,155		3,784
Total	$	6,893	$	5,107	$	11,967	$	11,063

Stock Based Compensation Stock Option Activity

Stock option activity under the Company’s stock-based compensation plans is shown below:

	Number of Options		Weighted Avg Exercise Price		Aggregate Intrinsic Value		Weighted Avg Remaining Contractual Life (Years)
Outstanding at December 31, 2017	259,563		$	18.03	$	10,985	2.76
Granted	—		—
Exercised	(25,000	)	17.22		1,092
Forfeited	—		—
Outstanding at June 30, 2018	234,563		$	18.12	$	9,029	2.35
Vested and exercisable at June 30, 2018	234,563		$	18.12	$	9,029	2.35

Restricted Stock and Restricted Stock Units

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock Activity Under Company's Stock Plans

Restricted stock and restricted stock unit activity under the Company’s stock-based compensation plans is shown below:

	Restricted Stock				Restricted Stock Units
	Number		Weighted Average Fair Value		Number		Weighted Average Fair Value
Outstanding at December 31, 2017*	182,267		$	42.64	1,046,999		$	42.26
Granted	—		—		362,735		60.54
Vested	(36,639	)	35.91		(386,193	)	39.15
Forfeited	(14,620	)	47.86		(33,530	)	51.52
Outstanding at June 30, 2018*	131,008		$	43.94	990,011		$	49.86

* As of June 30, 2018 and December 31, 2017 restricted stock units vested for which the underlying common stock is yet to be issued are 155,753 and 146,112, respectively.

Performance Based Stock Awards

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock Activity Under Company's Stock Plans

Performance based restricted stock unit (the “PRSUs”) activity under the Company’s stock-based compensation plans is shown below:

	Revenue Based PRSUs				Market Condition Based PRSUs
	Number		Weighted Average Fair Value		Number		Weighted Average Fair Value
Outstanding at December 31, 2017	113,190		$	48.13	113,174		$	60.80
Granted	55,268		60.58		55,262		70.97
Vested	—		—		—		—
Forfeited	(2,428	)	51.99		(2,427	)	64.16
Outstanding at June 30, 2018	166,030		$	52.22	166,009		$	64.14

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Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Value of unsatisfied performance obligations not disclosed for contracts (less than)	1 year
Impact of adoption of Topic 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect		$ 454
Impact of adoption of Topic 606 | Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect		$ 454
Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Typical length of contract	3 years
Payment terms	30 days
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Typical length of contract	5 years
Payment terms	60 days

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Segment and Geographical Information - Additional Information (Details)	6 Months Ended
	Jun. 30, 2018 operating_segment
Segment Reporting [Abstract]
Number of operating segments	8
Number of operating segments, operations management	6
Number of operating segments, finance and accounting	1
Number of operating segments, company provides operations management services	6
Number of non-operations management services	2

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Segment and Geographical Information - Revenues and Cost of Revenues for Company's Reportable Segments (Details) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) operating_segment	Jun. 30, 2017 USD ($)
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net		$ 210,112	$ 189,057	$ 417,085	$ 372,090
Cost of revenues(1)	[1]	139,649	123,734	277,750	242,806
Gross profit	[1]	70,463	65,323	139,335	129,284
Operating expenses		53,373	47,055	107,095	93,804
Foreign exchange gain, interest expense and other income, net		2,940	2,933	6,551	6,069
Income tax expense		5,510	823	1,057	4,383
Loss from equity-method investment		58	0	114	0
Net income attributable to ExlService Holdings, Inc. stockholders		14,462	20,378	$ 37,620	37,166
Number of operating segments, industry focused | operating_segment				5
Number of capability operating segments | operating_segment				1
BPM and related services
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net		150,494	137,498	$ 300,365	271,524
Analytics services
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net		59,618	51,559	116,720	100,566
Insurance
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net		64,812	58,255	128,715	114,176
Cost of revenues(1)		44,033	40,471	86,460	78,501
Gross profit		20,779	17,784	42,255	35,675
Healthcare
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net		19,817	18,923	42,614	37,855
Cost of revenues(1)		16,713	12,306	33,955	24,615
Gross profit		3,104	6,617	8,659	13,240
TT&L
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net		18,549	17,835	36,048	34,878
Cost of revenues(1)		10,625	10,323	21,068	20,461
Gross profit		7,924	7,512	14,980	14,417
F&A
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net		24,228	21,038	48,200	42,052
Cost of revenues(1)		14,543	12,338	29,272	24,764
Gross profit		9,685	8,700	18,928	17,288
All Other
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net		23,088	21,447	44,788	42,563
Cost of revenues(1)		15,079	14,645	30,264	29,058
Gross profit		8,009	6,802	14,524	13,505
Analytics
Revenues and cost of revenues for Company's reportable segments [Line Items]
Revenues, net		59,618	51,559	116,720	100,566
Cost of revenues(1)		38,656	33,651	76,731	65,407
Gross profit		$ 20,962	$ 17,908	$ 39,989	$ 35,159

[1] Exclusive of depreciation and amortization.

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Segment and Geographical Information - Revenues based on Geographical Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	$ 210,112	$ 189,057	$ 417,085	$ 372,090
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	174,087	153,894	345,285	304,175
United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	27,480	28,951	55,496	55,033
Rest of World
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	8,545	6,212	16,304	12,882
Total Non-United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues, net	$ 36,025	$ 35,163	$ 71,800	$ 67,915

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Segment and Geographical Information - Property, Plant and Equipment, Net Based On Geographical Information (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	$ 66,112	$ 66,757
India
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	35,060	39,143
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	21,182	16,371
Philippines
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	6,748	8,217
Rest of World
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	$ 3,122	$ 3,026

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Revenues, net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounts receivable not billed	$ 58,339	$ 58,339		$ 49,125
Contract liability, revenue recognized	2,671	6,381
Impact of adoption of Topic 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect				454
Retained Earnings | Impact of adoption of Topic 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect				454
Contract Acquisition Costs
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Capitalized contract acquisition costs	672	672	$ 454
Capitalized contract acquisition costs, amount amortized	80	153
Contract Fulfillment Costs
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Capitalized contract acquisition costs	65	65		685
Capitalized contract acquisition costs, amount amortized	254	395
Deferred costs, contract fulfillment	$ 3,058	$ 3,058		$ 2,769

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Revenues, net - Contracts with Customer, Receivables, Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Revenue from Contract with Customer [Abstract]
Accounts receivable, net	$ 147,099	$ 135,705
Contract liabilities
Deferred revenue (advance payments portion)	$ 9,969	$ 9,311

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Earnings Per Share - Computation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net income	$ 14,462	$ 20,378	$ 37,620	$ 37,166
Denominators:
Basic weighted average outstanding (in shares)	34,511,777	33,819,320	34,479,202	33,833,153
Dilutive effect of share based awards (in shares)	630,611	1,173,906	743,636	1,218,614
Diluted weighted average outstanding (in shares)	35,142,388	34,993,226	35,222,838	35,051,767
Earnings per share attributable to ExlService Holdings Inc. stockholders:
Basic (in dollars per share)	$ 0.42	$ 0.60	$ 1.09	$ 1.10
Diluted (in dollars per share)	$ 0.41	$ 0.58	$ 1.07	$ 1.06
Weighted average potentially dilutive considered anti-dilutive and not included in computing diluted earnings per share (in shares)	336,599	2,893	242,561	227,941

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Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Cash and cash equivalents	$ 84,091	$ 86,795	$ 89,414
Restricted cash (current)	2,256	3,674	1,898
Restricted cash (non-current)	3,645	3,808	3,692
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$ 89,992	$ 94,277	$ 95,004	$ 220,394

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Other Income, net - Summary of Other Income, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Other Income and Expenses [Abstract]
Interest and dividend income	$ 329	$ 323	$ 637	$ 995
Gain on sale of mutual funds	1,694	2,438	4,827	4,221
Others, net	209	(249)	302	482
Other income, net	$ 2,232	$ 2,512	$ 5,766	$ 5,698

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Property and Equipment, net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Owned Assets:
Owned assets, gross	$ 209,260	$ 207,318
Less: Accumulated depreciation and amortization	(143,553)	(141,059)
Owned assets, net	65,707	66,259
Assets under capital leases:
Capital leased assets, gross	1,501	1,818
Less: Accumulated depreciation and amortization	(1,096)	(1,320)
Assets under capital leases, net	405	498
Property and equipment, net	66,112	66,757
Network equipment and computers
Owned Assets:
Owned assets, gross	77,183	77,587
Software
Owned Assets:
Owned assets, gross	63,827	59,325
Leasehold improvements
Owned Assets:
Owned assets, gross	37,506	38,857
Assets under capital leases:
Capital leased assets, gross	812	941
Office furniture and equipment
Owned Assets:
Owned assets, gross	19,823	19,667
Assets under capital leases:
Capital leased assets, gross	77	167
Motor vehicles
Owned Assets:
Owned assets, gross	597	638
Assets under capital leases:
Capital leased assets, gross	$ 612	710
Buildings
Owned Assets:
Estimated useful lives	30 years
Owned assets, gross	$ 1,162	1,245
Land
Owned Assets:
Owned assets, gross	760	815
Capital work in progress
Owned Assets:
Owned assets, gross	$ 8,402	$ 9,184
Minimum | Network equipment and computers
Owned Assets:
Estimated useful lives	3 years
Minimum | Software
Owned Assets:
Estimated useful lives	3 years
Minimum | Leasehold improvements
Owned Assets:
Estimated useful lives	3 years
Minimum | Office furniture and equipment
Owned Assets:
Estimated useful lives	3 years
Minimum | Motor vehicles
Owned Assets:
Estimated useful lives	2 years
Maximum | Network equipment and computers
Owned Assets:
Estimated useful lives	5 years
Maximum | Software
Owned Assets:
Estimated useful lives	5 years
Maximum | Leasehold improvements
Owned Assets:
Estimated useful lives	8 years
Maximum | Office furniture and equipment
Owned Assets:
Estimated useful lives	8 years
Maximum | Motor vehicles
Owned Assets:
Estimated useful lives	5 years

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Property and Equipment, net - Depreciation and Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 6,821	$ 6,028	$ 13,378	$ 11,902
Depreciation and Amortization
Property, Plant and Equipment [Line Items]
Effect of the foreign exchange gains upon settlement of cash flow hedges	$ 42	$ 102	$ 193	$ 156

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Property and Equipment, net - Internally Developed Software Costs, Included under Software (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Abstract]
Cost	$ 7,625	$ 2,571
Less : Accumulated amortization	1,448	976
Net	$ 6,177	$ 1,595

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Business Combinations, Goodwill and Intangible Assets - Additional Information (Details) - Health Integrated, Inc. - USD ($) $ in Thousands	Dec. 22, 2017	Jun. 30, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Purchase consideration	$ 22,577
Maximum contingent consideration	$ 5,000
Contingent cash consideration		$ 0	$ 920
Customer relationships
Business Acquisition [Line Items]
Weighted average useful life	7 years
Developed technology
Business Acquisition [Line Items]
Weighted average useful life	1 year
Trade names and trademarks
Business Acquisition [Line Items]
Weighted average useful life	2 years

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Business Combinations, Goodwill and Intangible Assets - Purchase Price Allocation (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Dec. 22, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill	$ 200,981	$ 204,481		$ 186,770
Health Integrated, Inc.
Business Acquisition [Line Items]
Tangible Assets			$ 5,475
Liabilities			(5,733)
Goodwill			14,229
Total purchase price			22,811
Customer relationships | Health Integrated, Inc.
Business Acquisition [Line Items]
Identifiable Intangible Assets			6,760
Developed technology | Health Integrated, Inc.
Business Acquisition [Line Items]
Identifiable Intangible Assets			1,510
Trade names and trademarks | Health Integrated, Inc.
Business Acquisition [Line Items]
Identifiable Intangible Assets			$ 570

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Business Combinations, Goodwill and Intangible Assets - Summary of Company's Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Goodwill [Roll Forward]
Beginning Balance	$ 204,481	$ 186,770
Acquisitions		15,957
Currency translation adjustments	(1,772)	1,754
Measurement period adjustments	(1,728)
Ending Balance	200,981	204,481
Insurance
Goodwill [Roll Forward]
Beginning Balance	38,333	38,110
Acquisitions		0
Currency translation adjustments	(56)	223
Measurement period adjustments	0
Ending Balance	38,277	38,333
Healthcare
Goodwill [Roll Forward]
Beginning Balance	35,233	19,276
Acquisitions		15,957
Currency translation adjustments	0	0
Measurement period adjustments	(1,728)
Ending Balance	33,505	35,233
TT&L
Goodwill [Roll Forward]
Beginning Balance	13,679	12,983
Acquisitions		0
Currency translation adjustments	(780)	696
Measurement period adjustments	0
Ending Balance	12,899	13,679
F&A
Goodwill [Roll Forward]
Beginning Balance	48,372	47,537
Acquisitions		0
Currency translation adjustments	(936)	835
Measurement period adjustments	0
Ending Balance	47,436	48,372
All Other
Goodwill [Roll Forward]
Beginning Balance	5,326	5,326
Acquisitions		0
Currency translation adjustments	0	0
Measurement period adjustments	0
Ending Balance	5,326	5,326
Analytics
Goodwill [Roll Forward]
Beginning Balance	63,538	63,538
Acquisitions		0
Currency translation adjustments	0	0
Measurement period adjustments	0
Ending Balance	63,538	$ 63,538
Health Integrated, Inc.
Goodwill [Roll Forward]
Measurement period adjustments, intangible assets acquired and earn-out	$ 1,728

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Business Combinations, Goodwill and Intangible Assets - Summary of Company's Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount	$ 108,547	$ 108,884
Accumulated Amortization	(68,277)	(60,826)
Total	40,270	48,058
Total intangible assets, gross carrying amount	109,447	109,784
Total intangible assets, net carrying amount	41,170	48,958
Trade names and trademarks
Indefinite-lived Intangible Assets [Line Items]
Trade names and trademarks	900	900
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount	82,063	82,165
Accumulated Amortization	(48,842)	(43,667)
Total	33,221	38,498
Leasehold benefits
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount	2,694	2,888
Accumulated Amortization	(2,518)	(2,596)
Total	176	292
Developed technology
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount	15,800	15,835
Accumulated Amortization	(10,657)	(8,749)
Total	5,143	7,086
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount	2,045	2,045
Accumulated Amortization	(1,861)	(1,780)
Total	184	265
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount	5,945	5,951
Accumulated Amortization	(4,399)	(4,034)
Total	$ 1,546	$ 1,917

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Business Combinations, Goodwill and Intangible Assets - Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Business Combination, Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense	$ 3,761	$ 3,507	$ 7,708	$ 7,005

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Business Combinations, Goodwill and Intangible Assets - Weighted Average Life of Intangible Assets (Details)	6 Months Ended
	Jun. 30, 2018
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted average life of intangible assets	5 years 1 month 17 days
Leasehold benefits
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted average life of intangible assets	11 months 1 day
Developed technology
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted average life of intangible assets	3 years
Non-compete agreements
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted average life of intangible assets	1 year 2 months 19 days
Trade names and trademarks (Finite lived)
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted average life of intangible assets	4 years 2 months 12 days

XML

Business Combinations, Goodwill and Intangible Assets - Estimated Future Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Business Combination, Goodwill And Intangible Assets Disclosure [Abstract]
2019	$ 13,815
2020	9,001
2021	4,359
2022	3,583
2023	3,065
2024 and thereafter	6,447
Total	$ 40,270	$ 48,058

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Investment in equity affiliate (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 12, 2017
Schedule of Equity Method Investments [Line Items]
Loss from equity-method investment	$ (58)	$ 0	$ (114)	$ 0
Corridor
Schedule of Equity Method Investments [Line Items]
Aggregate cost					$ 3,000
Loss from equity-method investment	$ 58		$ 114

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Other current assets - Schedule of Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Derivative instruments	$ 4,787	$ 10,938
Advances to suppliers	2,710	2,451
Receivables from statutory authorities	9,670	7,598
Others	5,835	8,595
Other current assets	$ 23,002	$ 29,582

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Other Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Lease deposits	$ 8,522	$ 8,776
Derivative instruments	1,128	7,361
Deposits with statutory authorities	6,378	6,492
Term deposits	9,015	6,909
Others	10,990	6,831
Other assets	$ 36,033	$ 36,369

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Accrued expenses and other current liabilities - Summary of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Accrued expenses	$ 43,440	$ 43,235
Derivative instruments	4,390	555
Client liabilities	5,107	8,982
Other current liabilities	6,945	8,594
Accrued expenses and other current liabilities	$ 59,882	$ 61,366

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Other non-current liabilities - Summary of Other Non-Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Liabilities, Noncurrent [Abstract]
Derivative instruments	$ 5,788	$ 322
Unrecognized tax benefits	892	892
Deferred rent	7,632	8,176
Retirement benefits	3,363	3,377
Other non-current liabilities	1,155	3,435
Non-current liabilities	$ 18,830	$ 16,202

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Accumulated Other Comprehensive Loss - Summary of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative foreign currency translation (loss)	$ (84,435)	$ (58,405)
Unrealized (loss)/gain on cash flow hedges, net of taxes of ($657) and $4,918, respectively	(3,874)	11,932
Retirement benefits, net of taxes of ($76) and ($74), respectively	688	763
Accumulated other comprehensive loss	(87,621)	(45,710)
Unrealized gain on cash flow hedges, taxes	(657)	4,918
Retirement benefits, taxes	$ (76)	$ (74)

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Fair Value Measurements - Assets and Liabilities Measured at Fair Value (Details) - Recurring - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets
Money market and mutual funds	$ 128,563	$ 162,906
Derivative financial instruments	5,915	18,298
Total	134,478	181,204
Liabilities
Derivative financial instruments	10,178	877
Fair value of earn-out consideration		920
Total	10,178	1,797
Level 1
Assets
Money market and mutual funds	128,563	162,906
Derivative financial instruments	0	0
Total	128,563	162,906
Liabilities
Derivative financial instruments	0	0
Fair value of earn-out consideration		0
Total	0	0
Level 2
Assets
Money market and mutual funds	0	0
Derivative financial instruments	5,915	18,298
Total	5,915	18,298
Liabilities
Derivative financial instruments	10,178	877
Fair value of earn-out consideration		0
Total	10,178	877
Level 3
Assets
Money market and mutual funds	0	0
Derivative financial instruments	0	0
Total	0	0
Liabilities
Derivative financial instruments	0	0
Fair value of earn-out consideration		920
Total	$ 0	$ 920

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Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Health Integrated, Inc.
Business Acquisition [Line Items]
Fair value of earn-out consideration	$ 0	$ 920

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Derivatives and Hedge Accounting - Additional Information (Details) £ in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2018 GBP (£)	Dec. 31, 2017 USD ($)	Dec. 31, 2017 GBP (£)
Derivative Instruments, Gain (Loss) [Line Items]
Net derivative gains which could be reclassified into earnings within the next 12 months	$ 245
Maximum outstanding term of cash flow hedges	45 months
Derivatives Designated as Hedging Instruments | Derivatives in Cash Flow Hedging Relationships | Foreign currency exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Foreign exchange contracts outstanding	$ 353,225		$ 300,757
Derivatives not Designated as Hedging Instruments | Foreign currency exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Foreign exchange contracts outstanding	$ 124,691	£ 19,111	$ 98,967	£ 17,947

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Derivatives and Hedge Accounting - Summary of Fair Value of Foreign Currency Exchange Contracts (Details) - Foreign currency exchange contracts - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Derivatives Designated as Hedging Instruments | Other current assets
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, asset	$ 4,635	$ 10,892
Derivatives Designated as Hedging Instruments | Other assets
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, asset	1,128	7,360
Derivatives Designated as Hedging Instruments | Accrued expense and other current liabilities
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, liability	4,390	481
Derivatives Designated as Hedging Instruments | Other non-current liabilities
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, liability	5,788	322
Derivatives not Designated as Hedging Instruments | Other current assets
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, asset	152	46
Derivatives not Designated as Hedging Instruments | Accrued expense and other current liabilities
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, liability	$ 0	$ 74

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Derivatives and Hedge Accounting - Summary of Effect of Foreign Currency Exchange Contracts (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Derivative Instruments, Gain (Loss) [Line Items]
(Gain)/loss recognized in unaudited consolidated statements of income	$ (1,414)	$ (886)	$ (2,029)	$ (1,268)
Derivatives in cash flow hedging relationships | Derivatives in hedging relationships | Foreign currency exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Derivatives in cash flow hedging relationships	12,229	(2,243)	17,243	(11,272)
Reclassification out of Accumulated Other Comprehensive Income | Derivatives not Designated as Hedging Instruments | Foreign currency exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
(Gain)/loss recognized in unaudited consolidated statements of income	$ 2,641	$ (151)	$ 5,569	$ (2,773)

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Derivatives and Hedge Accounting Derivatives and Hedge Accounting - Location of Gain or Loss Recognized (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Cost of revenues	$ 139,649	$ 123,734	$ 277,750	$ 242,806
General and administrative expenses	27,640	24,425	56,906	48,462
Selling & marketing expenses	15,151	13,095	29,103	26,435
Depreciation & amortization	10,582	9,535	21,086	18,907
Foreign exchange gain, net	(1,414)	(886)	(2,029)	(1,268)
Reclassification out of Accumulated Other Comprehensive Income | Derivatives Designated as Hedging Instruments | Derivatives in cash flow hedging relationships | Foreign currency exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Cost of revenues	(1,191)	(1,566)	(3,336)	(2,296)
General and administrative expenses	(180)	(288)	(511)	(429)
Selling & marketing expenses	(17)	(30)	(50)	(48)
Depreciation & amortization	(79)	(99)	(241)	(140)
Reclassification from AOCI, before tax	(1,467)	(1,983)	(4,138)	(2,913)
Reclassification out of Accumulated Other Comprehensive Income | Derivatives not Designated as Hedging Instruments | Foreign currency exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Foreign exchange gain, net	$ 2,641	$ (151)	$ 5,569	$ (2,773)

XML

Borrowings - Additional Information (Details)		3 Months Ended		6 Months Ended
	Nov. 21, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017	Jun. 30, 2018 USD ($)	Jun. 30, 2017	Dec. 31, 2017 USD ($)	Feb. 23, 2015 USD ($)	Oct. 24, 2014 USD ($)
Credit Facilities [Line Items]
Long-term debt, maturities, repayments of principal in next twelve months		$ 10,000,000		$ 10,000,000
Structured payable		644,000		644,000		$ 709,000
Current portion of long-term borrowings		10,318,000		10,318,000		10,318,000
Long term borrowings		$ 57,326,000		$ 57,326,000		50,391,000
Debt instrument, covenant, interest coverage ratio, minimum		3.5		3.5
Debt instrument, covenant, leverage ratio, maximum		3.0		3.0
Notes Payable, Other Payables
Credit Facilities [Line Items]
Current portion of long-term borrowings		$ 318,000		$ 318,000		318,000
Long term borrowings		326,000		326,000		391,000
Revolving Credit Facility
Credit Facilities [Line Items]
Outstanding debt		67,000,000		67,000,000		60,000,000
Outstanding debt, current						10,000,000
Outstanding debt, noncurrent		57,000,000		57,000,000		50,000,000
Unamortized debt issuance costs		$ 694,000		$ 694,000		$ 773,000
Revolving Credit Facility | Credit Facility
Credit Facilities [Line Items]
Maximum borrowing capacity								$ 50,000,000
Option to increase additional credit facility							$ 50,000,000
Interest rate			2.70%		2.60%
Revolving Credit Facility | New Credit Agreement
Credit Facilities [Line Items]
Maximum borrowing capacity	$ 200,000,000
Option to increase additional credit facility	100,000,000
Interest rate		3.80%		3.60%
Debt issuance costs	$ 790,000
Revolving Credit Facility | New Credit Agreement | Minimum
Credit Facilities [Line Items]
Commitment fee percentage range on unused credit facility	0.15%
Revolving Credit Facility | New Credit Agreement | Maximum
Credit Facilities [Line Items]
Commitment fee percentage range on unused credit facility	0.30%
Revolving Credit Facility | New Credit Agreement | Prime Rate | Minimum
Credit Facilities [Line Items]
Basis spread on variable rate	0.00%
Revolving Credit Facility | New Credit Agreement | Prime Rate | Maximum
Credit Facilities [Line Items]
Basis spread on variable rate	0.75%
Revolving Credit Facility | New Credit Agreement | London Interbank Offered Rate (LIBOR) | Minimum
Credit Facilities [Line Items]
Basis spread on variable rate	1.00%
Revolving Credit Facility | New Credit Agreement | London Interbank Offered Rate (LIBOR) | Maximum
Credit Facilities [Line Items]
Basis spread on variable rate	1.75%

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Capital Structure - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) $ / shares shares	Jun. 30, 2017 USD ($) $ / shares shares	Jun. 30, 2018 USD ($) ClassOfCommonStock $ / shares shares	Jun. 30, 2017 USD ($) $ / shares shares	Feb. 28, 2017 USD ($)	Dec. 30, 2014 USD ($)
Equity, Class of Treasury Stock [Line Items]
Number of classes of common stock outstanding | ClassOfCommonStock			1
Acquisition of restricted stock from employees in connection with withholding tax payments (in shares) | shares	3,835	2,219	45,646	65,003
Withholding tax payments related to the vesting of restricted stock for total consideration	$ 226,000	$ 103,000	$ 2,790,000	$ 3,016,000
Weighted average purchase price prior to the vesting date (in dollars per share) | $ / shares	$ 58.82	$ 46.51	$ 61.12	$ 46.40
2014 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Repurchase of common stock authorized by board of directors up to						$ 20,000,000
2017 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Additional authorized amount					$ 100,000,000
Authorized increase in repurchase amount, 2018					40,000,000
Authorized increase in repurchase amount, 2019					40,000,000
Common stock purchased under the repurchase program (in shares) | shares	165,000		347,182
Common stock aggregate purchase price including commissions	$ 9,407,000		$ 20,346,000
Common stock average purchase price per share (in dollars per share) | $ / shares	$ 57.01		$ 58.60
2017 Repurchase Program | Minimum
Equity, Class of Treasury Stock [Line Items]
Authorized increase in repurchase amount					20,000,000
2017 Repurchase Program | Maximum
Equity, Class of Treasury Stock [Line Items]
Authorized increase in repurchase amount					$ 40,000,000
2014 and 2017 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Common stock purchased under the repurchase program (in shares) | shares		230,022		423,984
Common stock aggregate purchase price including commissions		$ 11,316,000		$ 20,316,000
Common stock average purchase price per share (in dollars per share) | $ / shares		$ 49.20		$ 47.92

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Employee Benefit Plans - Net Gratuity Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Retirement Benefits [Abstract]
Service cost	$ 423	$ 494	$ 862	$ 978
Interest cost	173	166	353	328
Expected return on plan assets	(118)	(111)	(242)	(218)
Amortization of actuarial (gain)/loss	(38)	71	(77)	140
Net periodic benefit cost	$ 440	$ 620	$ 896	$ 1,228

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Employee Benefit Plans - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Retirement Benefits [Abstract]
Expected return on plan assets, percentage			7.80%
Discretionary contributions towards 401(k) Plan, maximum percentage			4.00%
Discretionary contributions to 401 (k) plans	$ 755	$ 496	$ 1,985	$ 1,564
Defined Contribution Plan, Cost	$ 1,753	$ 1,792	$ 3,667	$ 3,505

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Employee Benefit Plans - Effect of Retrospective Presentation Change Related to the Net Periodic Cost of Defined Benefit Pension Plans on Consolidated Statements of Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net periodic benefit cost	$ 440	$ 620	$ 896	$ 1,228
Cost of revenues
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net periodic benefit cost		123,734		242,806
Net periodic benefit cost, effect of change, higher/ (lower)		(112)		(221)
Cost of revenues | Previously reported
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net periodic benefit cost		123,846		243,027
General and administrative expenses
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net periodic benefit cost		24,425		48,462
Net periodic benefit cost, effect of change, higher/ (lower)		(13)		(27)
General and administrative expenses | Previously reported
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net periodic benefit cost		24,438		48,489
Selling and marketing expenses
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net periodic benefit cost		13,095		26,435
Net periodic benefit cost, effect of change, higher/ (lower)		(1)		(2)
Selling and marketing expenses | Previously reported
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net periodic benefit cost		13,096		26,437
Other income, net
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net periodic benefit cost		2,512		5,698
Net periodic benefit cost, effect of change, higher/ (lower)		(126)		(250)
Other income, net | Previously reported
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net periodic benefit cost		$ 2,638		$ 5,948

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Employee Benefit Plans - Change in Plan Assets (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Plan assets at January 1, 2018	$ 6,915
Actual return	275
Employer contribution	0
Benefits paid	(576)
Effect of exchange rate changes	(454)
Plan assets at June 30, 2018	$ 6,160

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Leases - Future Minimum Lease Payments under Capital Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Leases [Abstract]
2019	$ 273
2020	162
2021	101
2022	57
Total minimum lease payments	593
Less: amount representing interest	100
Present value of minimum lease payments	493
Less: current portion	223	$ 267
Long term capital lease obligation	$ 270	$ 331

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Leases - Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Leases [Abstract]
2019	$ 21,402
2020	17,854
2021	16,751
2022	13,675
2023	13,021
2024 and thereafter	36,164
Total operating lease payments	$ 118,867

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Leases - Rent Expense and Deferred Rent (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Leases [Abstract]
Rent expense	$ 6,057	$ 6,139	$ 12,479	$ 11,806
Cancelable and non-cancelable operating leases	$ 8,636		$ 8,636		$ 8,959

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Income tax (benefit) expense	$ 5,510	$ 823	$ 1,057	$ 4,383
Effective tax rate, current income tax expense (benefit)	27.50%	3.90%	2.70%	10.50%
Tax Adjustments, Settlements, and Unusual Provisions		$ 3,153
Measurement period adjustment, transition tax increase (decrease)	$ (4,836)
Excess tax benefits, stock awards	323	$ 1,624	$ 5,150	$ 3,681
Transition tax obligation	$ 22,400		22,400		$ 27,236
Transition tax, income tax expense (benefit)			$ 22,400		27,236
Provisional adjustments associated with the corporate rate change					$ 1,949

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Stock Based Compensation - Costs Related to Company's Stock-Based Compensation Plan (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expenses	$ 6,893	$ 5,107	$ 11,967	$ 11,063
Cost of revenues
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expenses	1,370	1,129	2,463	2,339
General and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expenses	3,099	2,344	5,349	4,940
Selling and marketing expenses
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expenses	$ 2,424	$ 1,634	$ 4,155	$ 3,784

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Stock Based Compensation - Costs Related to Company's Stock-Based Compensation Plan Additional Information (Details)	Jun. 30, 2018 shares
2015 Stock Options Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number available for grant (in shares)	3,192,319

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Stock Based Compensation - Stock Based Compensation Stock Option Activity (Details) - Employee Stock Option - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of Options, Outstanding, Beginning Balance (in shares)	259,563
Number of Options, Granted (in shares)	0
Number of Options, Exercised (in shares)	(25,000)
Number of Options, Forfeited (in shares)	0
Number of Options, Outstanding, Ending Balance (in shares)	234,563	259,563
Number of Options, Vested and exercisable at end of period (in shares)	234,563
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted-Average Exercise Price, Outstanding, Beginning Balance (in dollars per share)	$ 18.03
Weighted-Average Exercise Price, Granted (in dollars per share)	0.00
Weighted-Average Exercise Price, Exercised (in dollars per share)	17.22
Weighted-Average Exercise Price, Forfeited (in dollars per share)	0.00
Weighted-Average Exercise Price, Outstanding, Ending Balance (in dollars per share)	18.12	$ 18.03
Weighted Average Exercise Price, Vested and exercisable at end of period (in dollars per share)	$ 18.12
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Aggregate Intrinsic Value, Outstanding, Beginning Balance	$ 10,985
Aggregate Intrinsic Value, Exercised	1,092
Aggregate Intrinsic Value, Outstanding, Ending Balance	9,029	$ 10,985
Aggregate Intrinsic Value, Vested and exercisable at end of period	$ 9,029
Weighted-Average Remaining Contractual Life	2 years 4 months 6 days	2 years 9 months 3 days
Weighted-Average Remaining Contractual Life, Vested and exercisable at end of period	2 years 4 months 6 days

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Stock Based Compensation - Stock Options Additional Information (Details)	Jun. 30, 2018 USD ($)
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, unvested options	$ 0

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Stock Based Compensation - Restricted Stock and Restricted Stock Units Activity Under Company's Stock Plans (Details) - $ / shares	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at Beginning Balance (in shares)	182,267
Number, Granted (in shares)	0
Number, Vested (in shares)	(36,639)
Number, Forfeited (in shares)	(14,620)
Number, Outstanding, at Ending Balance (in shares)	131,008
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at Beginning Balance (in dollars per share)	$ 42.64
Weighted-Average Fair Value, Granted (in dollars per share)	0.00
Weighted-Average Fair Value, Vested (in dollars per share)	35.91
Weighted-Average Fair Value, Forfeited (in dollars per share)	47.86
Weighted-Average Fair Value, Outstanding, at Ending Balance (in dollars per share)	$ 43.94
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at Beginning Balance (in shares)	1,046,999
Number, Granted (in shares)	362,735
Number, Vested (in shares)	(386,193)
Number, Forfeited (in shares)	(33,530)
Number, Outstanding, at Ending Balance (in shares)	990,011
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at Beginning Balance (in dollars per share)	$ 42.26
Weighted-Average Fair Value, Granted (in dollars per share)	60.54
Weighted-Average Fair Value, Vested (in dollars per share)	39.15
Weighted-Average Fair Value, Forfeited (in dollars per share)	51.52
Weighted-Average Fair Value, Outstanding, at Ending Balance (in dollars per share)	$ 49.86
Units vested for which the underlying common stock is yet to be issued (in shares)	155,753	146,112

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Stock Based Compensation - Restricted Stock and Restricted Stock Unit Additional Information (Details) - Restricted Stock and Restricted Stock Units $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 44,369
Cost not yet recognized, period for recognition	2 years 8 months 28 days

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Stock Based Compensation - Performance Based Stock Awards (Details)	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Revenue Based PRSUs
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at Beginning Balance (in shares) | shares	113,190
Number, Granted (in shares) | shares	55,268
Number, Vested (in shares) | shares	0
Number, Forfeited (in shares) | shares	(2,428)
Number, Outstanding, at Ending Balance (in shares) | shares	166,030
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at Beginning Balance (in dollars per share) | $ / shares	$ 48.13
Weighted-Average Fair Value, Granted (in dollars per share) | $ / shares	60.58
Weighted-Average Fair Value, Vested (in dollars per share) | $ / shares	0.00
Weighted-Average Fair Value, Forfeited (in dollars per share) | $ / shares	51.99
Weighted-Average Fair Value, Outstanding, at Ending Balance (in dollars per share) | $ / shares	$ 52.22
Market Condition Based PRSUs
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at Beginning Balance (in shares) | shares	113,174
Number, Granted (in shares) | shares	55,262
Number, Vested (in shares) | shares	0
Number, Forfeited (in shares) | shares	(2,427)
Number, Outstanding, at Ending Balance (in shares) | shares	166,009
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at Beginning Balance (in dollars per share) | $ / shares	$ 60.80
Weighted-Average Fair Value, Granted (in dollars per share) | $ / shares	70.97
Weighted-Average Fair Value, Vested (in dollars per share) | $ / shares	0.00
Weighted-Average Fair Value, Forfeited (in dollars per share) | $ / shares	64.16
Weighted-Average Fair Value, Outstanding, at Ending Balance (in dollars per share) | $ / shares	$ 64.14
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at Beginning Balance (in shares) | shares	182,267
Number, Granted (in shares) | shares	0
Number, Vested (in shares) | shares	(36,639)
Number, Forfeited (in shares) | shares	(14,620)
Number, Outstanding, at Ending Balance (in shares) | shares	131,008
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at Beginning Balance (in dollars per share) | $ / shares	$ 42.64
Weighted-Average Fair Value, Granted (in dollars per share) | $ / shares	0.00
Weighted-Average Fair Value, Vested (in dollars per share) | $ / shares	35.91
Weighted-Average Fair Value, Forfeited (in dollars per share) | $ / shares	47.86
Weighted-Average Fair Value, Outstanding, at Ending Balance (in dollars per share) | $ / shares	$ 43.94
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number, Outstanding, at Beginning Balance (in shares) | shares	1,046,999
Number, Granted (in shares) | shares	362,735
Number, Vested (in shares) | shares	(386,193)
Number, Forfeited (in shares) | shares	(33,530)
Number, Outstanding, at Ending Balance (in shares) | shares	990,011
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Fair Value, Outstanding, at Beginning Balance (in dollars per share) | $ / shares	$ 42.26
Weighted-Average Fair Value, Granted (in dollars per share) | $ / shares	60.54
Weighted-Average Fair Value, Vested (in dollars per share) | $ / shares	39.15
Weighted-Average Fair Value, Forfeited (in dollars per share) | $ / shares	51.52
Weighted-Average Fair Value, Outstanding, at Ending Balance (in dollars per share) | $ / shares	$ 49.86

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Stock Based Compensation - Performance Based Stock Awards Additional Information (Details) - Performance Based Stock Awards $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 12,444
Cost not yet recognized, period for recognition	2 years 1 month 10 days

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Related Party Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Related Party Transactions [Abstract]
Revenue from related party	$ 16	$ 328	$ 215	$ 805
Accounts receivable from related party	$ 6		$ 6		$ 140

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Purchase commitments, net of advances	$ 5,668
Export-oriented units established, percentage	100.00%
Transfer pricing issues starting period	2003
Transfer pricing issues ending period	2014
Permanent establishment issues starting period	2003
Permanent establishment issues ending period	2007
Aggregate disputed amount amount related to transfer pricing and permanent establishment	$ 17,370	$ 18,065
Total bank guarantees and deposits in respect of contingencies	8,324	8,573
Amounts paid as deposits in respect of contingencies	6,389	6,499
Bank guarantee issued	1,935	$ 2,074
Litigation settlement, amount	$ 2,400

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Subsequent Event (Details) - Subsequent Event [Member] - USD ($) $ in Thousands	Jul. 01, 2018	Jul. 02, 2018
SCIOInspire Holdings, Inc.
Subsequent Event [Line Items]
Purchase consideration	$ 236,500
Business acquisition, equity interest issued or issuable, value assigned	4,080
Line of credit facility, increase (decrease), net	$ 233,000
Exchange of Stock for Stock [Member] | SCIOInspire Holdings, Inc.
Subsequent Event [Line Items]
Stock issued during period, shares, new issues	69,459
Revolving Credit Facility
Subsequent Event [Line Items]
Line of credit facility, increase (decrease), net	$ 100,000
Maximum borrowing capacity		$ 300,000