UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒
☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period ended ~~September 30, 2017~~

March 31, 2022

☐
☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from to

Commission file number: 001-33626

GENPACT LIMITED

(Exact name of registrant as specified in its charter)

~~Bermuda~~		~~98-0533350~~

Bermuda

98-0533350

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~Canon’s~~

Canon's Court

22 Victoria Street

Hamilton HM 12

Bermuda

(441) ~~295-2244~~

298-3300

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, par value $0.01 per share	G	New York Stock Exchange

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 ☒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 ☒ 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 ~~definition~~the definitions of ~~“accelerated filer”,~~ “large accelerated filer,” “accelerated filer,” “smaller reporting ~~company”~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

~~(Do not check if a smaller reporting company)~~

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 ~~l3(a)~~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 ☒

~~The number~~

As of ~~the registrant’s~~May 5, 2022, there were 185,148,923 common shares, par value $0.01 per share, ~~outstanding as~~ of ~~October 27, 2017 was 193,042,398.~~

the registrant issued and outstanding.

TABLE OF CONTENTS

Item No.

Page No.

PART I

Financial Statements

1.

Unaudited Consolidated Financial Statements

Consolidated Balance Sheets as of December 31, 2016 and September 30, 2017

1

Consolidated Statements of Income for the three months and nine months ended September 30, 2016 and 2017

2

Consolidated Statements of Comprehensive Income (Loss) for the three months and nine months ended September 30, 2016 and 2017

3

Consolidated Statements of Equity and Redeemable Non-controlling Interest for the nine months ended September 30, 2016 and 2017

5

Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2017

6

Notes to the Consolidated Financial Statements

7

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

35

3.

Quantitative and Qualitative Disclosures About Market Risk

52

4.

Controls and Procedures

52

PART II

Other Information

1.

Legal Proceedings

53

1A.

Risk Factors

53

2.

Unregistered Sales of Equity Securities and Use of Proceeds

53

3.

Defaults upon Senior Securities

53

5.

Other Information

53

6.

Exhibits

53

SIGNATURES

55


	Item No.		Page No.

PART I		Financial Information
	1.	Unaudited Consolidated Financial Statements
		Consolidated Balance Sheets as of December 31, 2021 and March 31, 2022	3
		Consolidated Statements of Income for the three months ended March 31, 2021 and 2022	4
		Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2022	5
		Consolidated Statements of Equity for the three months ended March 31, 2021 and 2022	6
		Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2022	8
		Notes to the Consolidated Financial Statements	9
	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
	3.	Quantitative and Qualitative Disclosures About Market Risk	58
	4.	Controls and Procedures	59

PART II		Other Information
	1.	Legal Proceedings	60
	1A.	Risk Factors	60
	2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
	6.	Exhibits	61

SIGNATURES			62

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements

GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share data and share count)

Notes

As of December 31,
2016

As of September 30,
2017

Assets

Current assets

Cash and cash equivalents

4

$
422,623

$
440,055

Accounts receivable, net

5

615,265

670,692

Prepaid expenses and other current assets

8

189,149

243,867

Total current assets

$
1,227,037

$
1,354,614

Property, plant and equipment, net

9

193,218

205,623

Deferred tax assets

23

70,143

75,273

Investment in equity affiliates

24

4,800

833

Intangible assets, net

10

78,946

138,215

Goodwill

10

1,069,408

1,315,312

Other assets

242,328

260,021

Total assets

$
2,885,880

$
3,349,891

Liabilities and equity

Current liabilities

Short-term borrowings

11

$
160,000

$
160,000

Current portion of long-term debt

12

39,181

39,224

Accounts payable

9,768

16,858

Income taxes payable

23

24,159

66,328

Accrued expenses and other current liabilities

13

498,247

540,743

Total current liabilities

$
731,355

$
823,153

Long-term debt, less current portion

12

698,152

1,016,371

Deferred tax liabilities

23

2,415

7,210

Other liabilities

14

162,790

184,965

Total liabilities

$
1,594,712

$
2,031,699

Redeemable non-controlling interest

4,520

3,839

Shareholders' equity

Preferred shares, $0.01 par value, 250,000,000 authorized, none issued

—

—

Common shares, $0.01 par value, 500,000,000 authorized, 198,794,052
and 193,033,898 issued and outstanding as of December 31, 2016
and September 30, 2017, respectively

1,984

1,926

Additional paid-in capital

1,384,468

1,369,392

Retained earnings

358,121

338,349

Accumulated other comprehensive income (loss)

(457,925
)

(395,314
)
Total equity

$
1,286,648

$
1,314,353

Commitments and contingencies

25

Total liabilities, redeemable non-controlling interest and equity

$
2,885,880

$
3,349,891


	Notes	As of December 31, 2021		As of March 31, 2022
Assets
Current assets
Cash and cash equivalents		$	899,458	$	861,760
Accounts receivable, net of allowance for credit losses of $24,329 and $21,938 as of December 31, 2021 and March 31, 2022, respectively	4	887,742		971,361
Prepaid expenses and other current assets	7	134,441		151,613
Total current assets		$	1,921,641	$	1,984,734

Property, plant and equipment, net	8	215,089		202,707
Operating lease right-of-use assets		270,603		253,568
Deferred tax assets	22	106,322		99,079
Intangible assets, net	9	169,635		154,149
Goodwill	9	1,731,027		1,722,012
Contract cost assets	19	238,794		234,772
Other assets, net of allowance for credit losses of $3,711 and $3,272 as of December 31, 2021 and March 31, 2022, respectively		322,158		320,250
Total assets		$	4,975,269	$	4,971,271

Liabilities and equity
Current liabilities
Short-term borrowings	10	$	—	$	250,000
Current portion of long-term debt	11	383,433		383,569
Accounts payable		24,984		21,098
Income taxes payable	22	47,353		53,212
Accrued expenses and other current liabilities	12	791,440		615,918
Operating leases liability		61,591		59,497
Total current liabilities		$	1,308,801	$	1,383,294

Long-term debt, less current portion	11	1,272,476		1,264,372
Operating leases liability		247,707		229,776
Deferred tax liabilities	22	3,942		3,613
Other liabilities	13	245,210		242,822
Total liabilities		$	3,078,136	$	3,123,877

Shareholders' equity
Preferred shares, $0.01 par value, 250,000,000 authorized, none issued		—		—
Common shares, $0.01 par value, 500,000,000 authorized, 185,336,357 and 185,072,415 issued and outstanding as of December 31, 2021 and March 31, 2022, respectively		1,847		1,845
Additional paid-in capital		1,717,165		1,693,854
Retained earnings		732,474		729,503
Accumulated other comprehensive income (loss)		(554,353)		(577,808)
Total equity		$	1,897,133	$	1,847,394
Commitments and contingencies	23	0		0
Total liabilities and equity		$	4,975,269	$	4,971,271

See accompanying notes to the Consolidated Financial Statements.

GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data and share count)

Three months ended September 30,

Nine months ended September 30,

Notes
2016 (1)

2017

2016 (1)

2017

Net revenues

$
648,783

$
708,824

$
1,889,009

$
2,002,516

Cost of revenue
19, 24

392,432

429,191

1,149,035

1,227,821

Gross profit

$
256,351

$
279,633

$
739,974

$
774,695

Operating expenses:

Selling, general and administrative expenses
20, 24

156,969

172,095

482,315

500,854

Amortization of acquired intangible assets
10

7,126

10,151

19,764

25,780

Other operating (income) expense, net
21

5,132

(64
)

(4,791
)

(8,517
)
Income from operations

$
87,124

$
97,451

$
242,686

$
256,578

Foreign exchange gains (losses), net

(654
)

5,045

3,156

2,045

Interest income (expense), net
22

(4,901
)

(8,724
)

(11,172
)

(24,067
)
Other income (expense), net

5,791

(4,030
)

7,172

9,011

Income before equity-method investment activity, net and income tax expense

$
87,360

$
89,742

$
241,842

$
243,567

Equity-method investment activity, net

(2,117
)

—

(6,336
)

(4,567
)
Income before income tax expense

$
85,243

$
89,742

$
235,506

$
239,000

Income tax expense
23

17,055

16,581

44,026

44,297

Net income

$
68,188

$
73,161

$
191,480

$
194,703

Net loss attributable to redeemable non-controlling interest

734

584

1,905

1,326

Net income attributable to Genpact Limited shareholders

$
68,922

$
73,745

$
193,385

$
196,029

Net income available to Genpact Limited common shareholders
18
$
68,922

$
73,745

$
193,385

$
196,029

Earnings per common share attributable to Genpact Limited common shareholders
18

Basic

$
0.33

$
0.38

$
0.93

$
1.01

Diluted

$
0.33

$
0.38

$
0.91

$
0.99

Weighted average number of common shares used in computing earnings per common share attributable to Genpact Limited common shareholders

Basic

206,146,007

192,124,366

209,034,741

194,221,162

Diluted

209,376,683

194,947,699

212,357,594

197,112,014

(1) Income taxes, net income and basic and diluted net income per common share for the three and nine months ended September 30, 2016 have been restated due to the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016.


		Three months ended March 31,
	Notes	2021		2022
Net revenues	19	$	946,071	$	1,068,443
Cost of revenue		600,928		685,962
Gross profit		$	345,143	$	382,481
Operating expenses:
Selling, general and administrative expenses		200,732		237,296
Amortization of acquired intangible assets	9	16,176		11,306
Other operating (income) expense, net	20	353		3
Income from operations		$	127,882	$	133,876
Foreign exchange gains (losses), net		3,293		4,303
Interest income (expense), net	21	(12,342)		(12,088)
Other income (expense), net		1,392		(409)
Income before income tax expense		$	120,225	$	125,682
Income tax expense	22	28,952		29,503
Net income		$	91,273	$	96,179
Earnings per common share	17
Basic		$	0.48	$	0.52
Diluted		$	0.47	$	0.51
Weighted average number of common shares used in computing earnings per common share	17
Basic		188,650,112		185,637,776
Diluted		193,213,258		189,558,404

See accompanying notes to the Consolidated Financial Statements.

GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(In thousands)


	Three months ended March 31,
	2021		2022
Net income (loss)	$	91,273	$	96,179
Other comprehensive income:
Currency translation adjustments	(18,644)		(27,429)
Net income (loss) on cash flow hedging derivatives, net of taxes (Note 6)	2,081		2,873
Retirement benefits, net of taxes	584		1,101
Other comprehensive income (loss)	(15,979)		(23,455)
Comprehensive income (loss)	$	75,294	$	72,724

See accompanying notes to the Consolidated Financial Statements.

GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Equity

For the three months ended March 31, 2021

(Unaudited)

(In thousands, except share count)


	Common shares							Accumulated Other Comprehensive Income (Loss)
	No. of Shares	Amount		Additional Paid-in Capital		Retained Earnings				Total Equity
Balance as of January 1, 2021	189,045,661	$	1,885	$	1,636,026	$	741,658	$	(545,340)	$	1,834,229
Issuance of common shares on exercise of options (Note 15)	158,000	2		3,785		—		—		3,787
Issuance of common shares under the employee stock purchase plan (Note 15)	77,165	1		2,808		—		—		2,809
Net settlement on vesting of restricted share units (Note 15)	91,039	1		(1,303)		—		—		(1,302)
Net settlement on vesting of performance units (Note 15)	1,102,440	11		(28,301)		—		—		(28,290)
Stock repurchased and retired (Note 16)	(3,297,966)	(33)		—		(134,119)		—		(134,152)
Expenses related to stock purchase (Note 16)	—	—		—		(66)		—		(66)
Stock-based compensation expense (Note 15)	—	—		17,430		—		—		17,430
Comprehensive income (loss):
Net income (loss)	—	—		—		91,273		—		91,273
Other comprehensive income (loss)	—	—		—		—		(15,979)		(15,979)
Dividend ($0.1075 per common share, Note 16)	—	—		—		(20,115)		—		(20,115)
Balance as of March 31, 2021	187,176,339	$	1,867	$	1,630,445	$	678,631	$	(561,319)	$	1,749,624

See accompanying notes to the Consolidated Financial Statements.

GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Equity

For the three months ended March 31, 2022

(Unaudited)

(In thousands, except share count)


	Common shares							Accumulated Other Comprehensive Income (Loss)
	No. of Shares	Amount		Additional Paid-in Capital		Retained Earnings				Total Equity
Balance as of January 1, 2022	185,336,357	$	1,847	$	1,717,165	$	732,474	$	(554,353)	$	1,897,133
Issuance of common shares on exercise of options (Note 15)	—	—		—		—		—		—
Issuance of common shares under the employee stock purchase plan (Note 15)	87,646	1		3,299		—		—		3,300
Net settlement on vesting of restricted share units (Note 15)	54,942	1		(1)		—		—		—
Net settlement on vesting of performance units (Note 15)	1,224,003	12		(41,859)		—		—		(41,847)
Stock repurchased and retired (Note 16)	(1,630,533)	(16)		—		(75,983)		—		(75,999)
Expenses related to stock purchase (Note 16)	—	—		—		(33)		—		(33)
Stock-based compensation expense (Note 15)	—	—		15,250		—		—		15,250
Comprehensive income (loss):
Net income (loss)	—	—		—		96,179		—		96,179
Other comprehensive income (loss)	—	—		—		—		(23,455)		(23,455)
Dividend ($0.1250 per common share, Note 16)	—	—		—		(23,134)		—		(23,134)
Balance as of March 31, 2022	185,072,415	$	1,845	$	1,693,854	$	729,503	$	(577,808)	$	1,847,394

See accompanying notes to the Consolidated Financial Statements.

GENPACT LIMITED AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Three months ended March 31,
	2021		2022
Operating activities
Net income	$	91,273	$	96,179
Adjustments to reconcile net income to net cash (used for)/ provided by operating activities:
Depreciation and amortization	28,953		24,847
Amortization of debt issuance costs	557		690
Amortization of acquired intangible assets	16,176		11,306
Write-down of intangible assets and property, plant and equipment	836		—
Allowance for credit losses	727		(463)
Unrealized gain on revaluation of foreign currency asset/liability	(3,127)		(4,599)
Stock-based compensation expense	17,430		15,250
Deferred tax expense	31		4,914
Others, net	201		19
Change in operating assets and liabilities:
Increase in accounts receivable	(6,385)		(83,548)
(Increase) decrease in prepaid expenses, other current assets, contract cost assets, operating lease right-of-use assets and other assets	14,526		(4,120)
Increase (decrease) in accounts payable	7,700		(2,010)
Decrease in accrued expenses, other current liabilities, operating leases liabilities and other liabilities	(106,727)		(179,186)
Increase in income taxes payable	14,985		6,440
Net cash (used for)/ provided by operating activities	$	77,156	$	(114,281)
Investing activities
Purchase of property, plant and equipment	(12,010)		(16,744)
Payment for internally generated intangible assets (including intangibles under development)	(1,897)		(1,065)
Proceeds from sale of property, plant and equipment	681		43
Payment for business acquisitions, net of cash acquired	(5,309)		—
Net cash (used for) investing activities	$	(18,535)	$	(17,766)
Financing activities
Repayment of finance lease obligations	(3,037)		(2,292)
Payment of debt issuance costs	(1,893)		—
Proceeds from long-term debt	350,000		—
Repayment of long-term debt	(8,500)		(8,500)
Proceeds from short-term borrowings	—		250,000
Repayment of short-term borrowings	(250,000)		—
Proceeds from issuance of common shares under stock-based compensation plans	6,596		3,300
Payment for net settlement of stock-based awards	(28,721)		(41,889)
Dividend paid	(20,115)		(23,134)
Payment for stock repurchased and retired (including expenses related to stock repurchase)	(134,218)		(76,032)
Net cash (used for)/ provided by financing activities	$	(89,888)	$	101,453
Effect of exchange rate changes	(5,171)		(7,104)
Net decrease in cash and cash equivalents	(31,267)		(30,594)
Cash and cash equivalents at the beginning of the period	680,440		899,458
Cash and cash equivalents at the end of the period	$	644,002	$	861,760
Supplementary information
Cash paid during the period for interest	$	4,086	$	1,893
Cash paid during the period for income taxes, net of refund	$	21,988	$	28,580

See accompanying notes to the Consolidated Financial Statements.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

Three months ended September 30,

Nine months ended September 30,

2016 (1)

2017

2016 (1)

2017

Genpact Limited Shareholders

Redeemable Non-controlling interest

Genpact Limited Shareholders

Redeemable Non-controlling interest

Genpact
Limited
Shareholders

Redeemable
Non-
controlling
interest

Genpact
Limited
Shareholders

Redeemable
Non-
controlling
interest

Net Income (loss)
$
68,922

$
(734
)

$
73,745

$
(584
)

$
193,385

$
(1,905
)

$
196,029

$
(1,326
)
Other comprehensive income:

Currency translation adjustments

11,224

14

(4,185
)

(256
)

(8,614
)

53

67,527

(334
)
Net income (loss) on cash flow hedging derivatives, net of taxes
(Note 7)

19,772

—

(14,874
)

—

18,187

—

(5,627
)

—

Retirement benefits, net of taxes

561

—

369

—

701

—

711

—

Other comprehensive income (loss)
$
31,557

$
14

$
(18,690
)

$
(256
)

$
10,274

$
53

$
62,611

$
(334
)
Comprehensive income (loss)
$
100,479

$
(720
)

$
55,055

$
(840
)

$
203,659

$
(1,852
)

$
258,640

$
(1,660
)

(1) Net income for the three months and nine months ended September 30, 2016 have been restated due to the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016.

~~See accompanying notes to the Consolidated Financial Statements.~~

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Consolidated Statements of Equity and Redeemable Non-controlling Interest~~

~~(Unaudited)~~

~~(In thousands, except share count)~~

Accumulated

Common shares

Additional Paid-

Retained

Other
Comprehensive

Total

Redeemable
non-controlling

No. of Shares

Amount

in Capital (1)

Earnings (1)

Income (Loss)

Equity

interest

Balance as of January 1, 2016

211,472,312

$
2,111

$
1,342,022

$
411,508

$
(451,285
)

$
1,304,356

$
—

Issuance of common shares on
   exercise of options (Note 16)

655,717

7

10,348

—

—

10,355

—

Issuance of common shares under the
   employee stock purchase plan
   (Note 16)

105,856

1

2,452

—

—

2,453

—

Net settlement on vesting of
   restricted share units (Note 16)

120,307

1

(462
)

—

—

(461
)

—

Net settlement on vesting of performance units (Note 16)

—

—

—

—

—

—

—

Stock repurchased and retired
   (Note 17)

(9,615,323
)

(96
)

—

(242,456
)

—

(242,552
)

—

Deferred tax assets recognized on early adoption of ASU
2016-09

—

—

—

24,912

—

24,912

—

Expenses related to stock purchase
   (Note 17)

—

—

—

(192
)

—

(192
)

—

Stock-based compensation expense
   (Note 16)

—

—

18,344

—

—

18,344

—

Acquisition of redeemable non
   controlling interest

—

—

—

—

—

-

3,910

Comprehensive income:

Net income

—

—

—

193,385

—

193,385

(1,905
)
      Other comprehensive income

—

—

—

—

10,274

10,274

53

Balance as of  September 30, 2016

202,738,869

$
2,024

$
1,372,704

$
387,157

$
(441,011
)

$
1,320,874

$
2,058

(1) Net income, additional paid-in capital and retained earnings for the three and nine months ended September 30, 2016 have been restated due to the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016.

~~See accompanying notes to the Consolidated Financial Statements.~~

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Consolidated Statements of Equity and Redeemable Non-controlling Interest~~

~~(Unaudited)~~

~~(In thousands, except share count)~~

Accumulated

Common shares

Additional Paid-

Retained

Other
Comprehensive

Total

Redeemable
non-controlling

No. of Shares

Amount

in Capital

Earnings

Income (Loss)

Equity

interest

Balance as of January 1, 2017

198,794,052

$
1,984

$
1,384,468

$
358,121

$
(457,925
)

$
1,286,648

$
4,520

Issuance of common shares on
   exercise of options (Note 16)

641,900

6

9,237

—

—

9,243

—

Issuance of common shares under the
   employee stock purchase plan
   (Note 16)

150,265

2

3,589

—

—

3,591

—

Net settlement on vesting of
   restricted share units (Note 16)

103,220

1

(358
)

—

—

(357
)

—

Net settlement on vesting of
   performance units (Note 16)

731,701

7

(9,946
)

—

—

(9,939
)

—

Stock repurchased and retired (Note17)

(7,387,240
)

(74
)

(40,000
)

(179,710
)

—

(219,784
)

—

Expenses related to stock purchase
   (Note 17)

—

—

—

(16
)

—

(16
)

—

Stock-based compensation expense
   (Note 16)

—

—

22,402

—

—

22,402

—

Change in fair value of redeemable non-controlling interest

—

—

—

(979
)

—

(979
)

979

Comprehensive income:

Net income

—

—

—

196,029

—

196,029

(1,326
)
Other comprehensive income

—

—

—

—

62,611

62,611

(334
)
Dividend (Note 17)

—

—

—

(35,096
)

—

(35,096
)

-

Balance as of September 30, 2017

193,033,898

$
1,926

$
1,369,392

$
338,349

$
(395,314
)

$
1,314,353

$
3,839

~~See accompanying notes to the Consolidated Financial Statements.~~

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

~~(In thousands)~~

Nine months ended September 30,

2016 (1)

2017

Operating activities

Net income attributable to Genpact Limited shareholders

$
193,385

$
196,029

Net loss attributable to redeemable non-controlling interest

(1,905
)

(1,326
)
Net income

$
191,480

$
194,703

Adjustments to reconcile net income to net cash provided by  (used for) operating activities:

Depreciation and amortization

40,366

42,271

Amortization of debt issuance costs

1,150

1,382

Amortization of acquired intangible assets

19,764

25,780

Intangible assets write-down

11,195

—

Reserve  for doubtful receivables

7,307

4,871

Unrealized loss (gain) on revaluation of foreign currency asset/liability

1,304

(9,296
)
Equity-method investment activity, net

6,336

4,567

Stock-based compensation expense

18,344

22,402

Deferred income taxes

20,729

(4,589
)
Gain on divestiture

(5,214
)

—

Provision for expected loss on divestiture

—

5,195

Others, net

29

(5,261
)
Change in operating assets and liabilities:

         Increase in accounts receivable

(33,760
)

(30,687
)
  Increase in prepaid expenses, other current assets and other assets

(64,252
)

(56,230
)
        Decrease in accounts payable

(397
)

(462
)
  Increase/(decrease) in accrued expenses, other current liabilities and other liabilities

(14,797
)

27,723

        Increase in income taxes payable

36,420

41,324

Net cash provided by operating activities

$
236,004

$
263,693

Investing activities

Purchase of property, plant and equipment & intangibles

(64,441
)

(56,460
)
Proceeds from sale of property, plant and equipment

334

1,648

Investment in equity affiliates

(7,519
)

(496
)
Payment for business acquisitions, net of cash acquired

(41,558
)

(277,549
)
Proceeds from divestiture of business, net of cash divested

17,582

—

Net cash used for investing activities

$
(95,602
)

$
(332,857
)
Financing activities

Repayment of capital lease obligations

(1,344
)

(2,199
)
Payment of debt issuance costs

—

(1,481
)
Proceeds from long-term debt

—

350,000

Repayment of long-term debt

(30,000
)

(30,000
)
Proceeds from short-term borrowings

155,000

275,000

Repayment of short-term borrowings

(61,500
)

(275,000
)
Proceeds from issuance of  common shares under stock-based compensation plans

12,808

12,834

Payment for net settlement of stock-based awards

(461
)

(10,296
)
Payment of earn-out/deferred consideration

(1,406
)

(6,219
)
Dividend paid

—

(35,096
)
Payment for stock purchased and retired

(242,552
)

(219,784
)
Payment for expenses related to stock purchase

(192
)

(16
)
Net cash provided by (used for) financing activities

$
(169,647
)

$
57,743

Effect of exchange rate changes

(2,570
)

28,853

Net increase (decrease) in cash and cash equivalents

(29,245
)

(11,421
)
Cash and cash equivalents at the beginning of the period

450,907

422,623

Cash and cash equivalents at the end of the period

$
419,092

$
440,055

Supplementary information

Cash paid during the period for interest

$
13,267

$
23,414

Cash paid during the period for income taxes

$
40,294

$
46,935

Property, plant and equipment acquired under capital lease obligations

$
1,667

$
1,944

(1) Income taxes, net income and cash flows for the nine months ended September 30, 2016 have been restated due to the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016.

~~See accompanying notes to the Consolidated Financial Statements.~~

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

1. Organization

The Company is a global professional services firm ~~focused on driving digital-led~~that drives digitally-led innovation and ~~running~~runs digitally-enabled intelligent operations for its ~~clients. Guided~~clients, guided by its experience running thousands of processes for hundreds of Fortune Global 500 ~~clients since its founding, the Company strives to help its clients achieve their operational goals by applying its industry expertise, proprietary digital technology and analytics~~.clients. The Company ~~employs~~has over ~~77,000 people~~115,300 employees serving clients in key industry verticals from more than 2030 countries.

Prior to December 30, 2004, the business of the Company was conducted through various entities and divisions of GE. On December 30, 2004, GE transferred such operations to the Company. In August 2007, the Company completed an initial public offering of its common shares. On October 25, 2012, Glory Investments A Limited (“Glory Investments”), formerly known as South Asia Private Investments, an affiliate of Bain Capital Investors, LLC, became the Company’s largest shareholder when, together with its affiliated assignees and two additional co-investors, it purchased 67,750,678 common shares of the Company from the Company’s initial investors. On August 18, 2017, Glory Investments and its affiliated assignees, together with one of its co-investors, sold 10,000,000 common shares of the Company in an underwritten public offering. The Company did not receive any proceeds from the offering.

2. Summary of significant accounting policies

(a) Basis of preparation and principles of consolidation

The ~~unaudited interim~~accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ~~(U.S. GAAP) for interim financial information~~("U.S. GAAP") and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, they do not include certain information and note disclosures required by generally accepted accounting principles for annual financial reporting and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2021. The ~~unaudited interim~~accompanying consolidated financial statements reflect all adjustments that management considers necessary for a fair presentation of the results of operations for these periods. ~~The results of operations for interim periods are not necessarily indicative of results for the full year.~~

The accompanying ~~unaudited interim consolidated~~ financial statements have been prepared on a consolidated basis and reflect the financial statements of Genpact Limited, a Bermuda company, and all of its subsidiaries that are more than 50% owned and controlled. When the Company does not have a controlling interest in an entity but exerts significant influence onover the entity, the Company applies the equity method of accounting. All intercompany transactions and balances are eliminated in consolidation.

Non-controlling interest in subsidiaries that is redeemable outside of the Company’s control for cash or other assets is reflected in the mezzanine section between liabilities and equity in the consolidated balance sheets at the redeemable value, which approximates fair value. Redeemable non-controlling interest is adjusted to its fair value at each balance sheet date. Any resulting increases or decreases in the estimated redemption amount are affected by corresponding changes to retained earnings. The share of non-controlling interest in subsidiary earnings is reflected in net loss (income) attributable to redeemable non-controlling interest in the consolidated statements of income.

(b) Use of estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment, ~~intangibles~~intangible assets and goodwill, revenue recognition, ~~reserves~~allowance for ~~doubtful receivables,~~credit losses, valuation allowances for deferred tax assets, the valuation of derivative financial instruments, the measurement of lease liabilities and right-of-use (“ROU”) assets, measurements of stock-based compensation, assets and obligations related to employee benefits, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, variable consideration, other obligations for revenue recognition, income tax uncertainties and other ~~contingencies.~~contingencies. Management believes that the estimates used in the preparation of the consolidated financial statements are ~~reasonable.~~ reasonable, and management has made assumptions about the possible effects of the ongoing COVID-19 pandemic on critical and significant accounting estimates.Although these estimates and assumptions are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. Any changes in estimates are adjusted prospectively in the Company’s consolidated financial statements.

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~2. Summary of significant accounting policies (Continued)~~

The Company accounts for its business combinations using the acquisition method of accounting in accordance with ~~ASC~~Accounting Standard Codification (“ASC”) Topic 805, Business Combinations, by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, and any non-controlling interest in the acquired business, measured at their acquisition date fair values. Contingent consideration is included within the acquisition cost and is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is ~~remeasured~~re-measured to fair value as of each reporting date until the contingency is resolved. Changes in fair value are recognized in earnings. All assets and liabilities of the acquired businesses, including goodwill, are assigned to reporting units. Acquisition-related costs are expensed as incurred under ~~Selling, General~~selling, general and ~~Administrative Expenses.~~

administrative expenses.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

2. Summary of significant accounting policies (Continued)

Goodwill represents the cost of acquired businesses in excess of the fair value of identifiable tangible and intangible net assets purchased. Goodwill is not amortized but is tested for impairment at least on an annual basis on December 31, based on a number of factors, including operating results, business plans and future cash flows. The Company performs an assessment of qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on the assessment of events or circumstances, the Company performs a quantitative assessment of goodwill impairment if it determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, based on the quantitative impairment analysis, the carrying value of the goodwill of a reporting unit exceeds the fair value of such goodwill, an impairment loss is recognized in an amount equal to the excess. In addition, the Company performs a qualitative assessment of goodwill impairment between annual tests if an event occurs or circumstances change that would ~~more~~more likely than not reduce the fair value of a reporting unit below its carrying amount. See Note 109 for information and related disclosures.

Intangible assets acquired individually or with a group of other assets or in a business combination and developed internally are carried at cost less accumulated amortization and accumulated impairment loss based on their estimated useful lives as follows:


Customer-related intangible assets		1	~~1-14~~-	9 years
Marketing-related intangible assets		1	~~1-10~~-	8 years
Technology-related intangible assets		2	~~2-8~~-	10 years
~~Other intangible assets~~	~~2-9 years~~

Intangible assets are amortized over their estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized.

In business combinations where the fair value of identifiable tangible and intangible net assets purchased exceeds the cost of the acquired business, the Company recognizes the resulting gain under “Other operating (income) expense, net” in the consolidated statements of income.

The Company also capitalizes certain software and technology-related development costs incurred in connection with developing or obtaining software or technology for sale/lease to customers when the initial design phase is completed and commercial and technological feasibility has been established. Any development cost incurred before technological feasibility is established is expensed as incurred as research and development costs. Technological feasibility is established upon completion of a detailed design program or, in its absence, completion of a working model. Capitalized software and technology costs include only (i) external direct costs of materials and services utilized in developing or obtaining software and technology and (ii) compensation and related benefits for employees who are directly associated with the project.

Costs incurred in connection with developing or obtaining software or technology for sale/lease to customers which are under development and not put to use are disclosed under “intangible assets under development.” Advances paid towards the acquisition of intangible assets outstanding as of each balance sheet date are disclosed under “intangible assets under development.”

Capitalized software and technology costs are included in intangible assets under technology-related intangible assets on the Company’s balance sheet and are amortized on a straight-line basis when placed into service over the estimated useful lives of the software and technology.

The Company evaluates the remaining useful life of intangible assets that are being amortized at each reporting period wherever events and circumstances warrant a revision to the remaining period of amortization, and the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

2. Summary of ~~Income.~~

significant accounting policies (Continued)

(d) Financial instruments and concentration of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk are reflected principally in cash and cash equivalents, derivative financial instruments and accounts receivable. The Company places its cash and cash equivalents and derivative financial instruments with corporations and banks with high investment grade ratings, limits the amount of credit exposure with any one corporation or bank and conducts ongoing evaluations of the creditworthiness of the corporations and banks with which it does business. To reduce its credit risk on accounts receivable, the Company conducts ongoing credit evaluations of its ~~clients. GE~~customers. The General Electric Company (“GE”) accounted for ~~15%~~8% and ~~11%~~9% of the Company’s receivables as of December 31, ~~2016~~2021 and ~~September 30, 2017,~~March 31, 2022, respectively. GE accounted for ~~15%~~10% and ~~10%~~9% of ~~total revenue~~the Company’s revenues for ~~the nine months ended September 30, 2016 and 2017, respectively, and 17% and 10% of total revenue for the~~the three months ended ~~September 30, 2016~~March 31, 2021 and ~~2017,~~2022, respectively.

(e) Accounts receivable

Accounts receivable are recorded at the invoiced or to be invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. The Company maintains an allowance for current expected credit losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses which are adjusted to current market conditions and a reasonable and supportable forecast. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.

(f) Revenue Recognition

The Company derives its revenue primarily from business process management services, including analytics, consulting and related digital solutions and information technology services, which are provided primarily on a time-and-material, transaction or fixed-price basis. The Company recognizes revenue upon the transfer of control of promised services to its customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. Revenues from services rendered under time-and-materials and transaction-based contracts are recognized as the services are provided. The Company’s fixed-price contracts include contracts for customization of applications, maintenance and support services. Revenues from these contracts are recognized ratably over the term of the agreement. The Company accrues for revenue and unbilled receivables for services rendered between the last billing date and the balance sheet date.

The Company’s contracts with its customers also include incentive payments received for discrete benefits delivered or promised to be delivered to the customer or service level agreements that could result in credits or refunds to the customer. Revenues relating to such arrangements are accounted for as variable consideration when the amount of revenue to be recognized can be estimated to the extent that it is probable that a significant reversal of any incremental revenue will not occur.

The Company records deferred revenue attributable to certain process transition activities where such activities do not represent separate performance obligations. Revenues relating to such transition activities are classified under contract liabilities and subsequently recognized ratably over the period in which the related services are performed. Costs relating to such transition activities are fulfillment costs which are directly related to the contract and result in the generation or enhancement of resources. Such costs are expected to be recoverable under the contract and are therefore classified as contract cost assets and recognized ratably over the estimated expected period of benefit under cost of revenue.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

2. Summary of significant accounting policies (Continued)

~~(e) Recently issued accounting pronouncements~~

Revenues are reported net of value-added tax, business tax and applicable discounts and allowances. Reimbursements of out-of-pocket expenses received from customers have been included as part of revenues.

Revenue for performance obligations that are satisfied over time is recognized in accordance with the methods prescribed for measuring progress. The ~~authoritative bodies release standards~~input (cost expended) method has been used to measure progress towards completion as there is a direct relationship between input and ~~guidance which~~the satisfaction of a performance obligation. Provisions for estimated losses, if any, on uncompleted contracts are ~~assessed by management for impact on the Company’s consolidated financial statements.~~

~~The Company has adopted the following recently released accounting standard:~~

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvement to Employee Share-Based Payment Accounting. The new standard contains several amendments that will simplify the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The changesrecorded in the new standard eliminate the requirement for excess tax benefits to be recognized in additional paid-in capital and tax deficiencies recognized either in income tax expense or in additional paid-in capital. In the quarter ended December 31, 2016, the Company elected to early adopt ASU 2016-09 effective January 1, 2016 and will continue to apply ASU 2016-09 using a modified retrospective approach. The treatment of forfeitures has not changed as the Company is electing to continue its current process of estimating the number of forfeitures. With the early adoption of ASU 2016-09, the Company has elected to present the cash flow statement on a prospective transition method and no prior periods have been adjusted. As a result, the Company’s income taxes, net income, cash flows, retained earnings, additional paid-in capital, and basic and diluted net income per common share for corresponding periods in 2016 have been restated due to the adoption of ASU No. 2016-09.

In addition, the Company has adopted the following recently released accounting standards. Adoption of these standards did not have a material impact on the Company’s consolidated results of operations, cash flows, financial position or disclosures:

Effective January 1, 2016, the Company adopted FASB ASU 2015-01 (Topic 225), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). Such items are defined as transactions or events that are both unusual in nature and infrequent in occurrence, and, currently, are required to be presented separately in the income statement, net of income tax, after income from continuing operations. The changes eliminate the concept of an extraordinary item and, therefore, the presentation of such items will no longer be required. Notwithstanding this change, the Company will still be required to present and disclose a transaction or event that is both unusual in nature and infrequent in occurrence in the notes to the financial statements.

Effective January 1, 2016, the Company adopted FASB ASU 2015-05 (Topic 350), Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”), which provides explicit guidance to evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The new guidance clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract.

Effective January 1, 2016, the Company adopted FASB ASU 2015-16 (Topic 805), Business Combinations (“ASU 2015-16”), which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. The guidance requires that the acquirer shall recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which such losses become probable based on the current contract estimates.

The Company enters into multiple-element revenue arrangements in which a customer may purchase a combination of products or services. The Company determines whether each product or service promised to a customer is capable of being distinct, and is distinct in the context of the contract. If not, the promised products or services are combined and accounted for as a single performance obligation. In the event of a multiple-element revenue arrangement, the Company allocates the arrangement consideration to separately identifiable performance obligations based on their relative stand-alone selling prices.

Certain contracts may include offerings such as sale of licenses, which may be perpetual or subscription-based. Revenue from distinct perpetual licenses is recognized upfront at the point in time when the software is made available to the customer. Revenue from distinct, non-cancellable, subscription-based licenses is recognized at the point in time it is transferred to the customer. Revenue from any associated maintenance or ongoing support services is recognized ratably over the term of the contract. For a combined software license/services performance obligation, revenue is recognized over the period that the services are performed.

All incremental and direct costs incurred for acquiring contracts, such as certain sales commissions, are classified as contract cost assets. Such costs are amortized over the expected period of benefit and recorded under selling, general and administrative expenses.

Other upfront fees paid to customers are classified as contract assets. Such fees are amortized over the expected period of benefit and recorded as an adjustment to the transaction price and deducted from revenue.

Timing of revenue recognition may differ from the timing of invoicing. If a payment is received in respect of services prior to the delivery of services, the payment is recognized as an advance from the customer and classified as a contract liability. Contract assets and contract liabilities relating to the same customer contract are offset against each other and presented on a net basis in the consolidated financial statements.

Significant judgements

The Company often enters into contracts with its customers that include promises to transfer multiple products and services to the customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately rather than together may require significant judgement.

Judgement is also required to determine the standalone selling price for each distinct performance obligation. In instances where the standalone selling price is not directly observable, it is determined using information that may include market conditions and other observable inputs.

Customer contracts sometimes include incentive payments received for discrete benefits delivered to the customer or service level agreements that could result in credits or refunds to the customer. Such amounts are ~~determined.~~

~~Effective January 1, 2016,~~estimated at contract inception and are adjusted at the ~~Company adopted FASB ASU 2015-02. In February 2015, the FASB issued ASU No. 2015-02, Amendment~~end of each reporting period as additional information becomes available only to the ~~Consolidation Analysis, which specifies changes to the analysis~~extent that ~~an entity must perform to determine whether~~ it should consolidate certain types of legal entities. These changes (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (ii) eliminate the presumptionis probable that a ~~general partner should consolidate a limited partnership, (iii) affect the consolidation analysis~~significant reversal of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships, and (iv) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds.

Effective January 1, 2017, the Company adopted FASB ASU 2016-06, Derivatives and Hedging (Topic 815). The amendments in this update clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments in this update is required to assess the embedded call (put) options solely in accordance with a four-step decision sequence.

any incremental revenue will not occur.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

2. Summary of significant accounting policies (Continued)

(g) Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on whether: (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term of the contract, and (3) the Company has the right to direct the use of the asset. At the inception of a lease, the consideration in the contract is allocated to each lease component based on its relative standalone price to determine the lease payments.

Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following ~~recently released accounting standards have~~criteria are met: (1) the lease transfers ownership of the asset by the end of the lease term, (2) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (3) the lease term is for a major part of the remaining useful life of the asset or (4) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of the above criteria.

For all leases at the lease commencement date, a ROU asset and a lease liability are recognized. The lease liability represents the present value of the lease payments under the lease. Lease liabilities are initially measured at the present value of the lease payments not yet ~~been adopted~~paid, discounted using the discount rate for the lease at the lease commencement. The lease liabilities are subsequently measured on an amortized cost basis. The lease liability is adjusted to reflect interest on the liability and the lease payments made during the period. Interest on the lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability.

The ROU asset represents the right to use the leased asset for the lease term. The ROU asset for each lease initially includes the amount of the initial measurement of the lease liability adjusted for any lease payments made to the lessor at or before the commencement date, accrued lease liabilities and any lease incentives received or any initial direct costs incurred by the ~~Company:~~

~~In May 2014,~~Company.

The ROU asset of finance leases is subsequently measured at cost, less accumulated amortization and any accumulated impairment losses. The ROU asset of operating leases is subsequently measured from the ~~FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP. The core principle~~carrying amount of the ~~ASU~~lease liability at the end of each reporting period, and is ~~that an entity should recognize revenue for the transfer of goods or services~~ equal to the carrying amount ~~that it expects~~of lease liabilities adjusted for (1) unamortized initial direct costs, (2) prepaid/(accrued) lease payments and (3) the unamortized balance of lease incentives received.

The carrying value of ROU assets is reviewed for impairment, similar to ~~be entitled to receive for those goods~~long-lived assets, whenever events or ~~services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and~~ changes in ~~judgments. Subsequently,~~circumstances indicate that the FASB issued ASU No. 2017-13, in September 2017, ASU No. 2016-08, “Principal versus Agent Considerations (Reporting Gross versus Net),” in March 2016, ASU No. 2016-10, “Identifying performance obligations and licensing,” in April 2016, and ASU 2016-20 “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” in December 2016, which amend and clarify ASU 2014-09. These ASUs willcarrying amounts may not be ~~effective for the Company beginning January 1, 2018, including interim periods in the fiscal year 2018, and allow for both retrospective and prospective adoption.~~ recoverable.

The Company has ~~performed an initial assessment~~elected to not separate lease and non-lease components for all of its leases and to use the recognition exemptions for lease contracts that, at commencement date, have a lease term of 12 months or less and do not contain a purchase option (“short-term leases”).

Significant judgements

The Company determines the lease term as the non-cancellable term of the ~~impact~~lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. Under certain of the ASU and developed a transition plan, including necessary changes to policies, processes, and internal controls as well as system enhancements to generate the information necessary for the new disclosures. The implementation plan is on schedule for adoption on January 1, 2018 andits leases, the Company ~~will apply the cumulative effect method as its transition approach.~~has a renewal and termination option to lease assets for additional terms between one and ten years. The Company ~~expects revenue recognition across~~applies judgement in evaluating whether it is reasonably certain to exercise the ~~portfolio of services~~option to ~~remain largely unchanged, however there would be~~renew or terminate the lease. The Company considers all relevant factors that create an ~~impact on~~economic incentive for it to exercise the ~~timing of recognition of certain contract costs, which would now be amortized over~~renewal or termination option. After the ~~contract period as against being previously expensed off. Based on the analysis completed to~~commencement date, the Company ~~does~~reassesses the lease term if there is a significant event or change in circumstances that is within the Company’s control and affects its ability to exercise (or not ~~currently expect that~~to exercise) the ~~ASU will have a material impact on consolidated revenue in its Consolidated Financial Statements. Company’s preliminary assessments are subject~~option to ~~change.~~

In February 2016, the FASB issued ASU No. 2016-02, “Leases.” The core principle of the ASU is that a lessee should recognize the assets and liabilities that arise from its leases other than those that meet the definition of a short-term lease. The ASU requires extensive qualitative and quantitative disclosures, including with respect to significant judgments made by management. Subsequently, the FASB issued ASU No. 2017-13, in September 2017, which amends and clarifies ASU 2016-02. The ASU will be effective for the Company beginning January 1, 2019, including interim periods in the fiscal year 2019. Early adoption is permitted. The Company is in the process of determining the method of adoption and assessing the impact of this ASU on its consolidated results of operations, cash flows, financial position and disclosures.

In October 2016, the FASB issued ASU 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory.” The new guidance eliminates the exception for deferment of tax recognition until the transferred asset is sold to a third partyrenew or otherwise recovered through use for all intra-entity sales of assets other than inventory. The ASU is effective for the Company beginning January 1, 2018, including interim periods in the fiscal year 2018. Early adoption is permitted. The Company does not expect the adoption of this update to have a material impact on its consolidated results of operations, cash flows, financial position or disclosures.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The new guidance revises the definition of a business. The definition of a business affects many areas of accounting (e.g., acquisitions, disposals, goodwill impairment, consolidation). The ASU is effective for the Company beginning January 1, 2018, including interim periods in the fiscal year 2018. Early adoption is permitted. The Company is in the process of assessing the impact of this ASU on its consolidated results of operations, cash flows, financial position and disclosures.

In March 2017, the FASB issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The ASU requires entities to (1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and (2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, the ASU requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. The ASU is effective for the Company beginning January 1, 2018, including interim periods in the fiscal year 2018. The Company is in the process of assessing the impact of this ASU on its consolidated results of operations, cash flows, financial position and disclosures.

terminate.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

2. Summary of significant accounting policies (Continued)

~~In August 2017,~~

The Company has applied an incremental borrowing rate for the ~~FASB issued ASU 2017-12, “Derivatives~~purpose of computing lease liabilities based on the remaining lease term and ~~Hedging.”~~the rates prevailing in the jurisdictions where leases were executed.

(h) Cost of revenue

Cost of revenue primarily consists of salaries and benefits (including stock-based compensation), recruitment, training and related costs of employees who are directly responsible for the performance of services for customers, their supervisors and certain support personnel who may be dedicated to a particular client or a set of processes. It also includes operational expenses, which consist of facilities maintenance expenses, travel and living expenses, rent, IT expenses, and consulting and certain other expenses. Consulting charges represent the cost of consultants and contract resources with specialized skills who are directly responsible for the performance of services for clients and travel and other billable costs related to the Company’s clients. It also includes depreciation of property, plant and equipment, and amortization of intangible and ROU assets which are directly related to providing services that generate revenue.

(i) Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses consist of expenses relating to salaries and benefits (including stock-based compensation) as well as costs related to recruitment, training and retention of senior management and other support personnel in enabling functions such as human resources, finance, legal, marketing, sales and sales support, and other support personnel. The ~~amendment expands~~operational costs component of SG&A expenses also includes travel and living costs for such personnel. SG&A expenses also include acquisition-related costs, legal and professional fees (which represent the costs of third party legal, tax, accounting and other advisors), investment in research and development, digital technology, advanced automation and robotics, and an ~~entity’s ability to hedge accounting to non-financial~~allowance for credit losses. It also includes depreciation of property, plant and ~~financial~~equipment, and amortization of intangibles and ROU assets other than those included in cost of revenue.

(j) Credit losses

An allowance for credit losses is recognized for all debt instruments other than those held at fair value through profit or loss. The Company pools its accounts receivable (other than deferred billings) based on similar risk ~~components~~characteristics in estimating expected credit losses. Credit losses for accounts receivable are based on the roll-rate method, and ~~requires~~the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date. The Company has established a provision matrix based on historical credit loss experience, adjusted for forward-looking factors and the economic environment. The Company believes the most relevant forward-looking factors are economic environment, gross domestic product, inflation rates and unemployment rates for each of the countries in which the Company or its customers operate, and accordingly the Company adjusts historical loss rates based on expected changes in ~~fair~~these factors. At every reporting date, observed historical default rates are updated to reflect changes in the Company’s forward-looking estimates.

Credit losses for other financial assets and deferred billings are based on the discounted cash flow (“DCF”) method. Under the DCF method, the allowance for credit losses reflects the difference between the contractual cash flows due in accordance with the contract and the present value of ~~hedging instruments~~the cash flows expected to be ~~presented in~~collected. The expected cash flows are discounted at the ~~same income statement line as~~effective interest rate of the ~~hedged item. The ASU also amends~~financial asset. Such allowances are based on the ~~presentation and disclosure requirements for~~credit losses expected to arise over the ~~effect~~life of ~~hedge accounting. The ASU must be adopted using a modified retrospective approach with a cumulative effect adjustment recorded to~~ the ~~opening balance~~asset which includes consideration of ~~retained earnings~~prepayments based on the Company’s expectation as of the ~~initial application~~balance sheet date. ~~The ASU~~

A financial asset is ~~effective for~~written off when it is deemed uncollectible and there is no reasonable expectation of recovering the ~~Company beginning January 1, 2019, including interim periods~~contractual cash flows. Expected recoveries of amounts previously written off, not to exceed the aggregate amounts previously written off, are included in determining the ~~fiscal year 2019. Early adoption is permitted. The Company is in~~allowance at each reporting period.

Credit losses are presented as a credit loss expense within “Selling, general and administrative expenses.” Subsequent recoveries of amounts previously written off are credited against the ~~process~~same line item.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

2. Summary of ~~assessing the impact of this ASU on its consolidated results of operations, cash flows, financial position and disclosures.~~

(f)significant accounting policies (Continued)

(k) Reclassification

Certain reclassifications have been made in the consolidated financial statements of prior periods to conform to the classification used in the current period. The impact of such reclassifications on the consolidated financial statements is not material.

(l) Impairment of long-lived assets

Long-lived assets, including certain intangible assets, to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Such assets are required to be tested for impairment if the carrying amount of the assets is higher than the future undiscounted net cash flows expected to be generated by the assets. The impairment amount to be recognized is measured as the amount by which the carrying value of the assets exceeds their fair value. The Company determines fair value by using a discounted cash flow approach.

(m) Recently issued accounting pronouncements

The authoritative bodies release standards and guidance which are assessed by management for impact on the Company’s consolidated financial statements.

The following recently released accounting standard has not yet been adopted by the Company:

In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance.” This ASU improves financial reporting by requiring disclosures that increase the transparency of transactions with governments. The ASU is effective for the Company for annual periods, beginning December 15, 2021. Early adoption is permitted. The Company is in the process of assessing the impact of this ASU on its consolidated results of operations, cash flows, financial position and disclosures.

3. Business acquisitions

~~Certain acquisitions~~

(a) ~~TandemSeven, Inc.~~

Hoodoo Digital, LLC

On ~~September 5, 2017,~~December 31, 2021, the Company acquired 100% of the outstanding ~~equity interest~~equity/limited liability company interests in ~~TandemSeven, Inc. (“TandemSeven”),~~Hoodoo Digital, LLC, a ~~Massachusetts corporation,~~Utah limited liability company, for ~~estimated~~ total purchase consideration of ~~$35,720, subject to adjustment for closing date working capital and indebtedness.~~$66,722. This amount ~~includes~~represents cash consideration of ~~$31,866,~~$64,439, net of cash acquired of ~~$3,854, and~~$2,283. The total purchase consideration paid by the Company to the sellers on the closing date was $67,695, resulting in a ~~preliminary adjustment for working capital and indebtedness. In addition, the~~ recoverable of $973 as of March 31, 2022. The Company is evaluating adjustments related to certain ~~tax positions,~~income and other taxes, which, when determined, may result in the recognition of additional assets ~~and~~or liabilities as of the acquisition date. The measurement period will not exceed one year from the acquisition date. ~~As of September 30, 2017,~~This acquisition furthers the ~~total consideration paid by~~Company's strategy to fuse experience and process innovation to help clients drive end-to-end digital transformation. Hoodoo Digital’s expertise with Adobe Experience Manager and other Adobe applications expands the ~~Company to the sellers was $34,806, resulting in a payable of $914. TandemSeven’s focus on improving the design of customer experiences complements the Company’s~~Company's existing capabilities ~~aimed at transforming clients’ processes end-to-end.~~

to provide clients with an end-to-end solution that integrates digital content, e-commerce, data analytics, and marketing operations.

In connection with ~~the~~this acquisition, ~~of TandemSeven,~~ the Company recorded ~~$2,000~~$16,200 in customer-related intangibles ~~$1,700~~and $2,400 in marketing-related intangibles ~~and $800 in technology-related intangible assets,~~ which have a weighted average amortization period of ~~two~~five years. Goodwill arising from the acquisition ~~amounted~~amounting to ~~$25,298, which~~$44,346 has been allocated using a relative fair value allocation method to each of the Company’s reporting segments as follows: to the ~~Company’s India reporting unit~~Banking, Capital Markets and Insurance ("BCMI") segment in the amount of $4,179, to the Consumer Goods, Retail, Life Sciences and Healthcare ("CGRLH") segment in the amount of $7,053 and to the High Tech, Manufacturing and Services ("HMS") segment in the amount of $33,114.

Goodwill arising from this acquisition is deductible for income tax purposes. The goodwill represents primarily the acquired ~~design expertise, operating synergies~~capabilities and other benefits expected to result from combining the acquired operations with ~~those of~~ the ~~Company.~~

Company’s existing operations.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

3. Business acquisitions (Continued)

Acquisition-related costs of ~~$932~~$1,177 have been included in selling, general and administrative expenses as incurred. In connection with the ~~transaction,~~acquisition, the Company also acquired certain assets with a value of ~~$7,388~~$5,629 and assumed certain liabilities amounting to ~~$1,206.~~$1,852. The agreement with the sellers provides a full indemnity to the Company for all pre-closing income and non-income tax liabilities up to a maximum of the purchase consideration, including interest and penalties thereon. The Company ~~also~~would not be financially or materially affected by any liabilities that may arise from such exposures.

Accordingly, the Company recognized ~~a net deferred tax liability~~an indemnification asset of ~~$260.~~$278 based on the information that was available at the date of the acquisition, which is included in the assets taken over by the Company. The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition.

(b) ~~OnSource, LLC~~

Enquero Inc

On ~~July 18, 2017,~~December 31, 2020, the Company acquired 100% of the outstanding equity ~~interest~~interests in ~~OnSource, LLC (“OnSource”),~~Enquero Inc, a ~~Massachusetts limited liability company,~~California corporation, and certain affiliated entities in India, the Netherlands and Canada (collectively referred to as “Enquero”) for ~~estimated~~ total purchase consideration of ~~$22,996, subject to adjustment for closing date working capital, indebtedness and certain transaction expenses incurred by OnSource in connection with closing.~~$148,797. This amount ~~includes~~represents cash consideration of ~~$22,959,~~$137,166, net of cash acquired of ~~$37, and a preliminary adjustment for working capital and net debt.~~$11,631. The total purchase consideration paid by the Company to the sellers ~~is $23,043, resulting in a receivable~~on the closing date was $141,938. No portion of ~~$47, which~~the purchase consideration is outstanding as of ~~September 30, 2017.~~March 31, 2022. This acquisition ~~brings digital capabilities to~~increased the scale and depth of the Company’s ~~insurance service offerings.~~

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share~~ data and ~~share count)~~

~~3. Business acquisitions (Continued)~~

analytics capabilities and enhanced the Company’s ability to accelerate the digital transformation journeys of its clients through cloud technologies and advanced data analytics.

In connection with ~~the~~this acquisition, ~~of OnSource,~~ the Company recorded ~~$794~~$49,000 in customer-related intangibles, ~~$936~~$9,500 in marketing-related intangibles and ~~$1,150~~$1,400 in technology-related intangibles, which have a weighted average amortization period of four years. Goodwill arising from the acquisition ~~amounted~~amounting to ~~$19,729, which~~$87,874 has been allocated using a relative fair value allocation method to each of the Company’s reporting segments as follows: to the ~~Company’s India reporting unit~~BCMI segment in the amount of $2,594, to the CGRLH segment in the amount of $22,548 and to the HMS segment in the amount of $62,732. The goodwill arising from this acquisition is not deductible for income tax purposes. The goodwill represents primarily the acquired capabilities ~~operating synergies~~ and other benefits expected to result from combining the acquired operations with ~~those of~~ the ~~Company.~~

Company’s existing operations.

Acquisition-related costs of ~~$1,334~~$1,590 have been included in selling, general and administrative expenses as incurred. In connection with the transaction, the Company also acquired certain assets with a value of ~~$1,180 and~~$32,879, assumed certain liabilities amounting to ~~$793.~~$17,232 and recognized a net deferred tax liability of $14,343. The agreement with the sellers provides a full indemnity to the Company for all pre-closing income and non-income tax liabilities up to a maximum of the purchase consideration, including interest and penalties thereon. The Company would not be financially or materially affected by any liabilities that may arise from such exposures.

Accordingly, the Company recognized an indemnification asset of $5,968 based on the information that was available at the date of the acquisition, which is included in the assets taken over by the Company. The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition.

SomethingDigital.Com LLC

On ~~July 18, 2017,~~October 5, 2020, the Company acquired ~~from Birlasoft (India) Limited,~~100% of the outstanding equity/limited liability company interests in SomethingDigital.Com LLC, a New York limited liability company, ~~incorporated~~ under the Indian Companies Act, 1956, Birlasoft Inc., a Delaware corporation, and Birlasoft (UK) Limited, a company incorporated in England and Wales (collectively referred to as “Birlasoft”) certain assets comprising a portionfor total purchase consideration of ~~Birlasoft’s IT business.~~$57,451. This amount represents cash consideration of $56,073, net of cash acquired of $1,378. The total purchase consideration paid by the Company to ~~Birlasoft~~the sellers on the closing date was $57,704, resulting in a recoverable of $253. No portion of the purchase consideration is ~~$16,309.~~ outstanding as of March 31, 2022.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

3. Business acquisitions (Continued)

This acquisition ~~expands~~supported the Company’s strategy to integrate experience and process innovation to help clients on their digital transformation journeys and expanded on the Company’s existing experience capabilities to support end-to-end digital commerce solutions, both business-to-business and business-to-consumer. Additionally, this acquisition expanded the Company’s capabilities into Magento Commerce, which powers Adobe Commerce Cloud, and Shopify Plus, a cloud-based e-commerce platform for ~~its clients in the healthcare and aviation industries.~~

high volume merchants.

In connection with ~~the transaction,~~this acquisition, the Company recorded ~~$8,600~~$11,900 in customer-related intangibles and $3,500 in marketing-related intangibles which have a weighted average amortization period of ~~three~~four years. Goodwill arising from the acquisition ~~amounted~~amounting to ~~$9,671, which~~$36,926 has been allocated using a relative fair value allocation method to 2 of the Company’s reporting segments as follows: to the ~~Company’s IT services reporting unit~~CGRLH segment in the amount of $30,373 and to the HMS segment in the amount of $6,553. Of the total goodwill arising from this acquisition, $35,084 is deductible for income tax purposes.

The goodwill represents primarily the acquired capabilities ~~operating synergies~~ and other benefits expected to result from combining the acquired operations with those of the ~~Company.~~

Company’s existing operations.

Acquisition-related costs of ~~$97~~$1,060 have been included in selling, general and administrative expenses as incurred. ~~Through this~~In connection with the transaction, the Company ~~has~~also acquired certain assets with a value of ~~$1,381 and~~$9,538, assumed certain liabilities amounting to ~~$3,343.~~$4,494 and recognized a net deferred tax asset of $81. The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition.

(d) ~~Image processing business of Fiserv Solutions of Australia Pty Ltd.~~

Rightpoint Consulting, LLC

On ~~May 11, 2017,~~November 12, 2019, the Company acquired 100% of the ~~image processing business of Fiserv Solutions of Australia Pty Limited~~outstanding equity/limited liability company interests in Rightpoint Consulting, LLC, an Illinois limited liability company, and certain affiliated entities in the United States and India (collectively referred to as “Rightpoint”) for ~~estimated~~ total purchase consideration of ~~$18,990, subject to adjustment for closing date working capital, value transfer and net debt.~~$270,669. This amount includes ~~a preliminary adjustment for closing date working capital, value transfer and~~cash consideration of $268,170, net ~~debt. As~~ of ~~September 30, 2017, the~~cash acquired of $2,499. The total purchase consideration paid by the Company to the sellers ~~is $21,301,~~on the closing date was $248,470, resulting in a ~~receivable~~payable of ~~$2,311.~~$22,199. $5,406 of the total purchase consideration remains payable as of March 31, 2022. This acquisition ~~strengthens~~expanded the Company’s ~~financial services portfolio~~capabilities in improving customer experience.

The securities purchase agreement between the Company and ~~expands its Australia footprint.~~

the selling equity holders of Rightpoint provided certain of the selling equity holders the option to elect to either (a) receive 100% consideration in cash at the closing date for their limited liability company interests and vested options or (b) “roll over” and retain 25% of their Rightpoint limited liability company interests and vested options for a three-year rollover period and receive cash consideration at closing for the remaining 75% of their Rightpoint limited liability company interests and vested options. Certain selling equity holders elected to receive deferred, variable earn-out consideration with an estimated value of $21,500 over the rollover period of three years.

The amount of deferred earn-out consideration ultimately payable by the Company to the selling equity holders of Rightpoint will be based on the future revenue multiple of the acquired business. Additionally, under the purchase agreement the selling equity holders are obligated to sell their rollover interests to the Company. Accordingly, the Company has obtained control over 100% of the outstanding equity/limited liability company interests of Rightpoint as of November 12, 2019. See Note 5, “Fair value measurements,” for additional details.

In connection with ~~the transaction,~~this acquisition, the Company recorded ~~$17,400~~$46,000 in customer-related intangibles ~~$1,806~~and $29,000 in ~~technology-related intangibles and $100 in other~~marketing-related intangibles which have a weighted average amortization period of ~~six~~five years. Goodwill arising from the acquisition ~~amounted~~amounting to ~~$5,416, which~~$177,181 has been allocated using a relative fair value allocation method to each of the Company’s reporting segments as follows: to the ~~Company’s India reporting unit~~BCMI segment in the amount of $16,983, to the CGRLH segment in the amount of $42,993 and to the HMS segment in the amount of $117,205. Of the total goodwill arising from this acquisition, $91,929 is ~~not~~ deductible for income tax purposes. The goodwill represents primarily the acquired capabilities ~~operating synergies~~ and other benefits expected to result from combining the acquired operations with those of the Company.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

3. Business acquisitions (Continued)

Acquisition-related costs of ~~$385~~$7,385 have been included in selling, general and administrative expenses as incurred. ~~Through this~~In connection with the transaction, the Company ~~has~~also acquired certain assets with a value of ~~$5,144,~~$39,140, assumed certain liabilities amounting to ~~$5,625,~~$22,295 and recognized a net deferred tax liability of ~~$5,250.~~$1,643. The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition.

4. Accounts receivable, net of allowance for credit losses

The following table provides details of the Company’s allowance for credit losses on accounts receivable:


	Year ended December 31, 2021		Three months ended March 31, 2022
Opening balance as of January 1	$	27,707	$	24,329
Additions due to acquisitions	—		—
Additions charged/reversal released to cost and expense	910		(24)
Deductions/effect of exchange rate fluctuations	(4,288)		(2,367)
Closing balance	$	24,329	$	21,938

Accounts receivable were $912,071 and $993,299, and allowances for credit losses were $24,329 and $21,938, resulting in net accounts receivable balances of $887,742 and $971,361as of December 31, 2021 and March 31, 2022, respectively.

In addition, deferred billings were $48,071 and $48,613 and allowances for credit losses on deferred billings were $3,711 and $3,272, resulting in net deferred billings balances of $44,360 and $45,341 as of December 31, 2021 and March 31, 2022, respectively.

During the three months ended March 31, 2021 and 2022 the Company recorded a release of $541 and $439, respectively, to cost and expense on account of credit losses on deferred billings. Deferred billings, net of related allowances for credit losses, are included under “other assets” in the Company's consolidated balance sheet as of December 31, 2021 and March 31, 2022.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

~~3. Business acquisitions (Continued)~~

~~(e)~~ ~~BrightClaim LLC and associated companies~~

On May 3, 2017, the Company acquired 100% of the outstanding equity interest in each of BrightClaim LLC, a Delaware limited liability company, BrightServe LLC, a Georgia limited liability company, National Vendor LLC, a Delaware limited liability company, and BrightClaim Blocker, Inc., a Delaware corporation (collectively referred to as “BrightClaim”) for total purchase consideration of $56,461, subject to adjustment for closing date working capital, indebtedness and certain transaction expenses incurred by BrightClaim in connection with closing. This amount includes cash consideration of $52,395, net of cash acquired of $4,002, and an adjustment for working capital and net debt. The total consideration paid by the Company to the sellers is $56,496. This acquisition enhances the Company’s breadth and depth of service offerings for clients in the insurance industry. During the quarter ended September 30, 2017, the Company recorded measurement period adjustments that resulted in a $64 increase in the purchase consideration as a result of an adjustment to closing date working capital and net debt. The adjustments included an increase of $156 in assets acquired, an increase of $156 in liabilities assumed and a corresponding impact on goodwill of $64. This resulted in a receivable of $35, which is outstanding as of September 30, 2017. These measurement period adjustments did not have a significant impact on the Company’s consolidated statements of income, balance sheets or cash flows.

In connection with the acquisition of BrightClaim, the Company recorded $8,000 in customer-related intangibles, $3,200 in marketing-related intangibles, $2,200 in technology-related intangibles and $200 in other intangibles, which have a weighted average amortization period of four years. Goodwill arising from the acquisition amounted to $42,638, which has been allocated to the Company’s India reporting unit and is partially deductible for tax purposes. The goodwill represents primarily the capabilities, operating synergies and other benefits expected to result from combining the acquired operations with those of the Company.

Acquisition-related costs of $1,563 have been included in selling, general and administrative expenses as incurred. In connection with the transaction, the Company also acquired certain assets with a value of $10,367, assumed certain liabilities amounting to $7,415, and recognized a net deferred tax liability of $2,728. The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition.

~~(f) RAGE Frameworks, Inc.~~

On April 13, 2017, the Company acquired 100% of the outstanding equity interest in RAGE Frameworks, Inc. (“RAGE”), a Delaware corporation, for estimated total consideration of $125,089, subject to adjustment for closing date working capital and indebtedness. This amount includes cash consideration of $124,149, net of cash acquired of $1,605, and a preliminary adjustment for working capital and indebtedness. In addition, the Company is evaluating certain tax positions which, when determined, may result in the recognition of additional assets and liabilities as of the acquisition date. The measurement period will not exceed one year from the acquisition date. As of September 30, 2017, the total consideration paid by the Company to the sellers was $125,754, resulting in a receivable of $548. This acquisition enhances the Company’s digital and artificial intelligence capabilities by adding knowledge-based automation technology and services.

In connection with the acquisition of RAGE, the Company recorded $1,600 in customer-related intangibles, $600 in marketing-related intangibles, $12,400 in technology-related intangible assets and $100 in other intangible assets, which have a weighted average amortization period of seven years. Goodwill arising from the acquisition amounted to $105,114, which has been allocated to the Company’s India reporting unit and is not deductible for tax purposes. The goodwill represents primarily the acquired digital and artificial intelligence capabilities, operating synergies and other benefits expected to result from combining the acquired operations with those of the Company.

Acquisition-related costs of $881 have been included in selling, general and administrative expenses as incurred. In connection with the transaction, the Company also acquired certain assets with a value of $13,836 and assumed certain liabilities amounting to $9,654. The Company also recognized a net deferred tax asset of $1,094. The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition.

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~3. Business acquisitions (Continued)~~

~~(g) LeaseDimensions, Inc.~~

On February 15, 2017, the Company acquired 100% of the outstanding equity interest in LeaseDimensions, Inc. (“LeaseDimensions”), an Oregon corporation, for estimated total consideration of $11,626, subject to adjustment for closing date working capital and net debt. This amount includes the estimated fair value of contingent earn-out consideration, cash consideration of $9,089, net of cash acquired of $217, and a preliminary adjustment for working capital and net debt. The total consideration paid by the Company to the sellers was $9,454, resulting in a receivable of $148, which is outstanding as of September 30, 2017. The purchase agreement also provides for contingent earn-out consideration ranging from $0 to $3,000, payable by the Company to the sellers based on the future performance of the business relative to the thresholds specified in the earn-out calculation. This acquisition enhances the Company’s capabilities in commercial lending and leasing.

In connection with the transaction, the Company recorded $2,400 in customer-related intangibles and $1,000 in marketing-related intangibles, which have a weighted average amortization period of three years. Goodwill arising from the acquisition amounted to $8,307, which has been allocated to the Company’s Americas reporting unit and is not deductible for tax purposes. The goodwill represents primarily the capabilities, operating synergies and other benefits expected to result from combining the acquired operations with those of the Company.

Acquisition-related costs of $422 have been included in selling, general and administrative expenses as incurred. Through this transaction, the Company acquired assets with a value of $2,277, assumed liabilities amounting to $1,038, and recognized a net deferred tax liability of $1,320. The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition.

~~(h) Endeavour Software Technologies Private Limited~~

On April 13, 2016, the Company acquired 100% of the outstanding equity interest in Endeavour Software Technologies Private Limited (“Endeavour”), an Indian private limited company, for total consideration of $14,788. This amount includes the estimated fair value of the contingent earn-out consideration, cash consideration of $10,345, net of cash acquired of $2,373, and an adjustment for working capital and net debt. Of this amount, $101 was paid by the Company to one of the sellers during the quarter ended September 30, 2017. During the quarter ended March 31, 2017, the Company recorded a measurement period adjustment that resulted in a $346 increase in the purchase consideration as a result of an adjustment to closing date working capital and net debt. The adjustments included an increase of $161 in assets acquired, a decrease of $118 in liabilities assumed and a corresponding impact on goodwill of $67. These measurement period adjustments did not have a significant impact on the Company’s consolidated statements of income, balance sheets or cash flows. This acquisition enhances the Company’s digital capabilities by adding critical end-to-end mobility services.

In connection with the transaction, the Company recorded $800 in customer-related intangibles, $900 in marketing-related intangibles and $950 in other intangible assets, which have a weighted average amortization period of three years. Goodwill arising from the acquisition amounted to $8,936, which has been allocated to the Company’s India reporting unit and is not deductible for tax purposes. The goodwill represents primarily the capabilities in end-to-end mobility services, operating synergies and other benefits expected to result from combining the acquired operations with those of the Company. In connection with the transaction, the Company also acquired certain assets with a value of $5,854 and assumed certain liabilities amounting to $1,735.

~~(i) Strategic Sourcing Excellence Limited~~

On January 8, 2016, the Company acquired 51% of the outstanding equity interest in Strategic Sourcing Excellence LLC (“SSE”), a Delaware limited liability company. The total consideration paid by the Company to the selling equity holders for the acquired interest in SSE was $14,541. This amount includes the fair value of earn-out consideration, cash consideration of $2,550, and an adjustment for working capital, transaction expenses and indebtedness. During the quarter ended December 31, 2016, the Company recorded a measurement period adjustment that resulted in a $51 increase in the purchase consideration through the recognition of $69 in current assets and $16 in non-current assets, with a corresponding impact on goodwill of $34. These measurement period adjustments did not have a significant impact on the Company’s consolidated statements of income, balance sheets or cash flows in any period. The equity purchase agreement between the Company and the selling equity holders of SSE also provides for contingent earn-out consideration of up to $20,000, payable by the Company to the selling equity holders based on the future performance of the acquired business relative to the thresholds specified in the earn-out calculation. Up to $9,800 of the total potential earn-out consideration, representing the selling equity holders’ 49% interest in SSE, is payable only if either the put or call option, each as described below, is exercised.

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~3. Business acquisitions (Continued)~~

The equity purchase agreement grants the Company a call option to purchase the remaining 49% equity interest in SSE, which option the Company has the right to exercise between January 1, 2018 and January 31, 2018. If the Company does not exercise its call option during such period, the selling equity holders have the right to exercise a put option between March 1, 2018 and April 30, 2018 to require the Company to purchase their 49% interest in SSE at a price ranging from $2,450 to $2,950. This acquisition enhances the Company’s sourcing and procurement consulting domain expertise.

Acquisition-related costs of $164 have been included in selling, general and administrative expenses as incurred. Through this transaction, the Company acquired assets with a value of $412 and assumed liabilities amounting to $617. The results of operations of the acquired business, the fair value of the acquired assets and assumed liabilities, and redeemable non-controlling interest are included in the Company’s Consolidated Financial Statements with effect from the date of the acquisition.

In connection with the transaction, the Company recorded $300 in customer-related intangible assets with an amortization period of five years. Goodwill arising from the acquisition amounted to $14,445, which has been allocated to the Company’s India reporting unit and is deductible for tax purposes. The goodwill represents future economic benefits the Company expects to derive from its expanded presence in the sourcing and procurement consulting domains, operating synergies and other anticipated benefits of combining the acquired operations with those of the Company.

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~4. Cash and cash equivalents~~

~~Cash and cash equivalents as of December 31, 2016 and September 30, 2017 are set out in the table below:~~

As of December 31,

As of September 30,

2016

2017

Cash and other bank balances

422,623

440,055

Total

$
422,623

$
440,055

5. ~~Accounts receivable, net of reserve for doubtful receivables~~

~~The following table provides details of the Company’s reserve for doubtful receivables:~~

Year ended

Nine months ended

December 31, 2016

September 30, 2017

Opening balance as of January 1

$
11,530

$
15,519

Additions due to acquisitions

-

235

Additions charged to cost and expense

7,282

4,871

Deductions/effect of exchange rate fluctuations

(3,293
)

(49
)
Closing balance

$
15,519

$
20,576

Accounts receivable were $630,784 and $691,268, and the reserves for doubtful receivables were $15,519 and $20,576, resulting in net accounts receivable balances of $615,265 and $670,692, as of December 31, 2016 and September 30, 2017, respectively. In addition, accounts receivable due after one year of $3,272 and $1,880 as of December 31, 2016 and September 30, 2017, respectively, are included under other assets in the Consolidated Balance Sheets.

Accounts receivable from related parties were $2,490 and $42 as of December 31, 2016 and September 30, 2017, respectively. There are no reserves for doubtful receivables in respect of amounts due from related parties.

6. Fair value measurements

The Company measures certain financial assets and liabilities, including derivative instruments, at fair value on a recurring basis. The fair value measurements of these financial assets and liabilities were determined using the following inputs as of December 31, ~~2016~~2021 and ~~September 30, 2017:~~

March 31, 2022:

As of December 31, 2016

Fair Value Measurements at Reporting Date Using

Quoted Prices in
Active Markets for
Identical Assets

Significant Other
Observable Inputs

Significant Other
Unobservable
Inputs

Total

(Level 1)

(Level 2)

(Level 3)

Assets

Derivative instruments (Note a, c)

$
55,386

$
—

$
55,386

$
—

Total

$
55,386

$
—

$
55,386

$
—

Liabilities

Earn-out consideration (Note b, d)

$
22,435

$
—

$
—

$
22,435

Derivative instruments (Note b, c)

$
17,353

$
—

$
17,353

$
—

Total

$
39,788

$
—

$
17,353

$
22,435

Redeemable non-controlling interest (Note e)

$
4,520

$
—

$
—

$
4,520


	As of December 31, 2021
	Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Derivative instruments (Note a, c)	$	34,070	$	—	$	34,070	$	—
Deferred compensation plan assets (Note a, e)	38,584		—		—		38,584
Total	$	72,654	$	—	$	34,070	$	38,584
Liabilities
Earn-out consideration (Note b, d)	$	5,406	$	—	$	—	$	5,406
Derivative instruments (Note b, c)	15,254		—		15,254		—
Deferred compensation plan liability (Note b, f)	38,007		—		—		38,007
Total	$	58,667	$	—	$	15,254	$	43,413


	As of March 31, 2022
	Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Derivative instruments (Note a, c)	$	31,857	$	—	$	31,857	$	—
Deferred compensation plan assets (Note a, e)	43,320		—		—		43,320
Total	$	75,177	$	—	$	31,857	$	43,320
Liabilities
Earn-out consideration (Note b, d)	$	5,406	$	—	$	—	$	5,406
Derivative instruments (Note b, c)	13,189		—		13,189		—
Deferred compensation plan liability (Note b, f)	42,554		—		—		42,554
Total	$	61,149	$	—	$	13,189	$	47,960

(a)Derivative assets are included in “prepaid expenses and other current assets” and “other assets.” Deferred compensation plan assets are included in “other assets” in the consolidated balance sheets.

(b)Included in “accrued expenses and other current liabilities” and “other liabilities” in the consolidated balance sheets.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

5. Fair value measurements (Continued)

As of September 30, 2017

Fair Value Measurements at Reporting Date Using

Quoted Prices in
Active Markets for
Identical Assets

Significant Other
Observable Inputs

Significant Other
Unobservable
Inputs

Total

(Level 1)

(Level 2)

(Level 3)

Assets

Derivative instruments (Note a, c)

$
55,080

$
—

$
55,080

$
—

Total

$
55,080

$
—

$
55,080

$
—

Liabilities

Earn-out consideration (Note b, d)

$
17,999

$
—

—

$
17,999

Derivative instruments (Note b, c)

$
27,763

$
—

$
27,763

$
—

Total

$
45,762

$
—

$
27,763

$
17,999

Redeemable non-controlling interest (Note e)

$
3,839

$
—

$
—

$
3,839

~~(a)~~

~~Included in prepaid expenses and other current assets and other assets in the consolidated balance sheets.~~

~~(b)~~

~~Included in accrued expenses and other current liabilities and other liabilities in the consolidated balance sheets.~~

~~(c)~~

The Company values its derivative instruments based on market observable inputs, including both forward and spot prices for the relevant currencies and interest rate indices for relevant interest rates. The quotes are taken from an independent market database.

(c)The Company values its derivative instruments based on market observable inputs, including both forward and spot prices for the relevant currencies and interest rate indices for relevant interest rates. The quotes are taken from an independent market database.

~~(d)~~

The fair value of earn-out consideration, calculated as the present value of expected future payments to be made to the sellers of acquired businesses, was derived by estimating the future financial performance of the acquired businesses using the earn-out formula and performance targets specified in each purchase agreement and adjusting the result to reflect the Company’s estimate of the likelihood of achievement of such targets. Given the significance of the unobservable inputs, the valuations are classified in level 3 of the fair value hierarchy.

~~(e)~~

The Company’s estimate of the fair value of redeemable non-controlling interest is based on unobservable inputs considering the assumptions that market participants would make in pricing the obligation. Given the significance of the unobservable inputs, the valuation is classified in level 3 of the fair value hierarchy. See Note 3—Business Acquisitions.

(d)The fair value of earn-out consideration, calculated as the present value of expected future payments to be made to the sellers of acquired businesses, was derived by estimating the future financial performance of the acquired businesses using the earn-out formula and performance targets specified in each purchase agreement and adjusting the result to reflect the Company’s estimate of the likelihood of achievement of such targets. Given the significance of the unobservable inputs, the valuations are classified in level 3 of the fair value hierarchy.

(e)Deferred compensation plan assets consist of life insurance policies held under a Rabbi Trust. Assets held in the Rabbi Trust are valued based on the cash surrender value of the insurance contract, which is determined based on the fair value of the underlying assets included in the insurance portfolio and are therefore classified within level 3 of the fair value hierarchy.

(f)The fair value of the deferred compensation plan liability is derived based on the fair value of the underlying assets in the insurance policies and is therefore classified within level 3 of the fair value hierarchy.

The following table provides a roll-forward of the fair value of earn-out consideration categorized as level 3 in the fair value hierarchy for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2021 and ~~2017:~~

2022:

Three months ended
September 30,

Nine months ended
September 30,

2016

2017

2016

2017

Opening balance

$
18,438

$
23,274

$
22,820

$
22,435

Earn-out consideration payable in connection with acquisitions

4,360

-

14,550

2,320

Payments of earn-out consideration

(357
)

(5,756
)

(1,509
)

(7,239
)
Changes in fair value of earn-out consideration (note a)

-

11

(14,997
)

(1,414
)
Others (note b)

545

470

2,122

1,897

Ending balance

$
22,986

$
17,999

$
22,986

$
17,999


	Three months ended March 31,
	2021		2022
Opening balance	$	8,272	$	5,406
Closing balance	$	8,272	$	5,406

The following table provides a roll-forward of the fair value of deferred compensation plan assets categorized as level 3 in the fair value hierarchy for the three months ended March 31, 2021 and 2022:


	Three months ended March 31,
	2021		2022
Opening balance	$	26,832	$	38,584
Additions (net of redemption)	5,014		7,088
Change in fair value of deferred compensation plan assets (Note a)	861		(2,352)
Closing balance	$	32,707	$	43,320

(a)Changes in the fair value of ~~earn-out consideration~~plan assets are reported in ~~other operating (income) expense, net~~“other income (expense), net” in the consolidated statements of income.

(b) Interest expense is included in interest income (expense), net and the impact of changes in foreign exchange is reported in foreign exchange gains (losses), net in the consolidated statements of income. The cumulative translation adjustment is reported as a component of other comprehensive income (loss).

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

5. Fair value measurements (Continued)

The following table provides a roll-forward of the fair value of deferred compensation liabilities categorized as level 3 in the fair value hierarchy for the three months ended March 31, 2021 and 2022:


	Three months ended March 31,
	2021		2022
Opening balance	$	26,390	$	38,007
Additions (net of redemption)	5,014		6,913
Change in fair value of deferred compensation plan liabilities (Note a)	803		(2,366)
Closing balance	$	32,207	$	42,554

(a)Changes in the fair value of deferred compensation plan liabilities are reported in “selling, general and administrative expenses” in the consolidated statements of income.

6. Derivative financial instruments

The Company is exposed to the risk of rate fluctuations on its foreign currency assets and liabilities and on foreign currency denominated forecasted cash ~~flows.~~flows and interest rates. The Company has established risk management policies, including the use of derivative financial instruments to hedge foreign currency assets and liabilities, foreign currency denominated forecasted cash flows and interest rate risk. These derivative financial instruments are largely deliverable, ~~and~~ non-deliverable forward foreign exchange contracts, treasury rate locks and interest rate swaps. The Company enters into these contracts with counterparties that are banks or other financial institutions, and the Company considers the risk of non-performance by such counterparties not to be material. The forward foreign exchange contracts and interest rate swaps mature during a period of up to 5145 months and the forecasted transactions are expected to occur during the same period.

The following table presents the aggregate notional principal amounts of outstanding derivative financial instruments together with the related balance sheet exposure:

Notional principal amounts
(note a)

Balance sheet exposure asset
(liability) (note b)

As of December 31,
2016

As of September 30,
2017

As of December 31,
2016

As of September 30,
2017

Foreign exchange forward contracts denominated in:

United States dollars (sell) Indian rupees (buy)

$
1,108,400

$
1,274,026

$
6,669

$
30,464

United States dollars (sell) Mexican peso (buy)

9,120

2,280

(187
)

362

United States dollars (sell) Philippines peso (buy)

70,050

66,800

(1,036
)

(1,635
)
Euro (sell) United States dollars (buy)

138,613

161,783

9,180

(1,760
)
Pound sterling (buy) United States dollars (sell)

-

16,077

-

40

Euro (sell) Romanian leu (buy)

29,805

36,662

(152
)

(481
)
Japanese yen (sell) Chinese renminbi (buy)

77,267

71,832

(742
)

306

Pound sterling (sell) United States dollars (buy)

104,142

94,728

14,228

(605
)
Australian dollars (sell) United States dollars (buy)

114,412

145,679

2,328

(5,934
)
Interest rate swaps (floating to fixed)

456,810

438,290

7,746

6,560

38,034

27,317

~~(a)~~

Notional amounts are key elements of derivative financial instrument agreements but do not represent the amount exchanged by counterparties and do not measure the Company’s exposure to credit or market risks. However, the amounts exchanged are based on the notional amounts and other provisions of the underlying derivative financial instrument agreements.

~~(b)~~

~~Balance sheet exposure is denominated in U.S. dollars and denotes the mark-to-market impact of the derivative financial instruments on the reporting date.~~


	Notional principal amounts (note a)				Balance sheet exposure asset (liability) (note b)
	As of December 31, 2021		As of March 31, 2022		As of December 31, 2021		As of March 31, 2022
Foreign exchange forward contracts denominated in:
United States Dollars (sell) Indian Rupees (buy)	$	1,348,600	$	1,498,700	$	26,247	$	17,014
United States Dollars (sell) Mexican Peso (buy)	23,750		20,500		140		1,022
United States Dollars (sell) Philippines Peso (buy)	75,600		73,200		(2,215)		(2,744)
Euro (sell) United States Dollars (buy)	120,994		123,884		2,634		3,368
Singapore Dollars (buy) United States Dollars (sell)	3,655		3,655		65		48
Euro (sell) Romanian Leu (buy)	47,506		45,214		(233)		(79)
Japanese Yen (sell) Chinese Renminbi (buy)	10,440		7,400		202		656
United States Dollars (sell) Chinese Renminbi (buy)	45,000		33,750		120		492
Pound Sterling (sell) United States Dollars (buy)	49,031		40,738		545		1,285
United States Dollars (sell) Hungarian Font (buy)	39,000		33,500		(2,174)		(1,484)
Hungarian Font (Sell) Euro (buy)	2,828		2,791		(17)		67
Australian Dollars (sell) Indian Rupees (buy)	97,053		87,736		1,234		(1,969)
Interest rate swaps (floating to fixed)	460,135		453,163		(7,732)		992
					$	18,816	$	18,668

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

6. Derivative financial instruments (Continued)

(a)Notional amounts are key elements of derivative financial instrument agreements but do not represent the amount exchanged by counterparties and do not measure the Company’s exposure to credit, foreign exchange, interest rate or market risks. However, the amounts exchanged are based on the notional amounts and other provisions of the underlying derivative financial instrument agreements. Notional amounts are denominated in U.S. dollars.

(b)Balance sheet exposure is denominated in U.S. dollars and denotes the mark-to-market impact of the derivative financial instruments on the reporting date.

FASB guidance on derivatives and hedging requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. In accordance with the FASB guidance on derivatives and hedging, the Company designates foreign exchange forward contracts, ~~and~~ interest rate swaps and treasury rate locks as cash flow hedges. Foreign exchange forward contracts are entered into to cover the effects of future exchange rate variability on forecasted revenues and purchases of services, and interest rate swaps and treasury rate locks are entered into to cover interest rate fluctuation risk. In addition to this program, the Company uses derivative instruments that are not accounted for as hedges under the FASB guidance in order to hedge foreign exchange risks related to balance sheet items, such as receivables and intercompany borrowings, that are denominated in currencies other than the Company’s underlying functional currency.

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~7. Derivative financial instruments (Continued)~~

The fair value of the Company’s derivative instruments and their location in the Company’s financial statements are summarized in the table below:


	Cash flow hedges				Non-designated					Cash flow hedges				Non-designated
	As of December 31, 2016		As of September 30, 2017		As of December 31, 2016		As of September 30, 2017			As of December 31, 2021		As of March 31, 2022		As of December 31, 2021		As of March 31, 2022
Assets									Assets
Prepaid expenses and other current assets	$	33,921	$	33,345	$	809	$	883	Prepaid expenses and other current assets	$	16,064	$	17,022	$	3,130	$	867
Other assets	$	20,657	$	20,852	$	—	$	—	Other assets	$	14,876	$	13,968	$	—	$	—

Liabilities									Liabilities
Accrued expenses and other current liabilities	$	4,540	$	12,005	$	237	$	2,522	Accrued expenses and other current liabilities	$	11,408	$	9,105	$	1,090	$	2,606
Other liabilities	$	12,576	$	13,236	$	—	$	—	Other liabilities	$	2,756	$	1,478	$	—	$	—

Cash flow hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain (loss) on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction is recognized in the consolidated statements of income. Gains (losses) on the derivatives, representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness, are recognized in earnings as incurred.

The Company executed a treasury rate lock agreement for $350,000 in connection with future interest payments to be made on its senior notes issued by Genpact Luxembourg S.à r.l. (“Genpact Luxembourg”) and Genpact USA, Inc. (“Genpact USA”), both wholly-owned subsidiaries of the Company, in March 2021 (the “2021 Senior Notes”), and the treasury rate lock was designated as a cash flow hedge. The treasury rate lock agreement was terminated on March 23, 2021 and a deferred gain was recorded in accumulated other comprehensive income and is being amortized to interest expense over the life of the 2021 Senior Notes. The remaining gain to be amortized related to the treasury rate lock agreement as of March 31, 2022 was $652.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

6. Derivative financial instruments (Continued)

In connection with cash flow hedges, the gains (losses) recorded as a component of other comprehensive income (loss) (“OCI”), ~~or OCI,~~ and the related tax effects are summarized below:

Three months ended September 30,

Nine months ended September 30,

2016

2017

2016

2017

Before-tax amount

Tax
(expense) or
benefit

Net of tax amount

Before-tax amount

Tax
(expense) or
benefit

Net of tax amount

Before-tax
amount

Tax
(expense) or
benefit

Net of tax
amount

Before-tax
amount

Tax
(expense) or
benefit

Net of tax amount

Opening balance
$
(30,790
)
$
8,945

$
(21,845
)
$
52,167

$
(19,438
)
$
32,729

$
(30,090
)
$
9,830

$
(20,260
)
$
37,461

$
(13,979
)
$
23,482

Net gains (losses) reclassified into statement of income on completion of hedged transactions

(1,584
)

11

(1,573
)

15,451

(5,716
)

9,735

(7,071
)

1,300

(5,771
)

40,251

(14,815
)

25,436

Changes in fair value of effective portion of outstanding derivatives, net

29,005

(10,806
)

18,199

(7,760
)

2,621

(5,139
)

22,818

(10,402
)

12,416

31,746

(11,937
)

19,809

Gain (loss) on cash flow hedging derivatives, net

30,589

(10,817
)

19,772

(23,211
)

8,337

(14,874
)

29,889

(11,702
)

18,187

(8,505
)

2,878

(5,627
)
Closing balance
$
(201
)
$
(1,872
)
$
(2,073
)
$
28,956

$
(11,101
)
$
17,855

$
(201
)
$
(1,872
)
$
(2,073
)
$
28,956

$
(11,101
)
$
17,855

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~7. Derivative financial instruments (Continued)~~


	Three months ended March 31,
	2021						2022
	Before tax Amount		Tax (Expense) or Benefit		Net of tax Amount		Before tax Amount		Tax (Expense) or Benefit		Net of tax Amount
Opening balance	$	(10,921)	$	1,861	$	(9,060)	$	17,468	$	(3,404)	$	14,064
Net gains (losses) reclassified into statement of income on completion of hedged transactions	2,074		(466)		1,608		648		(151)		497
Changes in fair value of effective portion of outstanding derivatives, net	4,922		(1,233)		3,689		4,239		(869)		3,370
Gain (loss) on cash flow hedging derivatives, net	2,848		(767)		2,081		3,591		(718)		2,873
Closing balance	$	(8,073)	$	1,094	$	(6,979)	$	21,059	$	(4,122)	$	16,937

The gains or losses recognized in other comprehensive income (loss) and their effects on financial performance are summarized below:

Amount of gain (loss)

Amount of gain (loss)

recognized in OCI on

reclassified from OCI into

Derivatives in
derivatives
(effective portion)

Location of gain (loss)
reclassified

statement of income
(effective portion)

Cash Flow
Three months ended

Nine months ended

from OCI into

Three months ended

Nine months ended

Hedging
September 30,

September 30,

statement of income

September 30,

September 30,

Relationships
2016

2017

2016

2017

(effective portion)

2016

2017

2016

2017

Forward foreign exchange contracts
$
28,287

$
(7,779
)

$
26,612

$
33,132

Revenue

$
2,599

$
403

$
8,596

$
6,429

Interest rate swaps

718

19

(3,794
)

(1,386
)

Cost of revenue

(2,823
)

11,666

(11,540
)

26,655

Selling, general and
administrative expenses

(693
)

3,213

(3,073
)

7,368

Interest expense

(667
)

169

(1,054
)

(201
)

$
29,005

$
(7,760
)

$
22,818

$
31,746

$
(1,584
)

$
15,451

$
(7,071
)

$
40,251


Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) recognized in OCI on Derivatives (Effective Portion)				Location of Gain (Loss) reclassified from OCI into Statement of Income (Effective Portion)	Amount of Gain (Loss) reclassified from OCI into Statement of Income (Effective Portion)
	Three months ended March 31,					Three months ended March 31,
	2021		2022			2021		2022
Forward foreign exchange contracts	$	3,083	$	(2,592)	Revenue	$	(145)	$	296
Interest rate swaps	1,023		6,831		Cost of revenue	3,312		1,654
Treasury rate lock	816		—		Selling, general and administrative expenses	901		551
					Interest expense	(1,994)		(1,853)
	$	4,922	$	4,239		$	2,074	$	648

~~Gain (loss)~~

There were no gains (losses) recognized in the statement of income on the ineffective portion of derivatives and ~~the amount~~ excluded from effectiveness testing ~~is $0~~ for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2021 and ~~2017,~~2022, respectively.

~~Non-designated Hedges~~

Amount of gain (loss)

recognized in statement of

income on derivatives

Derivatives not
designated as hedging

Location of gain (loss)
recognized in statement of

Three months ended
September 30,

Nine months ended
September 30,

instruments

income on derivatives

2016

2017

2016

2017

Forward foreign exchange
contracts (Note a)

Foreign exchange gains
(losses), net

$
2,599

$
(1,350
)

$
2,838

$
8,763

$
2,599

$
(1,350
)

$
2,838

$
8,763

~~(a)~~

These forward foreign exchange contracts were entered into to hedge fluctuations in foreign exchange rates for recognized balance sheet items such as receivables and intercompany borrowings, and were not originally designated as hedges under FASB guidance on derivatives and hedging. Realized gains (losses) and changes in the fair value of these derivatives are recorded in foreign exchange gains (losses), net in the consolidated statements of income.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

6. Derivative financial instruments (Continued)

Non-designated Hedges


		Amount of Gain (Loss) recognized in Statement of Income on Derivatives
		Three months ended March 31,
Derivatives not designated as hedging instruments	Location of Gain (Loss) recognized in Statement of Income on Derivatives	2021		2022
Forward foreign exchange contracts (Note a)	Foreign exchange gains (losses), net	$	1,611	$	(3,522)
		$	1,611	$	(3,522)

(a)These forward foreign exchange contracts were entered into to hedge fluctuations in foreign exchange rates for recognized balance sheet items such as receivables and intercompany borrowings, and were not originally designated as hedges under FASB guidance on derivatives and hedging. Realized gains (losses) and changes in the fair value of these derivatives are recorded in foreign exchange gains (losses), net in the consolidated statements of income.

In connection with the COVID-19 pandemic, the Company has reevaluated its hedging arrangements. The Company has considered the effect of changes, if any, in both counterparty credit risk and the Company’s own non-performance risk while assessing hedge effectiveness and measuring hedge ineffectiveness. The Company believes that its hedges continue to be effective after taking into account the expected impact of the COVID-19 pandemic on the Company’s hedged transactions.

7. Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following:

As of December 31,

As of September 30,

2016

2017

Advance income and non-income taxes

$
50,676

$
96,175

Deferred transition costs

45,252

50,561

Derivative instruments

34,730

34,229

Prepaid expenses

22,222

21,290

Customer acquisition cost

11,126

15,707

Employee advances

6,880

5,069

Deposits

2,688

2,855

Advances to suppliers

10,059

2,569

Others

5,516

15,412

$
189,149

$
243,867


	As of December 31, 2021		As of March 31, 2022
Advance income and non-income taxes	$	28,075	$	43,065
Contract asset (Note 19)	8,506		10,396
Prepaid expenses	38,528		45,713
Derivative instruments	19,194		17,889
Employee advances	2,797		3,060
Deposits	5,839		4,910
Advances to suppliers	804		717
Others	30,698		25,863
	$	134,441	$	151,613

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

8. Property, plant and equipment, net

~~Property,~~

The following table provides the gross and net amount of property, plant and ~~equipment, net consist of the following:~~

equipment:

As of December 31,

As of September 30,

2016

2017

Property, plant and equipment, gross

$
600,554

$
653,523

Less: Accumulated depreciation and amortization

(407,336
)

(447,900
)
Property, plant and equipment, net

$
193,218

$
205,623


	As of December 31, 2021		As of March 31, 2022
Property, plant and equipment, gross	$	818,452	$	812,103
Less: Accumulated depreciation and amortization	(603,363)		(609,396)
Property, plant and equipment, net	$	215,089	$	202,707

Depreciation expense on property, plant and equipment for the ~~nine months ended September 30, 2016 and 2017 was $33,990 and $32,692, respectively, and for the~~ three months ended ~~September 30, 2016~~March 31, 2021 and ~~2017~~2022 was ~~$11,334~~$17,128 and ~~$11,479,~~$14,530, respectively. Computer software amortization for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2021 and ~~2017 amounted~~2022 was $1,460 and $1,317, respectively. The Company recorded a write-down to ~~$6,990~~certain property, plant and ~~$8,368, respectively, and for~~equipment during the three months ended ~~September 30, 2016 and 2017 was $2,182 and $2,963, respectively.~~

The depreciation and amortization expenses set forth above include the effect of the reclassification of foreign exchange (gains) losses related to the effective portion of foreign currency derivative contracts, amounting to $614 and $(1,211) for the nine months ended September 30, 2016 and 2017, respectively, and $147 and $(517) for the three months ended September 30, 2016 and 2017, respectively.

~~10.~~March 31, 2021, as described in Note 9.

9. Goodwill and intangible assets

The following table presents the changes in goodwill for the year ended December 31, ~~2016~~2021 and ~~nine~~three months ended ~~September 30, 2017:~~

March 31, 2022:

As of December 31,

As of September 30,

2016

2017

Opening balance

$
1,038,346

$
1,069,408

Goodwill relating to acquisitions consummated during the
Period

51,535

216,108

Goodwill relating to divestitures consummated during
the period

(2,226
)

-

Impact of measurement period adjustments

(59
)

131

Effect of exchange rate fluctuations

(18,188
)

29,665

Closing balance

$
1,069,408

$
1,315,312


	For the year ended December 31, 2021	For the three months ended March 31, 2022
Opening balance	1,695,688	1,731,027
Goodwill relating to acquisitions consummated during the period	44,216	—
Impact of measurement period adjustments	1,205	130
Effect of exchange rate fluctuations	(10,082)	(9,145)
Closing balance	1,731,027	1,722,012

The following table presents the changes in goodwill by reporting unit for the year ended December 31, 2021:


	BCMI	CGRLH	HMS	Total
Opening balance	420,172	607,574	667,942	1,695,688
Goodwill relating to acquisitions consummated during the period	4,167	7,032	33,017	44,216
Impact of measurement period adjustments	35	309	861	1,205
Effect of exchange rate fluctuations	(3,117)	(3,795)	(3,170)	(10,082)
Closing balance	421,257	611,120	698,650	1,731,027

The following table presents the changes in goodwill by reporting unit for the three months ended March 31, 2022:


	BCMI	CGRLH	HMS	Total
Opening balance	421,257	611,120	698,650	1,731,027
Goodwill relating to acquisitions consummated during the period	—	—	—	—
Impact of measurement period adjustments	12	21	97	130
Effect of exchange rate fluctuations	(2,923)	(3,443)	(2,779)	(9,145)
Closing balance	418,346	607,698	695,968	1,722,012

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

~~10.~~

9. Goodwill and intangible assets (Continued)

The total amount of goodwill deductible for tax purposes was ~~$39,032~~$326,795 and ~~$109,268~~$319,698 as of December 31, ~~2016~~2021 and ~~September 30, 2017,~~March 31, 2022, respectively.

The Company’s intangible assets are as follows:

As of December 31, 2016

As of September 30, 2017

Gross carrying amount

Accumulated amortization & impairment

Net

Gross carrying amount

Accumulated amortization & impairment

Net

Customer-related intangible assets

$
312,041

$
260,018

$
52,023

$
362,496

$
283,459

$
79,037

Marketing-related intangible assets

45,098

30,571

14,527

52,275

36,355

15,920

Technology-related intangible assets

26,116

21,026

5,090

51,487

26,438

25,049

Other intangible assets

2,875

2,466

409

3,062

1,956

1,106

Intangible assets under development

6,897

-

6,897

17,103

-

17,103

$
393,027

$
314,081

$
78,946

$
486,423

$
348,208

$
138,215


	As of December 31, 2021						As of March 31, 2022
	Gross carrying amount		Accumulated amortization & Impairment		Net		Gross carrying amount		Accumulated amortization & Impairment		Net
Customer-related intangible assets	$	489,974	$	394,688	$	95,286	$	487,978	$	401,194	$	86,784
Marketing-related intangible assets	98,870		76,663		22,207		98,677		78,361		20,316
Technology-related intangible assets	171,772		119,630		52,142		172,749		125,700		47,049
	$	760,616	$	590,981	$	169,635	$	759,404	$	605,255	$	154,149

Amortization expenses for intangible assets acquired as part of a business combination anddisclosed in the consolidated statements of income under amortization of acquired intangible assets for the three months ended March 31, 2021 and 2022 were $16,176 and $11,306, respectively.

Amortization expenses for internally-developed and other intangible assets disclosed in the consolidated statements of income under ~~amortization~~cost of ~~intangible assets for the nine months ended September 30, 2016~~revenue and ~~2017 were $19,764~~selling, general and ~~$25,780, respectively, and~~administrative expenses for the three months ended ~~September 30, 2016~~March 31, 2021 and ~~2017~~2022 were ~~$7,126~~$6,044 and ~~$10,151,~~$5,276, respectively.

During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2021 and 2022, the Company tested anfor recoverability certain customer-related and technology-related intangible ~~software asset for recoverability~~assets, including those under development, and certain property, plant and equipment, as a result of ~~a downward revision~~changes in market trends and the Company’s investment strategy, including the Company's decisions to ~~the forecasted cash flows to be generated by the intangible asset. The Company previously recorded a charge to this asset in the third quarter of 2015.~~cease certain service offerings. Based on the results of ~~its~~this testing, the Company determined that the carrying ~~value~~values of the ~~intangible asset exceeded~~assets tested were not recoverable, and the ~~estimated undiscounted cash flows by $10,324 and~~Company recorded ~~an additional charge to further reduce~~complete write-downs of the carrying ~~value by this amount. Of this~~values of these assets amounting to $837 and $0 for the three months ended March 31, 2021 and 2022, respectively. These write-downs have been recorded in “other operating (income) expense, net” in the consolidated statement of income.

The summary below represents the impairment charge ~~$5,381 was~~ recorded for various categories of assets during the three months ended ~~September 30, 2016. The Company used a combination of the income~~March 31, 2021 and cost approaches to determine the fair value of the intangible asset for the purpose of calculating the charge. This charge has been recorded in other operating (income) expenses, net in the consolidated statement of income. During the nine months ended September 30, 2016, the Company also tested a customer-related intangible asset for recoverability as a result of the termination of a client contract. Based on results of such testing, the Company recorded a charge in the amount of the asset’s total carrying value of $871.

~~11. Short-term borrowings~~

~~The Company has the following borrowing facilities:~~

~~(a)~~

Fund-based and non-fund-based credit facilities with banks, which are available for operational requirements in the form of overdrafts, letters of credit, guarantees and short-term loans. As of December 31, 2016 and September 30, 2017, the limits available were $15,382 and $14,698, respectively, of which $10,980 and $7,395 was utilized, constituting non-funded drawdown.

March 31, 2022:

~~(b)~~

A fund-based and non-fund based revolving credit facility of $350,000, which the Company obtained in June 2015 as described in note 12. This facility replaced the Company’s $250,000 facility initially entered into in August 2012 and subsequently amended in June 2013. As of both December 31, 2016 and September 30, 2017, a total of $160,978 was utilized, of which $160,000 constituted funded drawdown and $978 constituted non-funded drawdown. The revolving facility expires in June 2020. The funded drawdown amount bore interest at a rate equal to LIBOR plus a margin of 1.50% per annum as of December 31, 2016 and September 30, 2017. The unutilized amount on the revolving facility bore a commitment fee of 0.25% as of December 31, 2016 and September 30, 2017. The credit agreement contains certain customary covenants, including a maximum leverage covenant and a minimum interest coverage ratio. During the nine months ended September 30, 2017, the Company was in compliance with the financial covenants.


	Three months ended March 31,
	2021		2022
Technology related intangibles	$	205	$	—
Total intangibles	$	205	$	—
Property, plant and equipment	$	632	$	—
Total property, plant and equipment	$	632	$	—
Grand total	$	837	$	—

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

~~12.~~

10. Short-term borrowings

The Company has the following borrowing facilities:

a.Fund-based and non-fund-based credit facilities with banks, which are available for operational requirements in the form of overdrafts, letters of credit, guarantees and short-term loans. As of December 31, 2021 and March 31, 2022, the limits available were $24,727 and $24,320, respectively, of which $5,848 and $5,795, respectively, was utilized, constituting non-funded drawdown.

b.A fund-based and non-fund based revolving credit facility of $500,000, which the Company obtained through an amendment of its existing credit agreement on August 9, 2018. The amended credit facility expires on August 8, 2023. The funded drawdown amount under the Company’s revolving facilities bore interest at a rate equal to LIBOR plus a margin of1.375% as of December 31, 2021 and March 31, 2022. The unutilized amount on the revolving facilities bore a commitment fee of 0.20%as of December 31, 2021 and March 31, 2022. As of December 31, 2021 and March 31, 2022, a total of $2,017 and $252,017, respectively, was utilized, of which $0 and $250,000, respectively, constituted funded drawdown and $2,017 and $2,017, respectively, constituted non-funded drawdown. The Company’s amended credit agreement contains certain customary covenants, including a maximum leverage covenant and a minimum interest coverage ratio. During the period ended December 31, 2021 and March 31, 2022, the Company was in compliance with the financial covenants of the credit agreement.

11. Long-term debt

~~In June 2015, the Company refinanced its 2012 credit facility through a new credit facility comprised of an $800,000 term loan and a $350,000 revolving credit facility.~~

Borrowings under the ~~new~~Company's credit facility, which was amended in August 2018, bear interest at a rate equal to, at the election of the Company, either LIBOR plus an applicable margin equal to ~~1.50%~~1.375% per annum or a base rate plus an applicable margin equal to ~~0.50%~~0.375% per annum, in each case subject to adjustment based on the Company’s debt ratings provided by Standard & Poor’s Rating Services and Moody’s Investors Service, Inc. Based on the Company’s election and current credit rating, the applicable interest rate is equal to LIBOR plus ~~1.50%~~1.375% per annum. ~~As a result~~The amended credit agreement restricts certain payments, including dividend payments, if there is an event of ~~the June 2015 refinancing, the gross outstanding term loan~~default under the ~~previous facility, which amounted to $663,188 as of June 30, 2015, was extinguished, and~~amended credit agreement or if the Company ~~expensed $10,050, representing accelerated amortization of~~is not, or after making the ~~existing unamortized debt issuance costs related to the prior facility. Additionally, the refinancing of the revolving facility resulted~~payment would not be, in compliance with certain financial covenants contained in the ~~accelerated amortization~~amended credit agreement. These covenants require the Company to maintain a net debt to EBITDA leverage ratio of ~~$65 relating to the existing unamortized debt issuance cost. The remaining unamortized costs for the revolving facility, together with the fees paid to the Company’s lenders~~below 3x and ~~third parties in connection with the new term loan and revolving facility, will be amortized over the term~~an interest coverage ratio of ~~the refinanced facility, which ends on June 30, 2020.~~more than 3x. During the ~~nine months~~year ended ~~September 30, 2017,~~March 31, 2022, the Company was in compliance with the ~~financial covenants~~terms of the credit agreement, including all of the financial covenants therein. The Company’s retained earnings are not subject to any restrictions on availability to make dividend payments to shareholders, subject to compliance with the financial covenants described above that are contained in the amended credit

agreement.

As of December 31, ~~2016~~2021 and ~~September 30, 2017,~~March 31, 2022, the amount outstanding under the term loan under the amended credit agreement, net of debt amortization expense of ~~$2,667~~$687 and ~~$2,051,~~$577, was ~~$737,333~~$560,313 and ~~$707,967,~~$551,923, respectively. As of December 31, ~~2016~~2021 and ~~September 30, 2017,~~March 31, 2022, the term loan bore interest at a rate equal to LIBOR plus a margin of ~~1.50%~~1.375% per ~~annum based on the Company’s election and current credit rating.~~ annum.

Indebtedness under the ~~refinanced~~amended credit facility is unsecured. The amount outstanding on the term loan as of ~~September 30, 2017 will be repaid through~~March 31, 2022 requires quarterly payments of ~~$10,000,~~$8,500, and the balance ~~will be repaid~~of the loan is due and payable upon the maturity of the term loan on ~~June 30, 2020.~~

August 8, 2023.

The maturity profile of the term loan outstanding as of March 31, 2022, net of debt amortization expense, is as follows:

Year ended

Amount

2017

$
9,815

2018

39,226

2019

39,272

2020

619,654

Total

$
707,967


Year ended	Amount
2022	33,571
2023	518,352
Total	$	551,923

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In ~~March 2017,~~thousands, except per share data and share count)

11. Long-term debt (Continued)

Genpact Luxembourg S.à r.l., a wholly-owned subsidiary of the Company, issued $350,000 aggregate principal amount of 3.70% senior notes in ~~a private offering, resulting~~March 2017 (the “2017 Senior Notes”), and $400,000 aggregate principal amount of 3.375% senior notes in ~~cash proceeds of approximately $348,519, net of an underwriting fee of $1,481. In connection with~~November 2019 (the “2019 Senior Notes”). The 2017 Senior Notes and 2019 Senior Notes are fully guaranteed by the ~~offering, the Company incurred other debt issuance costs of $1,161.~~Company. The total debt issuance cost of $2,642 and $2,937 incurred in connection with the 2017 Senior Notes and 2019 Senior Notes offerings, respectively, are being amortized over the lives of the respective notes as an additional interest expense. As of December 31, 2021 and March 31, 2022, the amount outstanding under the 2017 Senior Notes, net of debt amortization expense of $131 and $1, respectively, was $349,869 and $349,999, respectively, which was payable on April 1, 2022. As of December 31, 2021 and March 31, 2022, the amount outstanding under the 2019 Senior Notes, net of debt amortization expense of $1,702 and $1,558, was $398,298 and $398,442, respectively, which is payable on December 1, 2024.

In March 2021, Genpact Luxembourg S.à r.l. and Genpact USA, Inc., both wholly-owned subsidiaries of the Company, co-issued $350,000 aggregate principal amount of 1.750% senior notes (the “2021 Senior Notes,” and together with the 2017 Senior Notes and the 2019 Senior Notes, the “Senior Notes”). The 2021 Senior Notes are fully guaranteed by the Company. The total debt issuance cost of $3,032 incurred in connection with the 2021 Senior Notes is being amortized over the life of the ~~notes~~2021 Senior Notes as additional interest expense. As of ~~September 30, 2017,~~December 31, 2021 and March 31, 2022, the amount outstanding under the ~~notes,~~2021 Senior Notes, net of debt amortization expense of ~~$2,372,~~$2,571 and $2,423, respectively, was ~~$347,628,~~$347,249 and $347,577, respectively, which is payable on April ~~1, 2022.~~ 10, 2026.

The Company ~~will pay~~pays interest on (i) the ~~notes~~2017 Senior Notes semi-annually in arrears on April 1 and October 1 of each year, (ii) the 2019 Senior Notes semi-annually in arrears on June 1 and December 1 of each year, and (iii) the 2021 Senior Notes semi-annually in arrears on April 10 and October 10 of each year, ending on the maturity ~~date~~dates of April 1, ~~2022.~~2022, December 1, 2024 and April 10, 2026, respectively. The Company, at its option, may redeem the ~~notes~~Senior Notes at any time in whole or in part, at a redemption price equal to (i) 100% of the principal amount of the notes redeemed, together with accrued and unpaid interest on the redeemed amount, and (ii) if the notes are redeemed prior to, in the case of the 2017 Senior Notes, March 1, 2022, in the case of the 2019 Senior Notes, November 1, 2024, and in the case of the 2021 Senior Notes, March 10, 2026, a specified “make-whole” premium. The ~~notes~~Senior Notes are subject to certain customary covenants, including limitations on the ability of the Company and certain of its subsidiaries to incur debt secured by liens, engage in certain sale and leaseback transactions and consolidate, merge, convey or transfer their ~~assets.~~assets substantially as an entirety. During the period ended March 31, 2022, the Company and its applicable subsidiaries were in compliance with the covenants. Upon certain change of control transactions, the ~~Company~~applicable issuer or issuers will be required to make an offer to repurchase the ~~notes~~Senior Notes at a price equal to 101% of the aggregate principal amount of ~~such notes,~~the Senior Notes, plus accrued and unpaid interest. The interest rate payable on the ~~notes~~Senior Notes is subject to adjustment if the credit rating of the ~~notes~~Senior Notes is downgraded, up to a maximum increase of 2.0%. ~~The Company is required to offer to exchange the notes for registered notes or have one or more shelf registration statements declared effective within 455 days after the issue date~~

A summary of the notes and, if such exchange offer fails to be consummated or such registration statement fails to be effective by June 25, 2018, then the interest payable on the notes will increase by 0.25% per annum during the 90-day period immediately following such date and will further increase by 0.25% per annum at the end of each subsequent 90-day period up to a maximum increase of 0.50%. The notes are senior unsecured obligations of the Company and will rank equally with all other senior unsecured indebtedness of the Company outstanding from time to time.

Company’s long-term debt is as follows:


	As of December 31, 2021		As of March 31, 2022
Credit facility, net of amortization expenses	$	560,313	$	551,923
3.70% 2017 Senior Notes, net of debt amortization expenses	349,869		349,999
3.375% 2019 Senior Notes, net of debt amortization expenses	398,298		398,442
1.750% 2021 Senior Notes, net of debt amortization expenses	347,429		347,577
Total	$	1,655,909	$	1,647,941
Current portion	383,433		383,569
Non-current portion	1,272,476		1,264,372
Total	$	1,655,909	$	1,647,941

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

~~13.~~

12. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

	As of December 31,		As of September 30,
	2016		2017				As of December 31, 2021			As of March 31, 2022
Accrued expenses	$	163,400	$	183,261		Accrued expenses		$	162,054		$	127,481
Accrued employee cost		179,360		182,211		Accrued employee cost		307,777			140,838
Deferred transition revenue		50,552		47,317
Earn-out consideration					Earn-out consideration		2,501			2,501
Statutory liabilities		36,878		44,125		Statutory liabilities		67,948			84,787
Retirement benefits		17,616		19,810		Retirement benefits		1,746			2,145
Compensated absences					Compensated absences		26,596			28,162
Derivative instruments		4,777		14,527		Derivative instruments		12,498			11,711
Advance from customers		21,969		27,678
Earn-out consideration		6,885		6,687
Contract liabilities (Note 19)					Contract liabilities (Note 19)		160,602			160,735
Finance leases liability					Finance leases liability		18,549			18,371
Other liabilities		15,461		13,607		Other liabilities		31,169			39,187
Capital lease obligations		1,349		1,520
	$	498,247	$	540,743				$	791,440		$	615,918

~~14.~~

13. Other liabilities

Other liabilities consist of the following:

As of December 31,

As of September 30,

2016

2017

Accrued employee cost

$
3,976

$
16,234

Deferred transition revenue

72,560

74,860

Retirement benefits

39,020

45,243

Derivative instruments

12,576

13,236

Amount received from GE under indemnification
arrangement, pending adjustment

3,159

3,294

Advance from customers

2,371

232

Earn-out consideration

15,550

11,312

Others

11,078

17,803

Capital lease obligations

2,500

2,751

$
162,790

$
184,965


	As of December 31, 2021		As of March 31, 2022
Accrued employee cost	$	15,790	$	16,062
Earn-out consideration	2,905		2,905
Retirement benefits	11,993		11,565
Compensated absences	52,023		54,119
Derivative instruments	2,756		1,478
Contract liabilities (Note 19)	80,222		74,410
Finance leases liability	16,297		14,560
Others	63,224		67,723
	$	245,210	$	242,822

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~15.~~

14. Employee benefit plans

The Company has employee benefit plans in the form of certain statutory and other ~~schemes~~programs covering its employees.

Defined benefit plans

In accordance with Indian law, the Company maintains a defined benefit retirement plan covering substantially all of its Indian employees. In accordance with Mexican law, the Company provides termination benefits to all of its Mexican employees. In addition, certain of the Company’s subsidiaries in the Philippines, Israel and Japan sponsor defined benefit retirement programs.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

14. Employee benefit plans (Continued)

Net defined benefit plan costs for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2021 and ~~2017~~2022 include the following components:


	Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
	2016			2017			2016			2017				2021		2022
Service costs	$	1,207		$	1,814		$	4,040		$	5,391		Service costs	$	3,581	$	3,683
Interest costs		559			776			1,870			2,303		Interest costs	1,394		1,478
Amortization of actuarial loss		34			221			15			653		Amortization of actuarial loss	593		339
Expected return on plan assets		(469	)		(529	)		(1,449	)		(1,560	)	Expected return on plan assets	(1,584)		(1,536)
Net defined benefit plan costs	$	1,331		$	2,282		$	4,476		$	6,787		Net defined benefit plan costs	$	3,984	$	3,964

Defined contribution plans

During the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2021 and ~~2017,~~2022, the Company contributed the following amounts to defined contribution plans in various jurisdictions:

Three months ended September 30,

Nine months ended September 30,

2016

2017

2016

2017

India

$
4,843

$
5,731

$
13,877

$
16,514

U.S.

2,216

2,228

7,951

9,148

U.K.

1,596

1,887

5,177

5,961

China

4,158

4,132

11,555

11,700

Other regions

1,158

1,006

3,507

3,083

Total

$
13,971

$
14,984

$
42,067

$
46,405


	Three months ended March 31,
	2021		2022
India	$	8,604	$	10,740
U.S.	5,424		6,415
U.K.	4,006		6,137
China	6,068		6,793
Other regions	3,487		4,775
Total	$	27,589	$	34,860

Deferred compensation plan

On July 1, 2018, Genpact LLC, a wholly-owned subsidiary of the Company, adopted an executive deferred compensation plan (the “Plan”). The Plan provides a select group of U.S.-based members of Company management with the opportunity to defer from 1% to 80% of their base salary and from 1% to 100% of their qualifying bonus compensation (or such other minimums or maximums as determined by the Plan administrator from time to time) pursuant to the terms of the Plan. Participant deferrals are 100% vested at all times. The Plan also allows for discretionary supplemental employer contributions by the Company, in its sole discretion, which will be subject to a two-year vesting schedule (50% vesting on the one-year anniversary of approval of the contribution and 50% vesting on the second year anniversary of approval of the contribution) or such other vesting schedule as determined by the Company. However, no such contribution has been made by the Company to date.

The Plan also provides an option for participants to elect to receive deferred compensation and earnings thereon on either fixed date(s) no earlier than 2 years following the applicable Plan year (or end of the applicable performance period for performance-based bonus compensation) or following a separation from service, in each case either in a lump sum or in annual installments over a term of up to 15 years. Participants can elect to change or re-defer their rights to receive the deferred compensation until the 10th anniversary following their separation from service, subject to fulfillment of certain conditions. Each Plan participant’s compensation deferrals are credited or debited with notional investment gains and losses equal to the performance of selected hypothetical investment funds offered under the Plan and elected by the participant.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

~~16. Stock-based~~

14. Employee benefit plans (Continued)

The Company has investments in funds held in Company-owned life insurance policies which are held in a Rabbi Trust that are classified as trading securities. Management determines the appropriate classification of the securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. The securities are classified as trading securities because they are held for resale in anticipation of short-term fluctuations in market prices. The trading securities are stated at fair value.

The liability for the deferred compensation

plan was $38,007 and $42,554 as of December 31, 2021 and March 31, 2022, respectively, and is included in “accrued expenses and other current liabilities” and “other liabilities” in the consolidated balance sheets.

In connection with the administration of the Plan, the Company has purchased company-owned life insurance policies insuring the lives of certain employees. The cash surrender value of these policies was $38,584 and $43,320 as of December 31, 2021 and March 31, 2022, respectively. The cash surrender value of these insurance policies is included in “other assets” in the consolidated balance sheets.

During the three months ended March 31, 2021 and 2022, the change in the fair value of Plan assets was $861 and $(2,352), respectively, which is included in “other income (expense), net,” in the consolidated statements of income. During the three months ended March 31, 2021 and 2022, the change in the fair value of deferred compensation liabilities was $803 and $(2,366), respectively, which is included in “selling, general and administrative expenses.”

15. Stock-based compensation

The Company has issued options under ~~the Genpact Global Holdings 2005 Plan (the “2005 Plan”), the Genpact Global Holdings 2006 Plan (the “2006 Plan”), the Genpact Global Holdings 2007 Plan (the “2007 Plan”) and~~ the Genpact Limited 2007 Omnibus Incentive Compensation Plan (the “2007 Omnibus Plan”) and the Genpact Limited 2017 Omnibus Incentive Compensation Plan (the “2017 Omnibus Plan”) to eligible persons, ~~who are~~including employees, directors and certain other persons associated with the Company.

With respect to options granted under the 2005, 2006 and 2007 Plans before the date of adoption of the 2007 Omnibus Plan, if an award granted under any such plan was forfeited or otherwise expired, terminated, or cancelled without the delivery of shares, then the shares covered by the forfeited, expired, terminated, or cancelled award were added to the number of shares otherwise available for grant under the respective plans.

Under the 2007 Omnibus Plan, ~~share-based awards~~shares underlying options forfeited, expired, terminated or cancelled under any of the Company’s predecessor plans were added to the number of shares otherwise available for grant under the 2007 Omnibus Plan. The 2007 Omnibus Plan was amended and restated on April 11, 2012 to increase the number of common shares authorized for issuance by 5,593,200 shares to 15,000,000 shares.

Further, during the year ended December 31, 2012, the number of common shares authorized for issuance under the 2007 Omnibus Plan was increased by 8,858,823 shares as a result of a one-time adjustment to outstanding unvested share awards in connection with a special dividend payment.

On May 9, 2017, the Company’s shareholders approved the adoption of the ~~Genpact Limited~~ 2017 Omnibus ~~Incentive Compensation~~ Plan, ~~(the “2017 Omnibus Plan”),~~ pursuant to which 15,000,000 Company common shares are available for issuance. The 2017 Omnibus Plan was amended and restated on April 5, 2019 to increase the number of common shares authorized for issuance by 8,000,000 shares to 23,000,000 shares. No ~~further~~ grants may be made under the 2007 Omnibus Plan after the date of adoption of the 2017 Omnibus Plan.

Grants that were outstanding under the 2007 Omnibus Plan as of the date of Company’s adoption of the 2017 Omnibus Plan remain subject to the terms of the 2007 Omnibus Plan.

Stock-based compensation costs relating to the foregoing plans during the ~~nine months ended September 30, 2016 and 2017 were $18,046 and $21,985, respectively, and for the~~ three months ended ~~September 30, 2016~~March 31, 2021 and ~~2017~~March 31, 2022 were ~~$4,718~~$17,084 and ~~$9,907,~~$14,759, respectively. These costs have been allocated to ~~cost~~“cost of ~~revenue~~revenue” and ~~selling,~~“selling, general and administrative expenses.

”

Stock options

~~Options granted are subject to a vesting requirement. Options~~

All options granted under the ~~plans to date~~2007 and 2017 Omnibus Plans are exercisable into common shares of the Company, have a contractual period of ten years and vest over ~~four~~three to five years unless specified otherwise in the applicable award agreement. The Company recognizes ~~the~~ compensation cost over the vesting period of the option.

Compensation cost is determined ~~as of~~at the date of grant by estimating the fair value of an option using the Black-Scholes option-pricing model.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

15. Stock-based compensation (Continued)

The following table shows the significant assumptions used in ~~connection with the determination of~~determining the fair value of options granted in the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2021 and ~~September 30, 2017.~~

Nine months ended
September 30, 2016

Nine months ended
September 30, 2017

Dividend yield
—

0.97%

Expected life (in months)
84

84

Risk-free rate of interest
1.42%-1.56%

2.25%

Volatility
25.60%-27.22%

24.28%

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to~~March 31, 2022. The Company granted options covering 771,196 common shares in the ~~Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~16. Stock-based compensation (Continued)~~

three months ended March 31, 2021.


	Three months ended March 31, 2021				Three months ended March 31, 2022
Dividend yield	0.97	%	—	1.08%	0.96	%
Expected life (in months)	84				84
Risk-free rate of interest	1.21	%	—	1.37%	1.71	%
Volatility	26.05	%	—	26.07%	26.29	%

A summary of stock option activity during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 is set out below:

Nine months ended September 30, 2017

Shares arising
out of options

Weighted average
exercise price

Weighted average
remaining
contractual life
(years)

Aggregate
intrinsic
value

Outstanding as of January 1, 2017

5,707,690

$
18.65

5.8

$
—

Granted

250,000

24.74

—

—

Forfeited

(80,000
)

20.63

—

—

Expired

—

—

—

—

Exercised

(641,900
)

14.40

—

8,707

Outstanding as of September 30, 2017

5,235,790

$
19.44

5.8

$
48,770

Vested as of September 30, 2017 and expected to vest
thereafter (Note a)

5,036,756

$
19.22

5.8

$
47,981

Vested and exercisable as of September 30, 2017

2,304,291

$
16.12

4.3

$
29,095

Weighted average grant date fair value of grants
during the period

$
6.62

~~(a)~~

~~Options expected to vest reflect an estimated forfeiture rate.~~


	Three Months Ended March 31, 2022
	Shares arising out of options	Weighted average exercise price	Weighted average remaining contractual life (years)	Aggregate intrinsic value
Outstanding as of January 1, 2022	8,008,296	31.30	6.1	—
Granted	475,695	52.12	—	—
Forfeited	—	—	—	—
Expired	—	—	—	—
Exercised	—	—	—	—
Outstanding as of March 31, 2022	8,483,991	32.47	6.0	101,337
Vested as of March 31, 2022 and expected to vest thereafter (Note a)	7,835,943	31.57	6.0	99,487
Vested and exercisable as of March 31, 2022	3,876,735	24.79	3.8	72,557
Weighted average grant date fair value of grants during the period	14.19

(a)Options expected to vest reflect an estimated forfeiture rate.

As of ~~September 30, 2017,~~March 31, 2022, the total remaining unrecognized stock-based compensation cost for options expected to vest amounted to ~~$8,182,~~$26,621, which will be recognized over the weighted average remaining requisite vesting period of ~~2.7~~3.3 years.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

15. Stock-based compensation (Continued)

Restricted share units

The Company has granted restricted share units ~~or RSUs,~~(“RSUs”) under the 2007 and 2017 Omnibus Plans. Each RSU represents the right to receive ~~one Company~~1 common ~~share at a future date.~~share. The fair value of each RSU is ~~typically~~ the ~~closing~~ market price of ~~a Company~~1 common share of the Company on the date of the grant. The RSUs granted to date have graded vesting schedules of three months to four years. The compensation expense is recognized on a straight-line basis over the vesting term. A summary of ~~RSUs granted~~RSU activity during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 is set out below:

Nine months ended September 30, 2017

Number of Restricted Share Units

Weighted Average Grant Date Fair Value

Outstanding as of January 1, 2017

117,905

$
20.65

Granted

1,518,565

26.30

Vested (Note a)

(45,248
)

18.31

Forfeited

(1,242)

25.53

Outstanding as of September 30, 2017

1,589,980

$
26.11

Expected to vest (Note b)

1,324,508

~~(a)~~

~~RSUs that vested during the period were net settled upon vesting by issuing 32,395 shares (net of minimum statutory tax withholding).~~

~~(b)~~

~~The number of RSUs expected to vest reflects an estimated forfeiture rate.~~

~~53,546~~


	Three Months Ended March 31, 2022
	Number of Restricted Share Units	Weighted Average Grant Date Fair Value
Outstanding as of January 1, 2022	759,507	42.29
Granted	125,786	47.70
Vested	—	—
Forfeited	(2,601)	41.95
Outstanding as of March 31, 2022	882,692	43.06
Expected to vest (Note a)	761,720

(a)The number of RSUs expected to vest reflects the application of an estimated forfeiture rate.

49,513 RSUs vested in the year ended December 31, ~~2015,~~2020, in respect of which ~~53,023~~49,446 shares were issued during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 after withholding shares to the extent ofrequired to satisfy minimum statutory withholding ~~taxes.~~

~~34,035~~obligations.

7,863 RSUs vested in the year ended December 31, ~~2016,~~2021, in respect of which ~~17,802~~5,496 shares were issued during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 after withholding shares to the extent ofrequired to satisfy minimum statutory withholding ~~taxes.~~

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~16. Stock-based compensation (Continued)~~

obligations.

As of ~~September 30, 2017,~~March 31, 2022, the total remaining unrecognized stock-based compensation cost related to RSUs amounted to ~~$29,339,~~$19,723, which will be recognized over the weighted average remaining requisite vesting period of ~~3.1~~2.5 years.

Performance units

The Company also grants stock awards in the form of performance units ~~or PUs,~~(“PUs”) and has granted PUs under both the 2007 and 2017 Omnibus Plans.

Each PU represents the right to receive ~~one Company~~1 common share at a future date based on the Company’s performance against specified targets. PUs granted to date have vesting schedules of six months to three years. The fair value of each PU is the ~~closing~~ market price of ~~one~~1 common share of the Company on the date of grant and assumes that performance targets will be achieved. PUs granted under the ~~Company’s~~ plans ~~to date~~ are subject to cliff vesting. The compensation expense for such awards is recognized on a straight-line basis over the vesting terms. ~~Over~~During the performance period, the Company’s estimate of the number of shares to be issued is adjusted upward or downward ~~depending on~~based upon the probability of achievement of the performance targets. The ultimate number of shares issued and the related compensation cost recognized is based on a comparison of the final performance metrics to the specified targets.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

15. Stock-based compensation (Continued)

A summary of PU activity during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 is set out below:

Nine months ended September 30, 2017

Number of
Performance Units

Weighted
Average Grant
Date Fair Value

Maximum Shares
Eligible to Receive

Outstanding as of January 1, 2017

3,772,128

$
23.04

5,524,114

Granted

1,811,292

25.22

3,622,584

Vested (Note a)

(1,136,047)

16.78

(1,136,047)

Forfeited (Note b)

(1,557,067
)

27.62

(1,580,267
)
Adjustment upon final determination of level of
performance goal achievement (Note c)

(1,747,586)

Outstanding as of September 30, 2017

2,890,306

$
24.40

4,682,798

Expected to vest (Note d)

2,248,990

~~(a)~~

~~PUs that vested during the period were net settled upon vesting by issuing 731,701 shares (net of minimum statutory tax withholding).~~

~~(b)~~

Includes 1,443,624 target shares underlying PUs granted in 2016 which were forfeited for failure to achieve all of the threshold performance targets under such awards as certified by the compensation committee based on the Company’s audited financial statements for the year ended December 31, 2016.

~~(c)~~

Represents the difference between the maximum number of shares achievable under the PUs granted in 2016 and the number of target shares underlying the PUs granted in 2016, which were forfeited for failure to achieve all of the threshold performance targets under such awards as certified by the compensation committee based on the Company’s audited financial statements for the year ended December 31, 2016.


	Three months ended March 31, 2022
	Number of Performance Units	Weighted Average Grant Date Fair Value	Maximum Shares Eligible to Receive
Outstanding as of January 1, 2022	4,583,155	39.40	4,583,155
Granted	1,544,311	44.51	3,088,622
Vested (Note a)	(2,026,900)	34.66	(2,026,900)
Forfeited	(33,962)	43.68	(33,962)
Adjustment upon final determination of level of performance goal achievement (Note b)	28,325	44.01	28,325
Outstanding as of March 31, 2022	4,094,929	43.67	5,639,240
Expected to vest (Note c)	3,013,544

~~(d)~~

~~The number of PUs expected to vest is based on the probable achievement of the performance targets after considering an estimated forfeiture rate.~~

(a)2,026,900 PUs that vested during the period were net settled upon vesting by issuing 1,224,003 shares (net of minimum statutory tax withholding).

(b)Represents an adjustment made in March 2022 to the number of shares subject to the PUs granted in 2021 upon certification of the level of achievement of the performance targets underlying such awards.

(c)The number of PUs expected to vest reflects the application of an estimated forfeiture rate.

As of ~~September 30, 2017,~~March 31, 2022, the total remaining unrecognized stock-based compensation cost related to PUs amounted to ~~$27,746,~~$82,467, which will be recognized over the weighted average remaining requisite vesting period of ~~2.1~~2.2 years.

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~16. Stock-based compensation (Continued)~~

Employee Stock Purchase Plan (ESPP)

On May 1, 2008, the Company adopted the Genpact Limited U.S. Employee Stock Purchase Plan and the Genpact Limited International Employee Stock Purchase Plan (together, the “ESPP”).

In April 2018, these plans were amended and restated, and their terms were extended to August 31, 2028.

The ESPP allows eligible employees to purchase the Company’s common shares through payroll deductions at 90% of the closing price of the Company’s common shares on the last business day of each purchase interval. The dollar amount of common shares purchased under the ESPP ~~must~~may not exceed 15% of the participating employee’s base salary, subject to a cap of $25 per employee per calendar year. With effect from September 1, 2009, the offering periods commence on the first business day in March, June, September and December of each year and end on the last business day of the subsequent May, August, November and February. 4,200,000 common shares have been reserved for issuance in the aggregate over the term of the ESPP.

During the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2021 and ~~2017, 105,856~~2022, 77,165 and ~~150,265~~87,646 common shares, respectively, were issued under the ESPP.

The ESPP is considered compensatory under the FASB guidance on Compensation-Stock Compensation.

The compensation expense for the ESPP is recognized in accordance with the FASB guidance on Compensation-Stock Compensation. The compensation expense for the ESPP during the ~~nine months ended September 30, 2016 and 2017 was $298 and $417, respectively, and for the~~ three months ended ~~September 30, 2016~~March 31, 2021 and ~~2017~~2022 was ~~$110~~$346 and ~~$144,~~$491, respectively, and has been allocated to cost of revenue and selling, general and administrative ~~expenses.~~

expense.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

~~17.~~

16. Capital stock

Share repurchases

The Board of ~~December 31, 2016,~~Directors of the ~~Company’s board of directors~~Company (the “Board”) ~~had~~has authorized ~~the Company to repurchase~~repurchases of up to $750,000 in value of the Company’s common shares under its share repurchase program first announced in February 2015. On February 10, 2017 the Board approved up to an additional $500,000 in share repurchases, bringing the total authorization$1,750,000 under the Company’s existing ~~program to $1,250,000. The Company’s~~ share repurchase ~~program does not obligate it to acquire any specific number of shares.~~program. Under the program, shares may be purchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

During the three months ended March ~~29, 2017,~~31, 2021 and 2022, the Company ~~entered into an accelerated share repurchase (“ASR”) agreement with Morgan Stanley & Co. LLC (the “Dealer”) to repurchase Company common shares for an aggregate purchase price~~repurchased 3,297,966 and 1,630,533 of $200,000. The Company paid the aggregate purchase price to the Dealer and received an initial delivery of 6,578,947 common shares at a price of $24.32 per share. The purchase price was recorded as a reduction in shareholders’ equity through a $160,000 decrease in retained earnings and a $40,000 decrease in additional paid-in capital.

The final settlement of the transaction under the ASR agreement, which was initially expected to be completed by the end of the fourth quarter of 2017, is now expected to be completed in January 2018 pursuant to an amendment to the ASR agreement. The final number of common shares to be repurchased by the Company under the ASR agreement will be based on the volume-weighted average share price of the Company’s common shares during the term of the applicable transaction, less a discount and subject to adjustments pursuant to the terms of the ASR agreement. At settlement, under certain circumstances, the Company may be entitled to receive additional common shares from the Dealer or may be required either to deliver its common shares, ~~or to make a cash payment to the Dealer.~~

The ASR agreement contains customary provisions, including, among other things, with respect to mechanisms to determine the number of shares or the amount of cash that will be delivered at settlement, the required timing of delivery upon settlement, specific circumstances under which adjustments may be made to the repurchase transaction, and specific circumstances under which the repurchase transaction may be canceled prior to the scheduled maturity.

~~During the nine months ended September 30, 2016, the Company purchased 9,615,323 of its common shares~~respectively, on the open market at a weighted average price of ~~$25.23~~$40.68 and $46.61 per share, respectively, for an aggregate cash amount of $242,552. During the nine months ended September 30, 2017, the Company made payments in an aggregate cash amount of $219,784 toward share repurchases. Of this amount, the Company paid (i) $19,784 to repurchase 808,293 of its common shares on the open market at a weighted average price of $24.48 per share, (ii) $160,000 to the Dealer for the initial delivery of 6,578,947 of its common shares under the ASR agreement at a weighted average price of $24.32 per share,$134,152 and ~~(iii) $40,000 to the Dealer for shares to be delivered at the final settlement of the transaction under the ASR agreement as described above.~~$75,999, respectively. All repurchased shares have been retired.

The Company records repurchases of its common shares on the settlement date of each transaction. Shares purchased and retired are deducted to the extent of their par value from common stock and from retained earnings for the excess over par value. Direct costs incurred to acquire the shares are included in the total cost of the shares purchased. For the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2021 and ~~September 30, 2017, $192 and $16, respectively, was deducted from~~2022, retained earnings inwere reduced by the direct costs related to share ~~repurchases.~~

~~Dividend~~

~~In February 2017,~~repurchases of $66 and $33, respectively.

$262,911 remained available for share repurchases under the Company’s ~~board~~existing share repurchase program as of ~~directors~~March 31, 2022. This repurchase program does not obligate the Company to acquire any specific number of shares and does not specify an expiration date.

Dividend

On February 9, 2021, the Company announced that its Board had approved a ~~dividend program under which the Company intends to pay a regular~~10% increase in its quarterly cash dividend ~~of $0.06~~to $0.1075 per share, up from $0.0975 per share in 2020, representing an annual dividend of $0.43 per common share, up from $0.39 per share in 2020, payable to holders of ~~its~~the Company’s common ~~shares, representing a planned annual dividend of $0.24 per share.~~shares. On March ~~28, 2017, June 28, 2017 and September 21, 2017,~~19, 2021, the Company paid ~~dividends~~a dividend of ~~$0.06~~$0.1075 per share, amounting to ~~$11,957, $11,558 and $11,581~~$20,115 in the aggregate, to shareholders of record as of March 10, ~~2017, June 12, 2017 and September 8, 2017 respectively.~~

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes~~2021.

On February 10, 2022, the Company announced that its Board had approved a 16% increase in its quarterly cash dividend to ~~the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except~~$0.125 per share, ~~data and~~up from $0.1075 per share ~~count)~~

~~18.~~in 2021, representing a planned annual dividend of $0.50 per common share, up from $0.43 per share in 2021, payable to holders of the Company’s common shares. On March 23, 2022, the Company paid a dividend of $0.125 per share, amounting to $23,134 in the aggregate, to shareholders of record as of March 10, 2022.

17. Earnings per share

The Company calculates earnings per share in accordance with FASB guidance on earnings per share. Basic and diluted earnings per common share give effect to the change in the number of Company common shares outstanding. The calculation of basic earnings per common share is determined by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the respective periods. ~~Potentially~~The potentially dilutive shares, consisting of outstanding options on common shares, restricted share units, ~~performance units and~~ common shares to be issued under the ~~employee stock purchase plan,~~ESPP and performance units, have been included in the computation of diluted net earnings per share and the number of weighted average shares outstanding, except where the result would be anti-dilutive.

The number of shares subject to stock awards outstanding but not included in the computation of diluted earnings per common share because their effect was anti-dilutive is ~~698,286~~1,575,294 and ~~1,122,559 for the nine months ended September 30, 2016 and 2017, respectively, and 947,778 and 1,113,307~~2,738,799 for the three months ended ~~September 30, 2016~~March 31, 2021 and ~~2017,~~2022, respectively.

Three months ended September 30,

Nine months ended September 30,

2016

2017

2016

2017

Net income available to Genpact Limited common shareholders

$
68,922

$
73,745

$
193,385

$
196,029

Weighted average number of common shares used in computing basic earnings per common share

206,146,007

192,124,366

209,034,741

194,221,162

Dilutive effect of stock-based awards

3,230,676

2,823,333

3,322,853

2,890,852

Weighted average number of common shares used in computing dilutive earnings per common share

209,376,683

194,947,699

212,357,594

197,112,014

Earnings per common share attributable to Genpact Limited common shareholders

Basic

$
0.33

$
0.38

$
0.93

$
1.01

Diluted

$
0.33

$
0.38

$
0.91

$
0.99

~~19. Cost of revenue~~

~~Cost of revenue consists of the following:~~

Three months ended September 30,

Nine months ended September 30,

2016

2017

2016

2017

Personnel expenses
$
269,771

$
293,253

$
788,768

$
847,784

Operational expenses

111,443

123,995

325,938

346,300

Depreciation and amortization

11,218

11,943

34,329

33,737

$
392,432

$
429,191

$
1,149,035

$
1,227,821

~~20. Selling, general and administrative expenses~~

~~Selling, general and administrative expenses consist of the following:~~

Three months ended September 30,

Nine months ended September 30,

2016

2017

2016

2017

Personnel expenses
$
117,022

$
126,612

$
343,279

$
371,867

Operational expenses

37,649

42,984

132,385

121,664

Depreciation and amortization

2,298

2,499

6,651

7,323

$
156,969

$
172,095

$
482,315

$
500,854

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

~~21.~~

17. Earnings per share (Continued)


	Three months ended March 31,
	2021		2022
Net income	$	91,273	$	96,179
Weighted average number of common shares used in computing basic earnings per common share	188,650,112		185,637,776
Dilutive effect of stock-based awards	4,563,146		3,920,628
Weighted average number of common shares used in computing dilutive earnings per common share	193,213,258		189,558,404
Earnings per common share
Basic	$	0.48	$	0.52
Diluted	$	0.47	$	0.51

18. Segment reporting

The Company manages various types of business process and transformation services in an integrated manner for clients in various industries and geographic locations. The Company's operating segments are significant strategic business units that align its products and services with how it manages its business, approaches key markets and interacts with its clients.

The Company’s reportable segments are as follows: (1) Banking, Capital Markets and Insurance (“BCMI”); (2) Consumer Goods, Retail, Life Sciences and Healthcare (“CGRLH”); and (3) High Tech, Manufacturing and Services (“HMS”).

The Company’s Chief Executive Officer, who has been identified as the Chief Operating Decision Maker ("CODM"), reviews operating segment revenue, which is a GAAP measure, and operating segment adjusted income from operations, which is a non-GAAP measure. The Company does not allocate and therefore the CODM does not evaluate stock based compensation expenses, amortization and impairment of acquired intangible assets, foreign exchange gain/(losses), interest income/(expense), acquisition related expenses, other income/(expense), or income taxes by segment. The Company’s operating assets and liabilities pertain to multiple segments. The Company manages assets and liabilities on a total company basis, not by operating segment, and therefore asset and liabilities information and capital expenditures by operating segment are not presented to the CODM and are not reviewed by the CODM.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

18. Segment reporting (Continued)

Revenues and adjusted income from operations for each of the Company’s segments for the three months ended March 31, 2021 were as follows:


	Reportable segments
	BCMI	CGRLH	HMS	Total Reportable segment	Others#	Total
Revenues, net	242,312	340,035	356,927	939,274	6,797	946,071
Adjusted income from operations	32,367	57,816	67,618	157,801	4,855	162,656
Stock-based compensation						(17,430)
Amortization and impairment of acquired intangible assets (other than included above)						(15,952)
Foreign exchange gains (losses), net						3,293
Interest income (expense), net						(12,342)
Income tax expense						(28,952)
Net income						91,273

#Revenues, net for “Others” primarily represents the impact of foreign exchange fluctuations, which is not allocated to the Company’s segments for management’s internal reporting purposes. Adjusted income from operations for “Others” primarily represents the impact of over-absorption of overhead and foreign exchange fluctuations, which are not allocated to the Company’s segments for management’s internal reporting purposes.

Revenues and adjusted income from operations for each of the Company’s segments for the three months ended March 31, 2022 were as follows:


	Reportable segments
	BCMI	CGRLH	HMS	Total Reportable segment	Others*	Total
Revenues, net	276,161	404,180	394,947	1,075,288	(6,845)	1,068,443
Adjusted income from operations	25,084	53,306	68,142	146,532	13,487	160,019
Stock-based compensation						(15,250)
Amortization and impairment of acquired intangible assets (other than included above)						(11,302)
Foreign exchange gains (losses), net						4,303
Interest income (expense), net						(12,088)
Income tax expense						(29,503)
Net income						96,179

*Revenues, net for “Others” primarily represents the impact of foreign exchange fluctuations, which is not allocated to the Company’s segments for management’s internal reporting purposes. Adjusted income from operations for “Others” primarily represents the impact of over-absorption of overhead, unallocated allowance for credit losses and foreign exchange fluctuations, which are not allocated to the Company’s segments for management’s internal reporting purposes.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

19. Net revenues

Disaggregation of revenue

In the following table, the Company’s revenue is disaggregated by customer classification:


	Three months ended March 31,
	2021		2022
Global Clients	$	853,057	$	973,291
GE	93,014		95,152
Total net revenues	$	946,071	$	1,068,443

All revenue from GE is included in revenue from the HMS segment, and the remainder of revenue from the HMS segment consists of revenue from Global Clients. All of the segment revenue from both the BCMI and CGRLH segments consists of revenue from Global Clients. Refer to Note 18 for details on net revenues attributable to each of the Company’s segments.

The Company has evaluated the impact of the COVID-19 pandemic on the Company’s net revenues for the three months ended March 31, 2021 and 2022, respectively, to ensure that revenue is recognized after considering all impacts to the extent currently known. Impacts observed include constraints on the Company’s ability to render services, whether due to full or partial shutdowns of the Company’s facilities or travel restrictions, penalties relating to breaches of service level agreements, and contract terminations or contract performance delays initiated by clients. The Company’s net revenues for the three months ended March 31, 2021 were lower than expected before the onset of the pandemic, primarily due to delays in obtaining client approvals to shift to a virtual, work-from-home operating environment, whether as a result of regulatory constraints or due to privacy or security concerns. The COVID-19 pandemic did not have a significant impact on the Company’s net revenues for the three months ended March 31, 2022.

Due to the nature of the pandemic, the Company will continue to monitor developments to identify significant uncertainties relating to revenue in future periods.

Contract balances

Accounts receivable include amounts for services that the Company has performed but for which payment has not been received. The Company typically follows a 30-day billing cycle and, as such, at any point in time may have accrued up to 30 days of revenues that have not been billed. The Company has determined that in instances where the timing of revenue recognition differs from the timing of invoicing, the related contracts generally do not include a significant financing component. Refer to Note 4 for details on the Company’s accounts receivable and allowance for credit losses.

The following table shows the details of the Company’s contract balances:


	As of December 31, 2021		As of March 31, 2022
Contract assets (Note a)	$	13,741	$	16,052
Contract liabilities (Note b)
Deferred transition revenue	$	155,077	$	153,198
Advance from customers	$	85,747	$	81,947

(a)Included in "prepaid expenses and other current assets" and "other assets" in the consolidated balance sheet.

(b)Included in "accrued expenses and other current liabilities" and "other liabilities" in the consolidated balance sheet.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

19. Net revenues (Continued)

Contract assets represent the contract acquisition fees or other upfront fees paid to a customer. Such costs are amortized over the expected period of benefit and recorded as an adjustment to the transaction price and deducted from revenue. The Company’s assessment did not indicate any significant impairment losses on its contract assets for the periods presented.

Contract liabilities include that portion of revenue for which payments have been received in advance from customers. The Company also defers revenues attributable to certain process transition activities for which costs have been capitalized by the Company as contract fulfillment costs. Consideration received from customers, if any, relating to such transition activities is also included as part of contract liabilities. The contract liabilities are included within “Accrued expenses and other current liabilities” and “Other liabilities” in the unaudited consolidated balance sheets. The revenues are recognized as (or when) the performance obligation is fulfilled under the contract with the customer.

Changes in the Company’s contract asset and liability balances during the three months ended March 31, 2021 and 2022 were a result of normal business activity and not materially impacted by any other factors.

Revenue recognized during the three months ended March 31, 2021 and 2022 that was included in the Company's contract liabilities balance at the beginning of the period was $58,892 and $46,625, respectively.

The following table includes estimated revenue expected to be recognized in the future related to remaining performance obligations as of March 31, 2022:


Particulars	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Transaction price allocated to remaining performance obligations	$	235,145	$	160,739	$	59,605	$	13,073	$	1,728

The following table provides details of the Company’s contract cost assets:


	Three months ended March 31,
	2021				2022
Particulars	Sales incentive programs		Transition activities		Sales incentive programs		Transition activities
Opening balance	$	33,390	$	192,507	$	32,296	$	206,498
Closing balance	30,813		202,191		30,833		203,939
Amortization	4,796		17,145		6,340		20,538

20. Other operating (income) expense, net

Three months ended September 30,

Nine months ended September 30,

2016

2017

2016

2017

Other operating (income) expense
$
(249
)

$
(75
)

$
(990
)

$
(7,103
)
Provision for impairment of intangible assets

5,381

-

11,195

-

Change in fair value of earn-out consideration and deferred
consideration (relating to business acquisitions)

-

11

(14,996
)

(1,414
)
Other operating (income) expense, net
$
5,132

$
(64
)

$
(4,791
)

$
(8,517
)

~~22.~~


	Three months ended March 31,
	2021		2022
Write-down of intangible assets and property, plant and equipment	$	837	$	—
Other operating income	(484)		3
Other operating (income) expense, net	$	353	$	3

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

21. Interest income (expense), net


	Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
	2016			2017			2016			2017				2021		2022
Interest income	$	1,041		$	2,549		$	5,565		$	4,543		Interest income	$	1,171	$	1,918
Interest expense		(5,942	)		(11,273	)		(16,737	)		(28,610	)	Interest expense	(13,513)		(14,006)
Interest income (expense), net	$	(4,901	)	$	(8,724	)	$	(11,172	)	$	(24,067	)	Interest income (expense), net	$	(12,342)	$	(12,088)

~~23.~~

22. Income taxes

The Company determines its 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 the annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

~~As of December 31, 2016, the Company had unrecognized tax benefits amounting to $23,467, including an amount of $22,469, which, if recognized, would impact the effective tax rate.~~

The following table summarizes activities related to the Company’s unrecognized tax benefits for uncertain tax positions ~~from January 1, 2017 to September 30, 2017:~~

for the three months ended March 31, 2022:


	Three months ended March 31, 2022
Opening balance at January 1	$	25,651
Decrease related to prior year tax positions	(1,717)
Effect of exchange rate changes	(257)
Closing balance at March 31	$	23,677

2017

Opening balance at January 1

$
23,467

Increase related to prior year tax positions, including recorded in acquisition accounting

515

Decrease related to prior year tax positions

(1,203
)
Decrease related to prior year tax positions due to lapse of applicable statute of limitation

(663
)
Effect of exchange rate changes

853

Closing balance at September 30

$
22,969

~~The Company’s~~

As of December 31, 2021 and March 31, 2022, the Company had unrecognized tax benefits ~~as of September 30, 2017 include an amount of $21,964,~~amounting to 25,651 and $23,677, respectively, which, if recognized, would impact the Company’s effective tax rate.

As of December 31, ~~2016~~2021 and ~~September 30, 2017,~~March 31, 2022, the Company had accrued ~~approximately $3,856~~$2,842 and ~~$4,266,~~$2,888, respectively, in interest and $628 and $624, respectively, for ~~interest~~penalties relating to unrecognized tax benefits.

During the year ended December 31, ~~2016~~2021 and the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022, the ~~company~~Company recognized approximately ~~$(206)~~$(13,851) and ~~248,~~$96, respectively, ~~excluding the impact of exchange rate differences,~~ in interest ~~on unrecognized tax benefits.~~ related to income taxes.

23. Commitments and contingencies

Capital commitments

As of December 31, ~~2016~~2021 and ~~September 30, 2017, the Company had accrued approximately $977 and $912, respectively, for penalties.~~

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~24. Related party transactions~~

The Company has entered into related party transactions with its non-consolidating affiliates. The Company has also entered into related party transactions with a significant shareholder and its affiliates.

~~The Company’s related party transactions can be categorized as follows:~~

~~Revenue from services~~

During the nine months ended September 30, 2016 and 2017, the Company recognized net revenues of $257 and $299, respectively, and during the three months ended September 30, 2016 and September 30, 2017, the Company recognized net revenues of $89 and $112, respectively, from a client that is a significant shareholder of the Company.

During the nine months ended September 30, 2016 and 2017, the Company recognized net revenues of $5,109 and $5,400, respectively, and during the three months ended September 30, 2016, the Company recognized net revenues of $1,625, from a client that was a non-consolidating affiliate of the Company.

~~Cost of revenue from services~~

The Company purchases certain services from its non-consolidating affiliates, mainly relating to training and recruitment, which are included in cost of revenue. For the nine months ended September 30, 2016 and 2017, cost of revenue includes an amount of $1,675 and $1,245, respectively, and for the three months ended September 30, 2016 and 2017, cost of revenue includes an amount of $722 and $336, respectively, attributable to the cost of services provided by the Company’s non-consolidating affiliates.

~~Selling, general and administrative expenses~~

The Company purchases certain services from its non-consolidating affiliates, mainly relating to training and recruitment, the costs of which are included in selling, general and administrative expenses. For the nine months ended September 30, 2016 and 2017, selling, general and administrative expenses include an amount of $234 and $199, respectively, and for the three months ended September 30, 2016 and 2017, selling, general and administrative expenses include an amount of $107 and $51, respectively, attributable to the cost of services provided by the Company’s non-consolidating affiliates.

~~During the three and nine months ended September 30, 2016 and 2017, the Company engaged a significant shareholder to provide~~ ~~certain services~~ to the Company, the costs of which are included in selling, general and administrative expenses. For the nine months ended September 30, 2016 and 2017, selling, general and administrative expenses include an amount of $58 and $51, respectively, and for the three months ended September 30, 2016 and 2017, selling, general and administrative expenses include an amount of $43 and $6, respectively, attributable to the cost of this engagement.

~~Investment in equity affiliates~~

~~During the nine months ended September 30, 2017, the Company invested $496 in its non-consolidating affiliates.~~

During the nine months ended September 30, 2017, the Company recorded a charge of $2,849 related to an investment in one of its non-consolidating affiliates. This charge has been included in equity-method investment activity, net in the Company’s consolidated statement of income.

~~As of December~~March 31, ~~2016 and September 30, 2017, the Company’s investments in its non-consolidating affiliates amounted to $4,800 and $833, respectively.~~

~~Others~~

During the nine months ended September 30, 2016 and 2017, the Company also entered into transactions with one of its non-consolidating affiliates for certain cost reimbursements amounting to $918 and $477, respectively. During the three months ended September 30, 2016, such cost reimbursements amounted to $244.

~~GENPACT LIMITED AND ITS SUBSIDIARIES~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

~~(In thousands, except per share data and share count)~~

~~24. Related party transactions (Continued)~~

During the nine months ended September 30, 2017, the Company made payments of $3,847 to one of its non-consolidating affiliates under a tax-sharing arrangement in the U.K. This amount represents a portion of the non-consolidated affiliate’s net operating losses surrendered to the Company under the tax sharing arrangement for the years 2015 and 2016. On June 30, 2017, this non-consolidating affiliate ceased to be a related party.

~~25. Commitments and contingencies~~

~~Capital commitments~~

~~As of December 31, 2016 and September 30, 2017,~~2022, the Company has committed to spend ~~$5,185~~$13,317 and ~~$6,181,~~$12,734, respectively, under agreements to purchase property, plant and equipment. This amount is net of capital advances paid in respect of these purchases.

Bank guarantees

The Company has outstanding bank guarantees and letters of credit amounting to ~~$11,958~~$7,865 and ~~$8,373~~$7,812 as of December 31, ~~2016~~2021 and ~~September 30, 2017,~~March 31, 2022, respectively. Bank guarantees are generally provided to government agencies and excise and customs authorities for the purpose of maintaining a bonded warehouse. These guarantees may be revoked if the government agencies suffer any losses or damages through the breach of any of the covenants contained in the agreements governing such guarantees.

GENPACT LIMITED AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data and share count)

23. Commitments and contingencies (Continued)

Other commitments

~~The~~

Certain units of the Company’s ~~business process delivery centers in India~~Indian subsidiaries are ~~100% export oriented units or~~established as Software Technology Parks of India units or Special Economic Zone (“~~STPI”~~SEZ”) units under the ~~STPI guidelines~~relevant regulations issued by the Government of India. These units are exempt from customs ~~central excise~~and other duties ~~and levies~~ on imported and indigenous capital goods, stores and spares. SEZ units are also exempt from the Goods and Services Tax (“GST”) that was introduced in India in 2017. The Company has undertaken to pay ~~custom~~taxes and duties, ~~service taxes, levies and liquidated damages payable,~~ if any, in respect of ~~imported and indigenous~~ capital goods, stores, spares and ~~spares~~services consumed duty-free, in the event that certain terms and conditions are not fulfilled.

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Contingency

(a) In February 2019, there was a judicial pronouncement in India with respect to defined contribution benefit payments interpreting certain statutory defined contribution obligations of employees and employers. It is not currently clear whether the interpretation set out in the pronouncement has retrospective application. If applied retrospectively, the interpretation would result in an increase in contributions payable by the Company for past periods for certain of its India-based employees. There are numerous interpretative challenges concerning the retrospective application of the judgment. Due to such challenges and a lack of interpretive guidance, and based on legal advice the Company has obtained on the matter, it is currently impracticable to reliably estimate the timing and amount of any payments the Company may be required to make. Accordingly, the Company plans to obtain further clarity and will evaluate the amount of a potential provision, if any.

(b) The Indian taxing authorities (“ITA”) have initiated proceedings to examine the availability of a tax exemption claimed by the Company in respect of exports of services and related refunds under the Indian Goods and Services (“GST”) tax regime and the previous service tax regime. In the second quarter of 2020, the ITA began to challenge or reject the Company’s Indian GST and service tax refunds in certain Indian states. In total, refunds of $27,884 have been denied or challenged by the ITA and additional refunds may be denied. The Company is pursuing appeals of the denied refunds before relevant appellate authorities. The Company had requested these refunds pursuant to the tax exemption available for exports under the previous service tax regime as well as the current GST regime in respect of services performed by the Company in India for affiliates and clients outside of India. In denying the refunds, the ITA have taken the position that the services provided are local services, which interpretation, if correct, would make the service tax and GST exemption on exports unavailable to the Company in respect of such services. Additional potentially material challenges and assessments may result from ongoing proceedings related to service tax recovery. The Company believes that the denial of the refunds claimed pursuant to the service tax and GST exemption is incorrect and that the risk that the liability will materialize is remote. The Government of India has recently issued an administrative circular which supports the Company’s position, and the Company believes that the appellate authorities will reverse the previous orders denying refunds owed to the Company. Accordingly, no reserve has been provided as of March 31, 2022.

(c) An affiliate of the Company in India received an assessment order in 2016 seeking to assess tax amounting to $108,282 (including interest to the date of the order) on certain transactions that occurred in 2013. This amount excludes penalty or interest accrued since the date of the order. The Income Tax Appellate Tribunal of India (the “Tribunal”) has accepted the legal arguments raised by the Company on appeal and the assessment order has been cancelled. Taxes paid under protest have been refunded along with interest to the Company. The Indian tax authorities may appeal the order of the Tribunal before a higher court. Based on its evaluation of the facts underlying the transaction and legal advice received on the matter, the Company believes that it is more likely than not that this transaction would not be subject to tax liability in India. Accordingly, no reserve has been provided as of March 31, 2022.

(d) In September 2020, the Indian Parliament approved the Code on Social Security, 2020 (the “Code”), which will impact the Company’s contributions to its defined contribution and defined benefit plans for employees based in India. The date the changes will take effect is not yet known and the rules for quantifying the financial impact have not yet been published. The Company will evaluate the impact of the Code on the Company in its financial statements for the period in which the Code becomes effective and the related rules are published.

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

The following discussion and analysis is meant to provide material information relevant to an assessment of the financial condition and results of operations of our company, including an evaluation of the amounts and uncertainties of cash flows from operations and from outside sources, so as to allow investors to better view our company from management’s perspective. The following discussion should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021. In addition to historical information, this discussion includes forward-looking statements and information that involves risks, uncertainties and assumptions, including but not limited to those listed below and under “Risk Factors” in our ~~Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and in our~~ Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2021.

Special Note Regarding Forward-Looking Statements

We have made statements in this Quarterly Report on Form 10-Q (the “Quarterly Report”) in, among other sections, Part I, Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are forward-looking statements. In some cases, you can identify these statements by forward-looking terms such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “could,” “may,” “shall,” “will,” “would” and variations of such words and similar expressions, or the negative of such words or similar expressions. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, which in some cases may be based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks outlined in Part ~~II, Item 1A—“Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and in Part~~ I, Item 1A—“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

~~These forward-looking~~2021. For a discussion of risks of which we are aware in relation to the COVID-19 pandemic, see “Our business and results of operations have been adversely impacted and may in the future be adversely impacted by the COVID-19 pandemic" under Part I, Item 1A—"Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021. Many of the risks, uncertainties and other factors identified below have been, and may continue to be, amplified by the COVID-19 pandemic.

Forward-looking statements we may make include, but are not limited to, statements relating to:

•our ability to retain existing clients and contracts;

•our ability to win new clients and engagements;

•our rate of employee attrition;

•the expected value of the statements of work under our master service agreements;

•our beliefs about future trends in our market;

•political, economic or business conditions in countries where we have operations or where our clients ~~operate;~~

operate, including the withdrawal of the United Kingdom, or the U.K., from the European Union, or the EU, commonly known as Brexit, and uncertainty about the future relationship between the U.K. and the EU, and heightened economic and political uncertainty within and among other EU member states;

•expected spending on business process outsourcing, ~~and~~ information technology and digital transformation services by clients;

•foreign currency exchange rates;

•our ability to convert bookings to revenue;

~~our rate of employee attrition;~~

•our effective tax rate; and

•competition in our industry.

Factors that may cause actual results to differ from expected results include, among others:

•the invasion of Ukraine by Russia and the related sanctions and other measures being implemented or imposed in response thereto, or any potential expansion or escalation of the conflict or its economic disruption beyond its current scope;

•wage increases in countries where we have operations;

•our ability to ~~grow~~hire and retain enough qualified employees to support our operations;

•general inflationary pressures and our ability to share increased costs with our clients;

•our ability to effectively price our services and maintain pricing and employee utilization rates;

•the impact of the COVID-19 pandemic on our business, results of operations and financial condition;

•our ability to develop and successfully execute our business strategies;

•our ability to comply with data protection laws and regulations and to maintain the security and confidentiality of personal and other sensitive data of our clients, employees or others;

•telecommunications or technology disruptions or breaches, natural or other disasters, or medical epidemics or pandemics, including the COVID-19 pandemic;

•our dependence on favorable policies and tax laws that may be changed or amended in a manner adverse to us or be unavailable to us in the future, including as a result of tax policy changes in India, and our ability to effectively ~~manage growth and international operations while maintaining effective internal controls;~~

execute our tax planning strategies;

•our dependence on revenues derived from clients in the United States and Europe and clients that operate in certain industries, such as the financial services industry;

~~our dependence on favorable tax legislation and tax policies that may be amended in a manner adverse to us or be unavailable to us in the future;~~

•our ability to successfully consummate or integrate strategic acquisitions;

•our ability to attract and retain clients and to develop and maintain client relationships on attractive terms;

•our ability to service our defined contribution and benefit plan payment obligations;

•clarification as to the possible retrospective application of a judicial pronouncement in India regarding our defined contribution and benefit plan payment obligations;

•our relationship with the General Electric Company, or GE, and our ability to maintain ~~pricing and asset utilization rates;~~

relationships with former GE businesses;

~~our ability to hire and retain enough qualified employees to support our operations;~~

~~increases in wages in locations in which we have operations;~~

•

~~our relative dependence on the General Electric Company (GE) and our ability to maintain our relationships with divested GE businesses;~~

•financing terms, including, but not limited to, changes in the London Interbank Offered ~~rate,~~Rate, or LIBOR, including the pending global phase-out of LIBOR, the development of alternative rates, including the Secured Overnight Financing Rate, and changes into our credit ratings;

•our ability to meet our corporate funding needs, pay dividends and service debt, including our ability to comply with the restrictions that apply to our indebtedness that may limit our business activities and investment opportunities;

•our ability to grow our business and effectively manage growth and international operations while maintaining effective internal controls;

•restrictions on visas for our employees traveling to North America and Europe;

•fluctuations in currency exchange rates between the U.S. dollar, the euro, U.K. pound sterling, Chinese renminbi, Hungarian forint, Japanese yen, Indian rupee, Australian dollar, Philippines peso, Norwegian krone, Mexican peso, Polish zloty, Romanian leu, South African rand, Hong Kong dollar, Singapore dollar, Arab Emirates dirham, Brazilian real, Swiss franc, Swedish krona, Danish krone, Kenyan shilling, Czech koruna, Israeli new shekel, Colombian peso, Guatemalan quetzal, Malaysian ringgit, Moroccan dirham and Canadian dollar;

currencies in which we transact business;

•our ability to retain senior management;

•the selling cycle for our client relationships;

~~our ability to attract and retain clients and our ability to develop and maintain client relationships on attractive terms;~~

•legislation in the United States or elsewhere that adversely affects ~~the performance of~~demand for business process outsourcing, ~~and~~ information technology and digital transformation services offshore;

•increasing competition in our industry;

~~telecommunications or technology disruptions or breaches, or natural or other disasters;~~

•our ability to protect our intellectual property and the intellectual property of others;

~~our ability to maintain the security and confidentiality of personal and other sensitive data of our clients, employees or others;~~

•deterioration in the global economic environment and its impact on our clients, including the bankruptcy of our clients;

•regulatory, legislative and judicial developments, including the withdrawal of governmental fiscal incentives;

•the international nature of our business;

•technological innovation;

•our ability to derive revenues from new service ~~offerings;~~offerings and

acquisitions; and

•unionization of any of our employees.

Although we believe the expectations reflected in ~~any~~the forward-looking statements are reasonable at the time they are made, we cannot guarantee future results, level of activity, performance or achievements. Achievement of future results is subject to risks, uncertainties, and potentially inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements. We undertake no obligation to update any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations. You are advised, however, to consult any further disclosures we make on related subjects in our ~~Forms~~Form 10-K, ~~Forms~~Form 10-Q and Form 8-K reports to the ~~SEC.~~

Securities and Exchange Commission (the “SEC”).

Continued impact of COVID-19 on our business and results of operations

The COVID-19 pandemic continues to impact the global economy and the markets in which we operate. In the three months ended March 31, 2022, the pandemic had a modest negative impact on our results and may continue to have an impact on us in future periods. This section provides a brief overview of how we are responding to known and anticipated impacts of the COVID-19 pandemic on our business, financial condition, and results of operations.

While many of our employees globally continue to work from home, we have reopened our offices, in some instances on a limited and voluntary basis, where circumstances have enabled us to do so. In these circumstances we have implemented additional health and safety measures consistent with government recommendations and/or requirements to help ensure employee safety. These measures include health screening, social distancing, contact tracing, enhanced cleaning procedures, and testing and vaccination requirements.

Governments continue to ease COVID-19 restrictions in many places, which in some cases has contributed to a resurgence of COVID-19 cases and the spread of COVID-19 variants and subvariants. The availability of vaccines (and vaccine boosters) continues to increase around the world, albeit with slower than anticipated rollouts and challenges in certain countries.

Our Global Leadership Council continues to coordinate and oversee our actions in response to the COVID-19 pandemic, including business continuity planning, monitoring our revenue and profitability, developing transformation service offerings to address new and developing client needs, and evaluating and adapting our human resource policies.

As the COVID-19 pandemic evolves, we will continue to assess its impact on the Company and respond accordingly. The ultimate impact of COVID-19 on our business and the industry in which we operate remains unknown and unpredictable. Our past results may not be indicative of our future performance, and our financial results in future periods, including but not limited to net revenues, income from operations, income from operations margin, net income and earnings per share, may differ materially from historical trends. The extent of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including but not limited to the duration and severity of the

pandemic; future variants or subvariants of the COVID-19 virus and the severity of such variants or subvariants; rates of vaccination and the availability and effectiveness of vaccines, including booster shots, and treatments for COVID-19 globally; the macroeconomic impact of the spread of the virus; and related government stimulus measures. We are currently unable to predict the full impact that the COVID-19 pandemic will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures and the related macroeconomic impacts. For example, to the extent the pandemic continues to disrupt economic activity globally, we, like other businesses, will not be immune from its effects, and our business, results of operations and financial condition may be adversely affected, possibly materially, by prolonged decreases in spending on the types of services we provide, deterioration of our clients’ credit, or reduced economic activities. In addition, some of our expenses are less variable in nature and do not closely correlate with revenues, which may lead to a decrease in our profitability.

Impact of Russia’s Military Action in Ukraine on our Business

In February 2022, Russian forces launched significant military action against Ukraine, which has resulted in conflict and disruptions in the region. In response to this action taken by Russia, the United States, the United Kingdom and the European Union governments, among others, have imposed various sanctions and export-control measures, including comprehensive financial sanctions, targeted at Russia or designated individuals and entities with business interests and/or government connections to Russia or those involved in Russian military activities. Governments have also enhanced export controls and trade sanctions targeting Russia’s import of goods. In the event these geopolitical tensions fail to improve or deteriorate, additional governmental sanctions and measures may be enacted.

It is not possible to predict the broader consequences of the conflict, including related geopolitical tensions. The invasion and retaliatory actions taken by the United States and other countries in respect thereof, as well as any counter measures or retaliatory actions by Russia in response, have in certain cases caused and are likely to continue to cause supply chain disruption and inflation, regional instability, geopolitical shifts and could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. While we do not have any operations in Russia or Ukraine, it is difficult to anticipate the impact of any of the foregoing on our business, and the conflict and actions taken in response to the conflict could increase our costs, disrupt our supply chain, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations. To date, we do not believe Russia’s military action in Ukraine and governmental actions in response thereto have had a material impact on our business, financial position or operations. We continue to monitor the situation closely.

For additional information about the risks we face in relation to the COVID-19 pandemic and Russia's invasion of Ukraine, see Part I, Item 1A—“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

Overview

We are a global professional services firm ~~focused on driving~~that makes business transformation real. We drive digital-led innovation and ~~running~~run digitally-enabled intelligent operations for our ~~clients. Guided~~clients, guided by our experience running thousands of processes for hundreds of Fortune Global 500 clients. We have over 115,300 employees serving clients ~~since our founding, we strive to help our clients achieve their operational goals by applying our~~in key industry ~~expertise, proprietary digital technology and analytics. We employ over 77,000 people in~~verticals from more than 2030 countries. Our registered office is located at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

In the quarter ended ~~September 30, 2017,~~March 31, 2022, we ~~had~~recorded net revenues of ~~$708.8~~$1,068.4 million, of which ~~$636.6~~$973.3 million, or ~~89.8%~~91.1%, was from clients other than GE, which we refer to as Global Clients, with the remaining ~~$72.2~~$95.2 million, or ~~10.2%~~8.9%, ~~coming~~ from GE.

Certain Acquisitions

~~Acquisitions~~

On ~~September 5, 2017,~~December 31, 2021, we acquired 100% of the outstanding ~~equity interest~~equity/limited liability company interests in ~~TandemSeven, Inc. (“TandemSeven”),~~Hoodoo Digital, LLC, a ~~Massachusetts corporation,~~Utah limited liability company, for ~~estimated~~ total purchase consideration of ~~$35.7 million, subject to adjustment for closing date working capital and indebtedness.~~$66.7 million. This amount ~~includes~~represents cash consideration of ~~$31.9~~$64.4 million, net of cash acquired of ~~$3.9 million,~~$2.3 million. This acquisition furthers our strategy to fuse experience and ~~a preliminary adjustment for working capital~~process innovation to help clients drive end-to-end digital transformation. Hoodoo’s expertise with Adobe Experience Manager and indebtedness. As of September 30, 2017, we have paid the sellers total consideration of $34.8 million, resulting in a payable of $0.9 million. TandemSeven’s focus on improving the design of customer experiencesother Adobe applications complements our existing ~~capabilities aimed at transforming clients’ processes end-to-end.~~end-to-end client solution that seamlessly integrates digital content, e-commerce, data analytics, and marketing operations. Goodwill arising from the acquisition ~~amounted~~amounting to ~~$25.3~~$44.3 million ~~which~~ has been allocated toamong our ~~India~~three reporting ~~unit~~units as follows: Banking, Capital Markets and Insurance ("BCMI") in the amount of $4.2 million, Consumer Goods, Retail, Life Sciences and Healthcare ("CGRLH") in the amount of $7.1 million and High Tech, Manufacturing and Services ("HMS") in the amount of $33.1 million, using a relative fair value allocation method. Goodwill arising from this acquisition is deductible for income tax ~~purposes. The goodwill~~ purposes and

represents primarily the acquired ~~expertise, operating synergies~~capabilities and other benefits expected to result from combining the acquired operations with our existing ~~operations.~~

operations

On ~~July 18, 2017,~~December 31, 2020, we acquired 100% of the outstanding equity ~~interest~~interests in ~~OnSource LLC,~~Enquero Inc, a ~~Massachusetts limited liability company,~~California corporation, and certain affiliated entities in India, the Netherlands and Canada (collectively referred to as “Enquero”) for ~~estimated~~ total purchase consideration of ~~$23.0 million, subject to adjustment for closing date working capital, indebtedness and certain transaction expenses incurred by OnSource in connection with closing.~~$148.8 million. This amount ~~includes~~represents cash consideration of ~~$23.0~~$137.2 million, ~~and a preliminary adjustment for working capital and~~ net ~~debt. As~~ of ~~September 30, 2017, we have paid the sellers total consideration~~cash acquired of ~~$23.0~~$11.6 million. This acquisition ~~brings~~increased the scale and depth of our data and analytics capabilities, enhancing our ability to accelerate the digital ~~capabilities to~~transformation journeys of our ~~insurance service offerings.~~clients through cloud technologies and advanced data analytics. Goodwill arising from the acquisition ~~amounted~~amounting to ~~$19.7~~$87.9 million ~~which~~ has been allocated toamong our ~~India~~three reporting ~~unit~~units as follows: BCMI in the amount of $2.6 million, CGRLH in the amount of $22.5 million and HMS in the amount of $62.7 million, using a relative fair value allocation method. Goodwill arising from this acquisition is not deductible for income tax ~~purposes. The goodwill~~purposes and represents primarily the acquired capabilities ~~operating synergies~~ and other benefits expected to result from combining the acquired operations with our existing operations.

On ~~July 18, 2017,~~October 5, 2020, we acquired ~~from Birlasoft (India) Limited,~~100% of the outstanding equity/limited liability company interests in SomethingDigital.Com LLC, a New York limited liability company, incorporated under the Indian Companies Act, 1956, Birlasoft Inc., a Delaware corporation, and Birlasoft (UK) Limited, a company incorporated in England and Wales (collectively referred to as “Birlasoft”) certain assets comprising a portion of Birlasoft’s IT business for total purchase consideration of ~~$16.3~~$57.5 million. This amount represents cash consideration of $56.1 million, net of cash acquired of $1.4 million. This acquisition ~~expands~~supported our strategy to integrate experience and process innovation to help clients on their digital transformation journeys and expanded on our existing experience capabilities to support end-to-end digital commerce solutions, both business-to-business and business-to-consumer. Additionally, this acquisition expanded our capabilities into Magento Commerce, which powers Adobe Commerce Cloud, and Shopify Plus, a cloud-based-ecommerce platform for ~~our clients in the healthcare and aviation industries.~~high-volume merchants. Goodwill arising from the acquisition ~~amounted~~amounting to ~~$9.7~~$36.9 million ~~which~~ has been allocated toamong two of our ~~IT services~~ reporting ~~unit~~units as follows: CGRLH in the amount of $30.4 million and HMS in the amount of $6.6 million, using a relative fair value allocation method. Of the total goodwill arising from this acquisition, $35.1 million is deductible for income tax purposes. The goodwill represents primarily the acquired capabilities ~~operating synergies~~ and other benefits expected to result from combining the acquired operations with our existing operations.

On May 11, 2017, we acquired the instrument processing business of Fiserv Solutions of Australia Pty Limited for estimated total purchase consideration of $19.0 million, subject to adjustment for closing date working capital, value transfer and net debt. This amount includes a preliminary adjustment for closing date working capital, value transfer and net debt. As of September 30, 2017, we have paid the sellers total consideration of $21.3 million, resulting in a receivable of $2.3 million. This acquisition strengthens our financial services portfolio and expands our Australia footprint. Goodwill arising from the acquisition amounted to $5.4 million, which has been allocated to our India reporting unit and is not deductible for tax purposes. The goodwill represents primarily the capabilities, operating synergies and other benefits expected to be derived from combining the acquired operations with our existing operations.

~~On May 3, 2017,~~November 12, 2019, we acquired 100% of the outstanding ~~equity interest in each of BrightClaim LLC, a Delaware~~ equity/limited liability company ~~BrightServe~~interests in Rightpoint Consulting, LLC, ~~a Georgia limited liability company, National Vendor LLC, a Delaware~~an Illinois limited liability company, and ~~BrightClaim Blocker, Inc., a Delaware corporation~~certain affiliated entities in the United States and India (collectively referred to as ~~“BrightClaim”~~“Rightpoint”)~~. The estimated~~ for total purchase consideration ~~for the acquisition~~ of ~~BrightClaim is $56.5 million, subject to adjustment for closing date working capital, indebtedness and certain transaction expenses incurred by BrightClaim in connection with closing.~~$270.7 million. This amount includes cash consideration of ~~$52.4~~$268.2 million, net of cash acquired of ~~$4.0 million, and a preliminary adjustment for working capital and net debt.~~$2.5 million. This acquisition ~~enhances~~expanded our ~~breadth~~capabilities in improving customer experience and ~~depth~~strengthens our reputation as a thought leader in this space. The securities purchase agreement provided certain of ~~service offerings~~the selling equity holders the option to elect to either (a) receive 100% consideration in cash at the closing date for ~~clients~~their limited liability company interests and vested options or (b) “roll over” and retain 25% of their Rightpoint limited liability company interests and vested options and receive consideration in cash at closing for the remaining 75% of their Rightpoint limited liability company interests and vested options. Certain selling equity holders elected to receive deferred, variable earnout consideration with an estimated value of $21.5 million over the three-year rollover period, which is included in the ~~insurance industry.~~purchase consideration. The amount of deferred consideration ultimately payable to the rollover sellers will be based on the future revenue multiple of the acquired business. Goodwill arising from the acquisition ~~amounted~~amounting to ~~$42.6~~$177.2 million ~~which~~ has been allocated toamong our ~~India~~three reporting ~~unit~~units as follows: BCMI in the amount of $17.0 million, CGRLH in the amount of $43.0 million and HMS in the amount of $117.2 million, using a relative fair value allocation method. Of the total goodwill arising from this acquisition, $91.9 million is ~~partially~~ deductible for income tax purposes. The goodwill ~~represents~~ primarily ~~the capabilities, operating synergies and other benefits expected to be derived from combining~~represents the acquired ~~operations with our existing operations.~~

On April 13, 2017, we acquired 100% of the outstanding equity interest in RAGE Frameworks, Inc. (“RAGE”), a Delaware corporation for estimated total purchase consideration of $125.1 million, subject to adjustment for closing date working capital and indebtedness. This amount includes cash consideration of $124.1 million, net of cash acquired of $1.6 million, and a preliminary adjustment for working capital and indebtedness. As of September 30, 2017, we have paid the sellers total consideration of $125.8 million, resulting in a receivable of $0.5 million. This acquisition enhances our digital and artificial intelligence capabilities by adding knowledge-based automation technology and services. Goodwill arising from the acquisition amounted to $105.1 million, which has been allocated to our India reporting unit and is not deductible for tax purposes. The goodwill represents primarily the acquired digital and artificial intelligence capabilities, operating synergies and other benefits expected to be derived from combining the acquired operations with our existing operations.

On February 15, 2017, we acquired 100% of the outstanding equity interest in LeaseDimensions, Inc. (“LeaseDimensions”), an Oregon corporation, for estimated total purchase consideration of $11.6 million, subject to adjustment for closing date working capital and net debt. This amount includes the estimated fair value of the contingent earn-out consideration and cash consideration of $9.1 million, net of cash acquired of $0.2 million, and a preliminary adjustment for working capital and net debt. As of September 30, 2017, we have paid the sellers total consideration of $9.5 million, resulting in a receivable of $0.1 million. The purchase agreement between us and the sellers also provides for contingent earn-out consideration ranging from $0 to $3.0 million, payable by us to the sellers based on the future performance of LeaseDimensions relative to the thresholds specified in the earn-out calculation. This acquisition enhances our capabilities in commercial lending and leasing. Goodwill arising from the acquisition amounted to $8.3 million, which has been allocated to our Americas reporting unit and is not deductible for tax purposes. The goodwill represents primarily the capabilities, operating synergies and other benefits expected to be derived from combining the acquired operations with our existing operations.

On April 13, 2016, we acquired 100% of the outstanding equity interest in Endeavour Software Technologies Private Limited (“Endeavour”), an Indian private limited company. The total consideration we paid the sellers to acquire Endeavour was $14.8 million. This amount includes the estimated fair value of contingent earn-out consideration, cash consideration of $10.3 million, net of cash acquired of $2.4 million, and an adjustment for working capital and net debt. This acquisition enhances our digital capabilities by adding end-to-end mobility services. Goodwill arising from the acquisition amounted to $8.9 million, which has been allocated to our India reporting unit and is not deductible for tax purposes. The goodwill represents primarily the capabilities in end-to-end mobility services, operating synergies and other benefits expected to result from combining the acquired operations with our existing operations.

On January 8, 2016, we acquired 51% of the outstanding equity interest in Strategic Sourcing Excellence LLC (“SSE”), a Delaware limited liability company, for initial cash consideration of $2.6 million, subject to adjustment for working capital, transaction expenses and indebtedness. This acquisition strengthens our procurement consulting, transformation and strategic sourcing capabilities. The equity purchase agreement between us and the selling equity holders provides for contingent earn-out consideration of up to $20.0 million, payable by us to the selling equity holders based on the future performance of SSE relative to the thresholds specified in the earn-out calculation. Up to $9.8 million of the total potential earn-out consideration, representing the selling equity holders’ 49% interest in SSE, is payable by us to the selling equity holders only if either the put or call option, each as described below, is exercised. Goodwill arising from the acquisition amounted to $14.4 million, which has been allocated to our India reporting unit and is deductible for tax purposes. The equity purchase agreement grants us a call option to purchase the remaining 49% equity interest in SSE, which option we have the right to exercise between January 1, 2018 and January 31, 2018. If we do not exercise our call option during such period, the selling equity holders have the right to exercise a put option between March 1, 2018 and April 30, 2018 to require us to purchase their 49% interest in SSE at a price ranging from $2.5 million to $3.0 million. The goodwill represents future economic benefits we expect to derive from our expanded presence in the sourcing and procurement consulting domains, operating synergies and other anticipated benefits of combining the acquired operations with our existing operations.

~~Secondary Offering~~

On August 18, 2017, we completed a secondary offering of our common shares, pursuant to which certain of our shareholders affiliated with Bain Capital Investors, LLC, namely Glory Investments A Limited and its affiliated assignees, together with their co-investor, GIC Private Limited (the “Selling Shareholders”), sold 10.0 million common shares at a price of $28.72 per share in an underwritten public offering. All of the common shares were sold by the Selling Shareholders and, as a result, we did not receive any of the proceeds from the offering.

Critical Accounting Policies and Estimates

For a description of our critical accounting policies and estimates, see Note 2—“Summary of significant accounting policies” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above, as well as Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and ~~Estimates,”~~Estimates” and Note 2—“Summary of significant accounting policies” under Part IV, Item 15—“Exhibits and Financial Statement Schedules” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2021. These have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2022 from those described in our Annual Report on Form 10-K for the year ended December 31, 2021

Due to rounding, the numbers presented in the tables included in this “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.

Results of Operations

The following table sets forth certain data from our consolidated statements of income for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2021 and ~~2017.~~

2022.

																Percentage Change
																Increase/(Decrease)													Percentage Change Increase/(Decrease)
	Three months ended September 30,							Nine months ended September 30,								Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,				Three months ended March 31,
	2016			2017				2016				2017				2017 vs. 2016				2017 vs. 2016					2021		2022		2022 vs. 2021
	(dollars in millions)							(dollars in millions)																	(dollars in millions)
Net revenues—GE*	$	85.4		$	72.2			$	276.6			$	204.7				(15.4	)	%		(26.0	)	%
Net revenues—Global Clients*	563.4			636.6				1,612.4				1,797.8					13.0		%		11.5		%
Net revenues—Global Clients																								Net revenues—Global Clients	$ 853.1		$ 973.3		14.1	%
Net revenues—GE																								Net revenues—GE	93.0		95.2		2.3	%
Total net revenues	648.8			708.8				1,889.0				2,002.5					9.3		%		6.0		%	Total net revenues	946.1		1,068.4		12.9	%
Cost of revenue	392.4			429.2				1,149.0				1,227.8					9.4		%		6.9		%	Cost of revenue	600.9		686.0		14.2	%
Gross profit	256.4			279.6				740.0				774.7					9.1		%		4.7		%	Gross profit	345.1		382.5		10.8	%
Gross profit margin		39.5	%		39.5		%		39.2		%		38.7		%									Gross profit margin	36.5	%	35.8	%
Operating expenses																								Operating expenses
Selling, general and administrative expenses	157.0			172.1				482.3				500.9					9.6		%		3.8		%	Selling, general and administrative expenses	200.7		237.3		18.2	%
Amortization of acquired intangible assets	7.1			10.2				19.8				25.8					42.5		%		30.4		%	Amortization of acquired intangible assets	16.2		11.3		(30.1)	%
Other operating (income) expense, net	5.1			(0.1)				(4.8)				(8.5)					(101.2	)	%		77.8		%	Other operating (income) expense, net	0.4		0.0		(99.2)	%
Income from operations	87.1			97.5				242.7				256.6					11.9		%		5.7		%	Income from operations	127.9		133.9		4.7	%
Income from operations as a percentage of net revenues		13.4	%		13.7		%		12.8		%		12.8		%									Income from operations as a percentage of net revenues	13.5	%	12.5	%
Foreign exchange gains (losses), net	(0.7)			5.0				3.2				2.0					(871.4	)	%		(35.2	)	%	Foreign exchange gains (losses), net	3.3		4.3		30.7	%
Interest income (expense), net	(4.9)				(8.7	)			(11.2	)			(24.1	)			78.0		%		115.4		%	Interest income (expense), net	(12.3)		(12.1)		(2.1)	%
Other income (expense), net	5.8			(4.0)				7.2				9.0					(169.6	)	%		25.6		%	Other income (expense), net	1.4		(0.4)		(129.4)	%
Income before equity-method investment activity, net and income tax expense	87.4			89.7				241.8				243.6					2.7		%		0.7		%
Equity-method investment activity, net	(2.1)			—				(6.3)				(4.6)					(100.0	)	%		(27.9	)	%
Income before income tax expense	85.2			89.7				235.5				239.0					5.3		%		1.5		%	Income before income tax expense	120.2		125.7		4.5	%
Income tax expense	17.1			16.6				44.0				44.3					(2.8	)	%		0.6		%	Income tax expense	29.0		29.5		1.9	%
Net income	68.2			73.2				191.5				194.7					7.3		%		1.7		%	Net income	$ 91.3		$ 96.2		5.4	%
Net loss attributable to redeemable non-controlling interest	0.7			0.6				1.9				1.3					(20.4	)	%		(30.4	)	%
Net income attributable to Genpact Limited common shareholders	$	68.9		$	73.7			$	193.4			$	196.0				7.0		%		1.4		%
Net income attributable to Genpact Limited common shareholders as a percentage of net revenues		10.6	%		10.4		%		10.2		%		9.8		%
Net income as a percentage of net revenues																								Net income as a percentage of net revenues	9.6	%	9.0	%

* At the end of each fiscal year, we reclassify revenue from certain divested GE businesses as Global Client revenue as of the dates of divestiture. Such reclassifications are reflected in the revenue results and growth rates presented in the table above.

Three Months Ended ~~September 30, 2017~~March 31, 2022 Compared to the Three Months Ended ~~September 30, 2016~~

March 31, 2021

Net revenues. Our net revenues were ~~$708.8~~$1,068.4 million in the ~~third~~first quarter of ~~2017,~~2022, up ~~$60.0~~122.4 million, or ~~9.3%~~12.9%, from ~~$648.8~~$946.1 million in the ~~third~~first quarter of ~~2016.~~2021. The growth in our net revenues was ~~driven primarily~~driven by ~~an increase~~better-than-expected performance in ~~business process outsourcing, or BPO, services, including our transformation services, delivered to our clients~~both Global Clients and ~~incremental revenue from acquisitions.~~ GE.

Adjusted for foreign exchange, primarily the impact of changes in the ~~values~~value of the Australian dollar, euro, U.K. pound sterling ~~euro~~ and ~~Australian dollar~~Japanese yen against the U.S. dollar, our net revenues grew ~~10%~~14% in the first quarter of 2022 compared to the ~~third~~first quarter of ~~2016~~2021 on a constant currency1 basis. ~~Revenue growth on a constant currency basis is a non-GAAP measure.~~ We provide information about our revenue growth on a constant currency1 basis so that our revenue may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of our business performance. Total net revenues on a constant currency1 basis are calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates and adjusted for hedging gains/losses.

Our average headcount increased by ~~3.2%~~16.9% to approximately ~~75,600~~113,500 in the ~~third~~first quarter of ~~2017~~2022 from approximately ~~73,200~~97,100 in the ~~third~~first quarter of ~~2016.~~

2021.

Percentage Change

Three months ended September 30,
Increase/(Decrease)

2016

2017

2017 vs. 2016

(dollars in millions)

Global Clients:

BPO services

$
469.5

$
540.6

15.1

%
IT services

93.9

96.0

2.3

Total net revenues from Global Clients

$
563.4

$
636.6

13.0

%
GE:

BPO services

61.0

42.7

(30.0
)
%
IT services

24.4

29.5

21.2

Total net revenues from GE

$
85.4

$
72.2

(15.4
)
%
Total net revenues from BPO services

530.5

583.3

9.9

Total net revenues from IT services

118.3

125.6

6.2

Total net revenues

$
648.8

$
708.8

9.3

%

1 Revenue growth on a constant currency basis is a non-GAAP measure and is calculated by restating current-period activity using the ~~end of each~~prior fiscal year, we reclassify revenue from certain divested GE businesses as Global Client revenue as of the dates of divestiture. Additionally, at the end of 2016, we reclassified revenue from our acquisitions of Endeavour and PNMSoft Limited from IT services to BPO revenue effective as of the date of each acquisition. Such reclassifications are reflected in the revenue results and growth rates presented below and in the table above. In addition, to provide a consistent view of the trends underlying our business, we are presenting below revenue results and growthperiod’s foreign currency exchange rates adjusted ~~to assume that all 2016 GE revenue reclassifications occurred on January 1, 2016.~~

for hedging gains/losses in such period.


	Three months ended March 31,				Percentage Change Increase/(Decrease)
	2021		2022		2022 vs. 2021
	(dollars in millions)
Net revenues – Global Clients	$	853.1	$	973.3	14.1	%
Net revenues – GE	$	93.0	$	95.2	2.3	%
Total net revenues	$	946.1	$	1,068.4	12.9	%

Net revenues from Global Clients in the first quarter of 2022 were ~~$636.6~~$973.3 million, up $120.2 million, or 14.1%, from $853.1 million in the ~~third~~first quarter of ~~2017, up $73.2 million, or 13.0%, from $563.4 million in the third quarter of 2016.~~2021. This increase was ~~primarily~~largely driven by ~~growth~~continued strong demand for transformation services and service ramp-ups related to recently signed intelligent operations engagements, as well as revenue from Hoodoo Digital, LLC, which we acquired in ~~our targeted verticals, including consumer product goods, banking and financial services, insurance, life sciences, manufacturing and high tech.~~the fourth quarter of 2021. As a percentage of total net revenues, net revenues from Global Clients increased from ~~86.8%~~90.2% in the ~~third~~first quarter of ~~2016~~2021 to ~~89.8%~~91.1% in the ~~third~~first quarter of ~~2017. If all 2016 revenue reclassifications had occurred on January 1, 2016, revenue from Global Clients would have increased 12% year over year.~~

2022.

Net revenues from GE in the first quarter of 2022 were ~~$72.2~~$95.2 million, up $2.2 million, or 2.3%, from $93.0 million in the ~~third~~first quarter of ~~2017, down $13.1 million, or 15.4%, from~~2021, primarily related to short cycle project work in the ~~third~~first quarter of ~~2016. The decline~~2022 compared to the first quarter of 2021.

Revenues by segment were as follows:


	Three months ended March 31,				Percentage Change Increase/(Decrease)
	2021		2022		2022 vs. 2021
	(dollars in millions)
BCMI	$	242.3	$	276.2	14.0	%
CGRLH	340.0		404.2		18.9	%
HMS	356.9		394.9		10.7	%
Others	6.8		(6.8)		(200.7)	%
Total net revenues	$	946.1	$	1,068.4	12.9	%

Net revenues from our BCMI segment increased by 14.0% in the first quarter of 2022 compared to the first quarter of 2021, primarily driven by an increase in revenues from both our transformation services and intelligent operations engagements in our insurance vertical, and an increase in transformation services revenue in our banking and capital markets vertical. Net revenues from our CGRLH segment increased by 18.9% in the first quarter of 2022 compared to the first quarter of 2021, driven by an increase in both our transformation services and intelligent operations engagements. Net revenues from our HMS segment increased by 10.7% in the first quarter of 2022 compared to the first quarter of 2021, primarily driven by an increase in both our transformation services and intelligent operations engagements for Global Clients, including revenue from Hoodoo Digital, LLC, which we acquired in the fourth quarter of 2021, as well as an increase in net revenues from GE, ~~was largely in line with expected decreases in services delivered~~primarily related to GEshort-cycle project work in the ~~third~~first quarter of ~~2017, primarily due~~2022 compared to ~~GE’s dispositions~~the first quarter of ~~GE Capital businesses in 2016.~~2021. Net revenues from ~~GE declined as a percentage of our total net revenues from 13.2%~~"Others" in the ~~third quarter~~table above primarily represents the impact of ~~2016 to 10.2% in the third quarter of 2017. If all 2016 revenue reclassifications had occurred on January 1, 2016, revenue from GE would have decreased 12% year over year.~~

Net revenues from BPO services were $583.3 million, up $52.7 million, or 9.9%, from $530.5 million in the third quarter of 2016. This increase was primarily attributable to an increase in services deliveredforeign exchange fluctuations, which is not allocated to our Global Clients, particularly core industry vertical operations services and finance and accounting services. Net revenues from IT services were $125.6 million in the third quarter of 2017, up $7.3 million, or 6.2%, from $118.3 million in the third quarter of 2016 due to an increase in revenues from GE and Global Clients.

Net revenues from BPO services as a percentage of total net revenues increased to 82.3% in the third quarter of 2017 from 81.8% in the third quarter of 2016 with a corresponding decline in the percentage of total net revenues attributable to IT services.

segments for management’s internal reporting purposes. For additional information, see Note 18—“Segment reporting” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.

Cost of ~~revenue and gross margin.~~ ~~The following table sets forth the components of our cost of revenue and the resulting gross margin:~~

Three months ended September 30,

As a Percentage of Total Net Revenues

2016

2017

2016

2017

(dollars in millions)

Personnel expenses

$
269.8

$
293.3

41.6

%

41.4

%
Operational expenses

111.4

124.0

17.2

17.5

Depreciation and amortization

11.2

11.9

1.7

1.7

Cost of revenue

$
392.4

$
429.2

60.5

%

60.5

%
Gross margin

39.5
%

39.5
%

revenue.Cost of revenue was ~~$429.2~~$686.0 million in the ~~third~~first quarter of ~~2017,~~2022, up ~~$36.8~~$85.1 million, or ~~9.4%~~14.2%, from $600.9 million in the ~~third~~first quarter of ~~2016. Wage inflation, increases in our operational headcount,~~ ~~incremental expenses from acquisitions~~ ~~and stock-based compensation expense in the third quarter of 2017 compared to the third quarter of 2016 contributed to the increase in cost of revenue.~~2021. The increase in cost of revenue ~~was partially offset by improved operational efficiencies, lower travel expenses and favorable foreign exchange, primarily the impact of changes~~ in the ~~values~~first quarter of the Indian rupee and U.K. pound sterling against the U.S. dollar. Foreign exchange fluctuations cause gains and losses on our foreign currency hedges and have a translation impact when we convert our non-U.S. dollar income statement items2022 compared to the ~~U.S. dollar, our reporting currency.~~

~~Our gross margin in the third~~first quarter of ~~2017~~2021 was ~~39.5%, unchanged from the third quarter of 2016 due to the factors described above.~~

~~Personnel expenses.~~ Personnel expenses as a percentage of total net revenues decreased from 41.6% in the third quarter of 2016 to 41.4% in the third quarter of 2017. Personnel expenses in the third quarter of 2017 were $293.3 million, up $23.5 million, or 8.7%, from $269.8 million in the third quarter of 2016. Personnel expenses increased primarily due to ~~wage inflation, higher stock-based compensation expense~~, ~~incremental expenses from acquisitions~~ ~~and~~ an ~~approximately 2,500-person, or 3.9%,~~ increase in our operational headcount to support revenue growth, including in the ~~third~~number of onshore personnel related to large deals and transformation services delivery and from our acquisition of Hoodoo Digital, LLC in the fourth quarter of ~~2017 compared to the third quarter of 2016. These increases were partially offset by the favorable impact of foreign exchange.~~

~~Operational expenses.~~ ~~Operational expenses~~2021, as a percentage of total net revenues increased from 17.2% in the third quarter of 2016 to 17.5% in the third quarter of 2017. Operational expenses in the third quarter of 2017 were $124.0 million, up $12.6 million, or 11.3%, from the third quarter of 2016 primarily due to ~~incremental expenses from acquisitions. The~~well as wage inflation. This increase ~~in operational expenses~~ was partially offset by ~~lower travel~~a decrease in depreciation and amortization, infrastructure and communication expenses ~~and improved operational efficiencies~~ in the ~~third~~first quarter of ~~2017~~2022 compared to the ~~third~~first quarter of ~~2016, and~~2021.

Gross margin. Our gross margin decreased from 36.5% in the ~~favorable impact of foreign exchange.~~

~~Depreciation and amortization expenses.~~ ~~Depreciation and amortization expenses as a percentage of total net revenues were 1.7%, unchanged from the third~~first quarter of ~~2016. Depreciation and amortization expenses as a component of cost of revenue were $11.9 million, up $0.7 million, or 6.5%, from~~2021 to 35.8% in the ~~third~~first quarter of ~~2016. This increase was~~2022, primarily driven by investments related to deal ramp-ups and to support new deal activity, as well as higher

personnel expenses, which were due in part to wage increases during the first quarter of 2022 compared to the ~~expansion~~first quarter of ~~certain existing facilities in India, partially offset by the favorable impact of foreign exchange.~~

2021.

Selling, general and administrative ~~expenses.~~ ~~The following table sets forth the components of our selling, general and administrative, or SG&A, expenses:~~

Three months ended September 30,

As a Percentage of Total Net Revenues

2016

2017

2016

2017

(dollars in millions)

Personnel expenses

$
117.0

$
126.6

18.0

%

17.9

%
Operational expenses

37.6

43.0

5.8

6.1

Depreciation and amortization

2.3

2.5

0.4

0.4

Selling, general and administrative expenses

$
157.0

$
172.1

24.2

%

24.3

%

expenses (SG&A).SG&A expenses as a percentage of total net revenues ~~marginally increased~~increased from ~~24.2%~~21.2% in the ~~third~~first quarter of ~~2016~~2021 to ~~24.3%~~22.2% in the ~~third~~first quarter of ~~2017.~~2022. SG&A expenses were ~~$172.1~~$237.3 million in the first quarter of 2022, up ~~$15.1~~$36.6 million, or ~~9.6%~~18.2%, from the ~~third~~first quarter of ~~2016. Wage inflation, higher infrastructure expenses, higher stock-based compensation expense, higher fees for professional services,~~ ~~incremental expenses from acquisitions~~2021. This increase was primarily due to investments to support increased revenues, including staffing, research and ~~an increase in marketing expenditures~~development related to ~~a branding update all contributed to higher SG&A expenses~~cloud-based offerings and other prioritized service lines that were increased in the ~~third~~second half of 2021, higher marketing expenses and facility maintenance expenses, and wage inflation in the first quarter of ~~2017~~2022 compared to the ~~third~~first quarter of ~~2016.~~2021. This ~~increase~~increased investment activity was partially offset by lower ~~travel expenses and the favorable impact of foreign exchange, primarily changes~~ stock-based compensation expense in the ~~values of the Indian rupee and U.K. pound sterling against the U.S. dollar in the third~~first quarter of ~~2017~~2022 compared to the ~~third~~first quarter of ~~2016. Our sales and marketing expenses as a percentage of net revenues were 6.5% in the third quarter of 2017, unchanged from the third quarter of 2016.~~

~~Personnel expenses.~~ As a percentage of total net revenues, personnel expenses marginally decreased from 18.0% in the third quarter of 2016 to 17.9% in the third quarter of 2017. Personnel expenses as a component of SG&A expenses were $126.6 million, up $9.6 million, or 8.2%, from the third quarter of 2016. This increase is primarily due to wage inflation, ~~incremental expenses from acquisitions~~ and higher stock-based compensation expense in the third quarter of 2017 compared to the third quarter of 2016, partially offset by a 2.4% decrease in our sales-team personnel expenses and the favorable impact of foreign exchange.

~~Operational expenses.~~ As a percentage of total net revenues, operational expenses increased from 5.8% in the third quarter of 2016 to 6.1% in the third quarter of 2017. Operational expenses as a component of SG&A expenses were $43.0 million, up $5.3 million, or 14.2%, from the third quarter of 2016. This increase is primarily due to higher infrastructure expenses, higher fees for professional services, ~~incremental expenses from acquisitions~~ and an increase in marketing expenditures related to a branding update in the third quarter of 2017 compared to the third quarter of 2016, partially offset by reduced travel expenses and the favorable impact of foreign exchange.

~~Depreciation and amortization.~~ Depreciation and amortization expenses as a percentage of total net revenues were 0.4% in the third quarter of 2017, unchanged from the third quarter of 2016. Depreciation and amortization expenses as a component of SG&A expenses were $2.5 million, up $0.2 million, or 8.7%, from the third quarter of 2016. This increase was primarily due to the expansion of certain existing facilities in India, partially offset by the favorable impact of foreign exchange.

2021.

Amortization of acquired intangibles. ~~Non-cash charges on account of amortization~~ Amortization of acquired intangibles ~~were $10.2~~was $11.3 million in the ~~third~~first quarter of ~~2017, up $3.0~~2022, down $4.9 million, or ~~42.5%~~30.1%, from the ~~third~~first quarter of ~~2016. This increase was primarily due to the amortization of intangibles acquired after the third quarter of 2016.~~

~~Other operating (income) expense, net.~~ ~~The following table sets forth the components of other operating (income) expense, net:~~

Percentage Change

Three months ended September 30,

Increase/(Decrease)

2016

2017

2017 vs. 2016

(dollars in millions)

Other operating (income) expense

$
(0.2
)

$
(0.1
)

(69.8
)
%
Provision for impairment of intangible assets

5.4

—

(100.0
)

Change in the fair value of earn-out consideration,
   deferred consideration (relating to business
   acquisitions)

—

—

—

Other operating (income) expense, net

$
5.1

$
(0.1
)

(101.2
)
%
Other operating (income) expense, net as a
   percentage of total net revenues

0.8

%

(0.0
)
%

~~Other operating income, net of expense, was $0.1 million in the third quarter of 2017, compared to $5.1 million of net other operating expense in the third quarter of 2016.~~2021. This decrease was primarily due to ~~a $5.4 million non-recurring charge~~the completion of useful lives of intangibles acquired in prior periods, partially offset by amortization expense related to Hoodoo Digital, LLC, which we acquired in the ~~third~~fourth quarter of ~~2016~~2021.

Other operating (income) expense, net. Other operating expense (net of income) was $3 thousand in the first quarter of 2022 compared to $353 thousand in the first quarter of 2021. The decrease in other operating expense was due to an asset impairment charge relating to antechnology-related intangible ~~asset, which charge we discuss~~assets and certain property, plant and equipment in ~~Note 10—“Goodwill and intangible assets” under Part I, Item 1—“Financial Statements” above. No such charge was~~the first quarter of 2021, while no corresponding charges were recorded in the ~~third~~first quarter of ~~2017.~~

2022.

Income from operations. As a result of the foregoing factors, income from operations as a percentage of total net revenues ~~increased~~decreased from ~~13.4%~~13.5% in the ~~third~~first quarter of ~~2016~~2021 to ~~13.7%~~12.5% in the ~~third~~first quarter of ~~2017.~~2022. Income from operations increased by ~~$10.3~~$6.0 million ~~to $97.5~~from $127.9 million in the ~~third~~first quarter of ~~2017 from $87.1~~2021 to $133.9 million in the ~~third~~first quarter of ~~2016.~~

2022, primarily driven by higher revenues.

Foreign exchange gains (losses), net. ~~Foreign exchange gains (losses), net represents the impact of the re-measurement of our non-functional currency assets and liabilities and related foreign exchange contracts.~~ We recorded a net foreign exchange gain of ~~$5.0~~$4.3 million in the ~~third~~first quarter of ~~2017,~~2022 compared to ~~a $0.7~~$3.3 million ~~loss~~ in the ~~third~~first quarter of ~~2016.~~2021. The ~~gain~~gains in the ~~third quarter~~first quarters of ~~2017 was~~2022 and 2021 were primarily ~~a result of~~due to the depreciation of the Indian rupee against the U.S. dollar during ~~that quarter. The loss in the third quarter of~~

each period.

~~2016 was primarily a result of the appreciation of the Indian rupee and the depreciation of the U.K. pound sterling against the U.S. dollar during that quarter.~~

Interest income (expense), net. ~~The following table sets forth the components~~Our interest expense (net of interest ~~income (expense), net:~~

Percentage Change

Three months ended September 30,

Increase/(Decrease)

2016

2017

2017 vs. 2016

(dollars in millions)

Interest income

$
1.0

$
2.5

144.9

%
Interest expense

(5.9)

(11.3)

89.7

Interest income (expense), net

$
(4.9
)

$
(8.7
)

78.0

%
Interest income (expense), net as a percentage of
total net revenues

(0.8
)
%

(1.2
)
%

~~Our net interest expense increased by $3.8~~income) was $12.1 million in the ~~third~~first quarter of ~~2017 compared to~~2022, down $0.2 million from $12.3 million in the ~~third~~first quarter of ~~2016,~~2021, primarily due to a ~~$5.3~~$0.7 million increase in interest ~~expense, partially~~income in India, offset by ana $0.5 million increase in interest ~~income.~~expense. The increase in interest expense ~~is primarily~~was largely due to ~~(i) $3.2~~interest expense related to our $350 million ~~in interest on the~~aggregate principal amount of 1.750% senior notes we issued in March ~~2017, (ii) an increase in LIBOR, resulting in higher interest expense on the term loan under our LIBOR-linked credit facility,~~2021, partially offset by ~~gains~~a lower outstanding balance under our term loan, including a lower drawdown balance on ~~interest rate swaps~~our revolving credit facility in the ~~third~~first quarter of ~~2017~~2022 compared to ~~losses in~~ the ~~third~~first quarter of ~~2016,~~2021, which we discuss in the section titled “Liquidity and Capital Resources—Financial Condition” below, and (iii) higher drawdown on our revolving credit facility in the third quarter of 2017 compared to the third quarter of 2016. Our interest income increased by $1.5 million in the third quarter of 2017 compared to the third quarter of 2016 primarily due to higher account balances in India, where we earn higher interest rates on our deposits than in other jurisdictions where we have deposits.below. The weighted average rate of interest on our debt, including the net impact of interest rate swaps, ~~increased~~decreased from ~~2.3%~~3.0% in the ~~third~~first quarter of ~~2016~~2021 to 2.9% in the ~~third~~first quarter of ~~2017.~~

2022.

Other income (expense), net. Our ~~net~~ other expense (net of income) was ~~$4.0~~$0.4 million in the ~~third~~first quarter of ~~2017,~~2022 compared to ~~net~~ other income (net of ~~$5.8~~expense) of $1.4 million in the ~~third~~first quarter of ~~2016.~~2021. The ~~expense~~decrease in other income was largely attributable to lower gains on the fair value of assets held in our deferred compensation plan in the ~~third~~first quarter of ~~2017 is primarily due to a $5.2 million provision for an expected loss on the divestiture of a non-strategic portion of our legacy IT support business in Europe~~2022 compared to ~~a $5.2 million gain on~~ the ~~divestiture of our cloud-hosted technology platform for the Indian rural banking sector in the third~~first quarter of ~~2016.~~

~~Equity-method investment activity, net.~~ Equity-method investment activity, net primarily represents our share of loss in the third quarter of 2016 in one of our non-consolidated affiliates that is no longer a non-consolidating affiliate since June 30, 2017.

2021.

Income tax expense.Our income tax expense was ~~$16.6~~$29.5 million in the ~~third~~first quarter of ~~2017, down $0.5 million~~2022, up from ~~$17.1~~$29.0 million in the ~~third~~first quarter of ~~2016 (as restated~~2021, due to ~~the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016),~~higher pre-tax income, representing an effective tax rate (“ETR”) of ~~18.4%~~23.5%, ~~compared to 19.8% in the third quarter of 2016. The decrease in effective tax rate is primarily due to certain discrete items recorded in the third quarters of 2016 and 2017.~~

~~Net income attributable to redeemable non-controlling interest.~~ ~~Non-controlling interest primarily refers to the profit or loss associated with the redeemable non-controlling interest in the operations of SSE, which we acquired~~down from 24.1% in the first quarter of ~~2016. See Note 3—“Business acquisitions” under Part I, Item 1—“Financial Statements” above.~~

2021. The decrease in our ETR was primarily due to a lower ETR in certain jurisdictions in the first quarter of 2022 compared to the first quarter of 2021.

Net income ~~attributable to Genpact Limited common shareholders~~. As a result of the foregoing factors, net income ~~attributable to our common shareholders~~ as a percentage of total net revenues was ~~10.4%~~9.0% in the ~~third~~first quarter of ~~2017,~~2022, down from ~~10.6%~~9.6% in the ~~third~~first quarter of ~~2016.~~2021. Net income ~~attributable to our common shareholders~~ increased ~~by $4.8 million~~ from ~~$68.9~~$91.3 million in the ~~third~~first quarter of ~~2016~~2021 to ~~$73.7~~$96.2 million in the ~~third~~first quarter of ~~2017.~~

2022.

~~Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016~~

~~Net revenues.~~ ~~Our net revenues were $2,002.5~~Adjusted income from operations. Adjusted income from operations (“AOI”) decreased by $2.7 million from $162.7 million in the ~~nine months ended September 30, 2017, up $113.5 million, or 6.0%, from $1,889.0~~first quarter of 2021 to $160.0 million in the ~~nine months ended September 30, 2016. The growth~~first quarter of 2022. Our AOI margin decreased from 17.2% in ~~net revenues was~~the first quarter of 2021 to 15.0% in the first quarter of 2022 primarily driven by ~~an increase~~higher sales and marketing expenses, higher investments in ~~BPO services, including our transformation services, delivered~~research and development related to ~~our clients~~cloud-based offerings and ~~incremental revenue from acquisitions. Adjusted for foreign exchange, primarily the impact of changes~~other prioritized service lines that

were increased in the ~~values~~second half of 2021 and higher travel costs in the ~~euro, the Australian dollar and U.K. pound sterling against the U.S. dollar, our net revenues grew 7%~~first quarter of 2022 compared to the ~~nine months ended September 30, 2016 on a constant currency basis. Revenue growth on a constant currency basis~~first quarter of 2021.

AOI is a non-GAAP ~~measure. Our average headcount increased~~measure and is not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by ~~4.9%~~other companies. We believe that presenting AOI together with our reported results can provide useful supplemental information to ~~approximately 75,300~~our investors and management regarding financial and business trends relating to our financial condition and results of operations. A limitation of using AOI versus net income calculated in accordance with GAAP is that AOI excludes certain recurring costs and certain other charges, namely stock-based compensation and amortization of acquired intangibles. We compensate for this limitation by providing specific information on the GAAP amounts excluded from AOI.

We calculate AOI as net income, excluding (i) stock-based compensation, (ii) amortization and impairment of acquired intangible assets, (iii) acquisition-related expenses excluded in the ~~nine~~period in which an acquisition is consummated, (iv) foreign exchange (gains)/losses, (v) interest (income) expense, and (vi) income tax expense, as we believe that our results after taking into account these adjustments more accurately reflect our ongoing operations. For additional information, see Note 18—“Segment reporting” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.

The following table shows the reconciliation of AOI to net income, the most directly comparable GAAP measure, for the three months ended ~~September 30, 2017 from approximately 71,800 in the nine months ended September 30, 2016.~~

Percentage Change

Nine months ended September 30,

Increase/(Decrease)

2016

2017

2017 vs. 2016

(dollars in millions)

Global Clients:

BPO services

$

1,327.4

$

1,513.8

14.0

%
IT services

285.0

284.1

(0.3
)

Total net revenues from Global Clients

$

1,612.4

$

1,797.8

11.5

%
GE:

BPO services

202.7

137.0

(32.4
)
%
IT services

73.9

67.7

(8.4
)

Total net revenues from GE

$

276.6

$

204.7

(26.0
)
%
Total net revenues from BPO services

1,530.1

1,650.8

7.9

Total net revenues from IT services

358.9

351.7

(2.0
)

Total net revenues

$

1,889.0

$

2,002.5

6.0

%

At the end of each fiscal year, we reclassify revenue from certain divested GE businesses as Global Client revenue as of the dates of divestiture. Additionally, at the end of 2016, we reclassified revenue from our acquisitions of EndeavourMarch 31, 2021 and PNMSoft Limited from IT services to BPO revenue effective as of the date of each acquisition. Such reclassifications are reflected in the revenue results and growth rates presented below and in the table above. In addition, to provide a consistent view of the trends underlying our business, we are presenting below revenue results and growth rates adjusted to assume that all 2016 revenue reclassifications occurred on January 1, 2016.

Net revenues from Global Clients were $1,797.8 million in the nine months ended September 30, 2017, up $185.4 million, or 11.5%, from $1,612.4 million in the nine months ended September 30, 2016. This increase was primarily driven by growth in our targeted verticals, including banking and financial services, consumer product goods, life sciences, manufacturing, insurance and high tech. As a percentage of total net revenues, net revenues from Global Clients increased from 85.4% in the nine months ended September 30, 2016 to 89.8% in the nine months ended September 30, 2017. If all 2016 revenue reclassifications had occurred on January 1, 2016, revenue from Global Clients would have increased 10% year over year.

Net revenues from GE were $204.7 million in the nine months ended September 30, 2017, down $71.9 million, or 26.0%, from the nine months ended September 30, 2016. The decline in net revenues from GE was largely due to GE’s dispositions of GE Capital businesses in 2016. Net revenues from GE declined as a percentage of our total net revenues from 14.6% in the nine months ended September 30, 2016 to 10.2% in the nine months ended September 30, 2017. If all 2016 revenue reclassifications had occurred on January 1, 2016, revenue from GE would have decreased 18% year over year.

Net revenues from BPO services were $1,650.8 million, up $120.7 million, or 7.9%, from $1,530.1 million in the nine months ended September 30, 2016. This increase was primarily attributable to an increase in services delivered to our Global Clients, particularly core industry vertical operations services and finance and accounting services. Net revenues from IT services were $351.7 million in the nine months ended September 30, 2017, down $7.2 million, or 2.0%, from $358.9 million in the nine months ended September 30, 2016, primarily due to a decrease in revenues from GE.

Net revenues from BPO services as a percentage of total net revenues increased to 82.4% in the nine months ended September 30, 2017 from 81.0% in the nine months ended September 30, 2016, with a corresponding decline in the percentage of total net revenues attributable to IT services.

2022:


	Three months ended March 31,
	2021		2022
	(dollars in millions)
Net income	$	91.3	$	96.2
Foreign exchange (gains) losses, net	(3.3)		(4.3)
Interest (income) expense, net	12.3		12.1
Income tax expense	29.0		29.5
Stock-based compensation	17.4		15.3
Amortization and impairment of acquired intangible assets	16.0		11.3
Adjusted income from operations	$	162.7	$	160.0

~~Cost of revenue and gross margin.~~

The following table sets forth our AOI by segment for the ~~components~~three months ended March 31, 2021 and 2022:


	Three months ended March 31,				Percentage Change Increase/(Decrease)
	2021		2022		2022 vs. 2021
	(dollars in millions)
BCMI	$	32.4	$	25.1	(22.5)	%
CGRLH	57.8		53.3		(7.8)	%
HMS	67.6		68.1		0.8	%
Others	4.9		13.5		177.8	%

AOI of our ~~cost of revenue and the resulting gross margin:~~

Nine months ended September 30,

As a Percentage of Total Net Revenues

2016

2017

2016

2017

(dollars in millions)

Personnel expenses

$
788.8

$
847.8

41.8

%

42.3

%

Operational expenses

325.9

346.3

17.3

17.3

Depreciation and amortization

34.3

33.7

1.8

1.7

Cost of revenue

$
1,149.0

$
1,227.8

60.8

%

61.3

%

Gross margin

39.2
%

38.7
%

~~Cost of revenue was $1,227.8~~BCMI segment decreased to $25.1 million in the ~~nine months ended September 30, 2017, up $78.8~~first quarter of 2022 from $32.4 million ~~or 6.9%, from the nine months ended September 30, 2016. Wage inflation, an increase in our operational headcount,~~ ~~incremental expenses from acquisitions~~ ~~and an increase in infrastructure expenses contributed to the higher cost of revenue~~ in the ~~nine months ended September 30, 2017 compared~~first quarter of 2021, primarily due to higher sales and marketing expenses, increased transition costs related to recently signed client engagements and the ~~nine months ended September 30, 2016. These increases were~~impact of wage inflation, partially offset by ~~improved operational efficiencies, lower travel expenses~~higher revenues from our insurance vertical, led by growth in both our transformation services and intelligent operations engagements. AOI of our CGRLH segment decreased to $53.3 million in the first quarter of 2022 from $57.8 million in the first quarter of 2021, largely due to higher investments to support new deal activity and the ~~favorable~~impact of wage inflation. AOI of our HMS segment increased to $68.1 million in the first quarter of 2022 from $67.6 million in the first quarter of 2021, primarily driven by higher revenues from transformation services, including revenue from Hoodoo Digital, LLC, which we acquired in the fourth quarter of

2021. AOI for “Others” in the table above primarily represents the impact of foreign exchange ~~primarily changes in the values~~fluctuations, adjustment of ~~the Indian rupee~~allowances for credit losses and ~~U.K. pound sterling against the U.S. dollar.~~

~~Our gross margin decreased from 39.2% in the nine months ended September 30, 2016~~over- or under-absorption of overheads, none of which is allocated to ~~38.7% in the nine months ended September 30, 2017 due to the factors described above.~~

~~Personnel expenses.~~ Personnel expenses as a percentage of total net revenues increased from 41.8% in the nine months ended September 30, 2016 to 42.3% in the nine months ended September 30, 2017. Personnel expenses were $847.8 million in the nine months ended September 30, 2017, up $59.0 million, or 7.5%, from $788.8 million in the nine months ended September 30, 2016. The impact of wage inflation, an approximately 2,700-person, or 4.4%, increase in our operational headcount, ~~incremental expenses from acquisitions~~ and higher stock-based compensation expense in the nine months ended September 30, 2017 compared to the same period in 2016 contributed to higher personnel expenses. These increases were partially offset by improved operational efficiencies and the favorable impact of foreign exchange.

~~Operational expenses.~~ Operational expenses as a percentage of total net revenues were approximately 17.3% in the nine months ended September 30, 2017, unchanged from the nine months ended September 30, 2016. Operational expenses were $346.3 million in the nine months ended September 30, 2017, up $20.4 million, or 6.2%, from the nine months ended September 30, 2016. Higher infrastructure expenses and ~~incremental expenses from acquisitions~~contributed to the increase in operational expenses in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The increase in operational expenses was partially offset by improved operational efficiencies, lower travel expenses and the favorable impact of foreign exchange.

~~Depreciation and amortization expenses.~~ Depreciation and amortization expenses as a percentage of total net revenues marginally decreased from 1.8% in the nine months ended September 30, 2016 to 1.7% in the nine months ended September 30, 2017. Depreciation and amortization expenses were $33.7 million in the nine months ended September 30, 2017, down $0.6 million, or 1.7%, from the nine months ended September 30, 2016. This marginal decrease was primarily due to an increase in fully depreciated assets since the nine months ended September 30, 2016 and the favorable impact of foreign exchange.

~~Selling, general and administrative expenses.~~ ~~The following table sets forth the components of our SG&A expenses:~~

Nine months ended September 30,

As a Percentage of Total Net Revenues

2016

2017

2016

2017

(dollars in millions)

Personnel expenses

$
343.3

$
371.9

18.2

%

18.6

%
Operational expenses

132.4

121.7

7.0

6.1

Depreciation and amortization

6.7

7.3

0.4

0.4

Selling, general and administrative expenses

$
482.3

$
500.9

25.5

%

25.0

%

SG&A expenses as a percentage of total net revenues decreased from 25.5% in the nine months ended September 30, 2016 to 25.0% in the nine months ended September 30, 2017. SG&A expenses were $500.9 million in the nine months ended September 30, 2017, up $18.5 million, or 3.8%, from the nine months ended September 30, 2016. Higher personnel expenses, higher infrastructure

~~expenses,~~ ~~incremental expenses from acquisitions~~, investments in domain expertise and digital and analytics capabilities and an increase in marketing expenditures related to a branding update contributed to higher SG&A expenses in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. These increases were partially offset by lower travel expenses, a lower reserveany individual segment for doubtful receivables and the favorable impact of foreign exchange, primarily changes in the values of the Indian rupee and U.K. pound sterling against the U.S. dollar. Our sales and marketing expenses as a percentage of total net revenues decreased from approximately 7.0% in the nine months ended September 30, 2016 to approximately 6.6% in the nine months ended September 30, 2017.

~~Personnel expenses.~~ Personnel expenses as a percentage of total net revenues increased from 18.2% in the nine months ended September 30, 2016 to 18.6% in the nine months ended September 30, 2017. Personnel expenses as a component of SG&A expenses were $371.9 million in the nine months ended September 30, 2017, up $28.6 million, or 8.3%, from the nine months ended September 30, 2016. Wage inflation, investments in domain expertise and digital and analytics capabilities, ~~incremental expenses from acquisitions~~ and higher stock-based compensation expense resulted in higher personnel costs as a component of SG&A expenses in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. These increases were partially offset by the favorable impact of foreign exchange.

~~Operational expenses.~~ Operational expenses as a percentage of total net revenues decreased from 7.0% in the nine months ended September 30, 2016 to 6.1% in the nine months ended September 30, 2017. Operational expenses as a component of SG&A expenses were $121.7 million in the nine months ended September 30, 2017, down $10.7 million, or 8.1%, from the nine months ended September 30, 2016. This decrease is primarily due to decreased travel expenses, a lower reserve for doubtful receivables and the favorable impact of foreign exchange in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. This decrease was partially offset by higher infrastructure expenses, ~~incremental expenses from acquisitions~~ ~~and an increase in marketing expenditures related to a branding update.~~

~~Depreciation and amortization.~~ Depreciation and amortization expenses as a percentage of total net revenues were 0.4%, unchanged from the nine months ended September 30, 2016. Depreciation and amortization expenses were $7.3 million in the nine months ended September 30, 2017, up $0.7 million, or 10.1%, from the nine months ended September 30, 2016. This marginal increase was primarily due to the expansion of certain existing facilities in India, partially offset by the favorable impact of foreign exchange.

~~Amortization of acquired intangibles.~~ Non-cash charges on account of the amortization of acquired intangibles were $25.8 million in the nine months ended September 30, 2017, up $6.0 million, or 30.4%, from the nine months ended September 30, 2016. This increase is primarily due to the amortization of intangibles acquired after the nine months ended September 30, 2016.

~~Other operating (income) expense, net.~~ ~~The following table sets forth the components of other operating (income) expense, net:~~

Percentage Change

Nine months ended September 30,

Increase/(Decrease)

2016

2017

2017 vs. 2016

(dollars in millions)

Other operating (income) expense

$
(1.0
)

$
(7.1
)

617.5

%
Provision for impairment of intangible assets

11.2

—

(100.0
)

Change in the fair value of earn-out consideration,
   deferred consideration (relating to business
   acquisitions)

(15.0
)

(1.4
)

(90.6
)

Other operating (income) expense, net

$
(4.8
)

$
(8.5
)

77.8

%
Other operating (income) expense, net as a
   percentage of total net revenues

(0.3
)
%

(0.4
)
%

Other operating income, net of expenses, was $8.5 million in the nine months ended September 30, 2017, up $3.7 million from $4.8 million in the nine months ended September 30, 2016, primarily due to a $1.4 million gain in the nine months ended September 30, 2017 compared to a $15.0 million gain in the nine months ended September 30, 2016 as a result of changes in the fair value of earn-out consideration payable in connection with certain acquisitions. We also recorded $7.1 million in other operating income in the nine months ended September 30, 2017, primarily due to a gain on the sale of rights to certain real property and as a result of the reversal of certain liabilities, compared to $1.0 million in other operating income in the nine months ended September 30, 2016. Additionally, we recorded an $11.2 million non-recurring charge in the nine months ended September 30, 2016 relating to intangible

~~assets, which charge we discuss in~~management's internal reporting purposes. See Note ~~10—~~18—“~~Goodwill and intangible assets”~~Segment reporting” under Part I, Item 1—“ “Unaudited Consolidated Financial Statements” above. ~~No such charge was recorded in the nine months ended September 30, 2017.~~

~~Income from operations.~~ As a result of the foregoing factors, income from operations as a percentage of total net revenues was 12.8% in the nine months ended September 30, 2017, unchanged from the nine months ended September 30, 2016. Income from operations was $256.6 million in the nine months ended September 30, 2017, up $13.9 million from $242.7 million in the nine months ended September 30, 2016.

~~Foreign exchange (gains) losses, net.~~ We recorded a net foreign exchange gain of $2.0 million in the nine months ended September 30, 2017, down from $3.2 million in the nine months ended September 30, 2016, primarily due to the re-measurement of non-functional currency assets and liabilities and related foreign exchange contracts, mainly resulting from the appreciation of the Indian rupee against the U.S. dollar in the nine months ended September 30, 2017 compared to the depreciation of the Indian rupee and U.K. pound sterling against the U.S. dollar in the nine months ended September 30, 2016.

~~Interest income (expense), net.~~ ~~The following table sets forth the components of interest income (expense), net:~~

Percentage Change

Nine months ended September 30,

Increase/(Decrease)

2016

2017

2017 vs. 2016

(dollars in millions)

Interest income

$
5.6

$
4.5

(18.4
)
%

Interest expense

(16.7)

(28.6)

70.9

Interest income (expense), net

$
(11.2
)

$
(24.1
)

115.4

%

Interest income (expense), net as a percentage of
total net revenues

(0.6
)
%

(1.2
)
%

Our net interest expense was $24.1 million in the nine months ended September 30, 2017, up $12.9 million from $11.2 million in the nine months ended September 30, 2016, primarily due to an $11.9 million increase in interest expense in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The $11.9 million increase in interest expense is primarily due to (i) $6.6 million in interest on the senior notes we issued in March 2017, (ii) an increase in LIBOR, resulting in higher interest expense on the term loan under our LIBOR-linked credit facility, which we discuss in the section titled “Liquidity and Capital Resources—Financial Condition” below, and (iii) higher drawdown on our revolving credit facility in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Our interest income decreased by $1.0 million in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to lower average account balances in India, where we earn higher interest rates on our deposits than in other jurisdictions where we have deposits. The weighted average rate of interest on our debt increased from 2.1% in the nine months ended September 30, 2016 to 2.8% in the nine months ended September 30, 2017.

~~Other income (expense), net.~~ Our net other income was $9.0 million in the nine months ended September 30, 2017, up $1.8 million from $7.2 million in the nine months ended September 30, 2016. This increase is primarily due to a subsidy received by one of our Indian subsidiaries in the nine months ended September 30, 2017, partially offset by a $5.2 million provision for an expected loss on the divestiture of a non-strategic portion of our legacy IT support business in Europe in the nine months ended September 30, 2017 and a $5.2 million gain on the divestiture of our cloud-hosted technology platform for the Indian rural banking sector in the nine months ended September 30, 2016.

~~Equity-method investment activity, net.~~ ~~Equity-method investment activity, net primarily represents our share of loss in one of our non-consolidated affiliates that ceased to be a non-consolidating affiliate since June 30, 2017.~~

~~Income tax expense.~~ Our income tax expense was $44.3 million in the nine months ended September 30, 2017, up $0.3 million from $44.0 million in the nine months ended September 30, 2016 (as restated due to the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016), representing an effective tax rate of 18.4% in the nine months ended September 30, 2017, marginally down from 18.5% in the nine months ended September 30, 2016.

~~Net income attributable to redeemable non-controlling interest.~~ Non-controlling interest primarily refers to the profit or loss associated with the redeemable non-controlling interest in the operations of SSE in the nine months ended September 30, 2016, which we discuss in Note 3—“Business acquisitions” under Part I, Item 1—“Financial Statements” above.

~~Net income attributable to Genpact Limited common shareholders.~~ As a result of the foregoing factors, net income attributable to our common shareholders as a percentage of net revenues decreased from 10.2% in the nine months ended September 30, 2016 to 9.8% in the nine months ended September 30, 2017. Net income attributable to our common shareholders was $196.0 million in the nine months ended September 30, 2017, up $2.6 million from $193.4 million in the nine months ended September 30, 2016.

Liquidity and Capital Resources

Overview

Information about our financial position as of December 31, ~~2016~~2021 and ~~September 30, 2017~~March 31, 2022 is presented below:

As of December 31,
2016

As of September 30,
2017

Percentage Change
Increase/(Decrease)

(dollars in millions)

2017 vs. 2016

Cash and cash equivalents

$
422.6

$
440.1

4.1

%
Short-term borrowings

160.0

160.0

—

Long-term debt due within one year

39.2

39.2

0.1

Long-term debt other than the current portion

698.2

1,016.4

45.6

Genpact Limited total shareholders’ equity

$
1,286.6

$
1,314.4

2.2

%


	As of December 31, 2021		As of March 31, 2022		Percentage Change Increase/(Decrease)
	(dollars in millions)				2022 vs. 2021
Cash and cash equivalents	$	899.5	$	861.8	(4.2)	%
Short-term borrowings	—		250.0		NM*
Long-term debt due within one year	383.4		383.6		0.0	%
Long-term debt other than the current portion	1,272.5		1,264.4		(0.6)	%
Genpact Limited total shareholders’ equity	$	1,897.1	$	1,847.4	(2.6)	%

*Not Meaningful

Financial Condition

We have historically financed our operations and our expansion, including acquisitions, with cash from operations and borrowing facilities. In March 2017, we issued $350.0 million aggregate principal amount of 3.70% senior notes in a private offering. As of September 30, 2017, the amount outstanding under the notes, net of debt amortization expense of $2.4 million, was $347.6 million, which is payable on April 1, 2022. We will pay interest on the notes semi-annually in arrears on April 1 and October 1 of each year, ending on the maturity date of April 1, 2022. For additional information, see Note 12—“Long-term debt” under Part I, Item 1—“Financial Statements” above.

On February ~~2017,~~9, 2021, our board of directors approved a ~~dividend program under which we intend to pay a regular~~10% increase in our quarterly cash dividend ~~of $0.06~~to $0.1075 per share, up from $0.0975 per share in 2020, representing an annual dividend of $0.43 per common share, up from $0.39 per share in 2020, payable to holders of our common ~~shares, representing~~shares. On March 19, 2021, we paid a ~~planned annual~~ dividend of ~~$0.24 per share. On March 28, 2017, June 28, 2017 and September 21, 2017, we paid dividends of $0.06~~$0.1075 per share, amounting to ~~$12.0 million, $11.6 million and $11.6~~$20.1 million in the aggregate, to shareholders of record as of March 10, ~~2017, June 12, 2017 and September 8, 2017, respectively.~~

2021.

On February 10, 2022, our board of directors approved a 16% increase in our quarterly cash dividend to $0.125 per share, up from $0.1075 per share in 2021, representing a planned annual dividend of $0.50 per common share, up from $0.43 per share in 2021, payable to holders of our common shares. On March 23, 2022, we paid a dividend of $0.125 per share, amounting to $23.1 million in the aggregate, to shareholders of record as of March 10, 2022.

As of ~~September 30, 2017, $434.4~~March 31, 2022, $855.3 million of our ~~$440.1~~$861.8 million in cash and cash equivalents was held by our foreign (non-Bermuda) subsidiaries. ~~$15.2~~$3.4 million of this cash was held by a foreign ~~subsidiary~~subsidiaries for which we expect to incur ~~a tax liability~~ and have ~~accordingly~~ accrued a deferred tax liability on the repatriation of ~~$10.9~~$9.6 million of retained earnings. ~~$84.3~~$851.9 million of the cash and cash equivalents is held by ~~our~~ foreign subsidiaries ~~is held~~ in jurisdictions where no tax is expected to be imposed upon ~~repatriation. We currently intend to permanently reinvest the remaining $334.9 million in cash and cash equivalents held by certain~~repatriation of ~~our foreign subsidiaries.~~

As of December 31, 2016, our board of directors had authorized repurchases of up to $750.0 million in value of our common shares under our share repurchase program first announced in February 2015. On February 10, 2017, our board of directors approved up to an additional $500.0 million in share repurchases, bringing theretained earnings or is being indefinitely reinvested.

The total authorization under our existing ~~program to $1,250.0 million. On March 29, 2017, we entered into an accelerated~~ share repurchase ~~or ASR, agreement with Morgan Stanley & Co. LLC to~~program is $1,750.0 million, of which $262.9 million remained available as of March 31, 2022. Since our share repurchase ~~an aggregate of $200.0 million~~program was initially authorized in 2015, we have repurchased 49,017,610 of our common ~~shares. For additional information, see Note 17—“Capital Stock” under Part I, Item 1—“Financial Statements” above.~~

shares at an average price of $30.34 per share, for an aggregate purchase price of $1,487.1 million.

During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2022, we ~~purchased 9,615,323~~repurchased 1,630,533 of our common shares on the open market at a weighted average price of ~~$25.23~~$46.61 per share for an aggregate cash amount of ~~$242.6~~$76.0 million. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, we ~~made payments in an aggregate cash amount of $219.8 million toward share repurchases. Of this amount, we paid (i) $19.8 million to repurchase 808,293~~repurchased 3,297,966 of our common shares on the open market at a weighted average price of ~~$24.48~~$40.68 per share ~~(ii) $160.0 million~~ for ~~the initial delivery~~an aggregate cash amount of 6,578,947 of our common shares under the ASR agreement at a weighted average price of $24.32 per share, and (iii) $40.0 million for shares to be delivered to us at the final settlement of the transaction under the ASR agreement as described above.$134.2 million. All repurchased shares have been retired.

For additional information, see Note 16—“Capital stock” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.

We expect that infor the next twelve months and for the foreseeable future our cash from operations, cash reserves and debt capacity will be sufficient to finance our operations, our growth and ~~expansion~~expansion plans, dividend payments and additional share repurchases we may make under our share repurchase program. However, there is no assurance that the impacts of the COVID-19 pandemic we have experienced to date, and any future impact we may experience, will not have an adverse effect on our cash flows. In addition, we may raise additional funds through public or private debt or equity ~~financings.~~financing. Our working

capital needs are primarily to finance our payroll and other administrative and information technology expenses in advance of the receipt of accounts receivable. Our primary capital requirements include opening new delivery centers, expanding ~~related~~existing operations to support our growth, financing acquisitions and ~~financing acquisitions.~~

enhancing capabilities, including building certain digital solutions.

Cash flows from operating, investing and financing activities, as reflected in our consolidated statements of cash flows, are summarized in the following table:

Percentage Change

Nine months ended September 30,

Increase/(Decrease)

2016

2017

2017 vs. 2016

(dollars in millions)

Net cash provided by (used for)

Operating activities

$
236.0

$
263.7

11.7

%
Investing activities

(95.6
)

(332.9
)

248.2

Financing activities

(169.6)

57.7

(134.0
)

Net increase (decrease) in cash and cash
equivalents

$
(29.2
)

$
(11.4
)

(60.9
)
%


	Three Months Ended March 31,				Percentage Change Increase/(Decrease)
	2021		2022		2022 vs. 2021
	(dollars in millions)
Net cash provided by/ (used for):
Operating activities	$	77.2	$	(114.3)	(248.1)	%
Investing activities	(18.5)		(17.8)		4.1	%
Financing activities	(89.9)		101.5		212.9	%
Net increase in cash and cash equivalents	$	(31.3)	$	(30.6)	2.2	%

Cash flows ~~from~~used for operating activities. Net cash ~~generated from~~used for operating activities was ~~$263.7~~$114.3 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022, compared to ~~$236.0~~net cash provided by operating activities of $77.2 million in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2021. This ~~increase is~~change was primarily due to ~~higher net income and improvements~~(i) a $186.5 million increase in ~~net~~ operating assets and liabilities driven by increased investment in accounts receivable, higher tax payments, and higher employee and vendor related payments in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 compared to the ~~nine~~three months ended ~~September 30, 2016, mainly driven by delays~~March 31, 2021 and (ii) a $9.8 million decrease in ~~invoicing by vendors, higher accruals~~non-cash expenses, primarily due to lower depreciation and amortization expenses and lower stock-based compensation expense in the three months ended March 31, 2022 compared to the three months ended March 31, 2021, partially offset by an increase in deferred tax ~~payments.~~

expense. The change was offset by a $4.9 million increase in net income in the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Cash flows ~~from~~used for investing activities. Our net cash used for investing activities was ~~$332.9~~$17.8 million in the ~~nine~~three months ended ~~September 30, 2017, up $237.3 million from $95.6~~March 31, 2022 compared to $18.5 million in the ~~nine~~three months ended ~~September 30, 2016. This increase~~March 31, 2021. The reduction in cash used for investing activities was primarily due to a ~~$236.0~~$5.3 million decrease in payments for business acquisitions in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This was offset by a $4.5 million increase in payments ~~related to acquisitions consummated in~~(net of sales proceeds and issuance cost) for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. For additional information, see Note 3—“Business Acquisitions” under Part I, Item 1—“Financial Statements” above. This increase was partially offset by a $9.3 million reduction in payments for purchasespurchase of property, plant and equipment ~~(net of sales proceeds)~~and acquired/internally generated intangible assets in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 compared to the ~~nine~~three months ended September 30, 2016. Additionally, investments we made in a non-consolidated affiliate, which ceased to be a non-consolidating affiliate as of June 30, 2017, were $7.0 million lower in the nine months ended September 30, 2017 than in the nine months ended September 30, 2016.

March 31, 2021.

Cash flows ~~from~~provided by financing ~~activities.~~activities. Our net cash ~~generated from~~provided by financing activities was ~~$57.7~~$101.5 million in the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022 compared to net cash used for financing activities of ~~$169.6~~$89.9 million in the ~~nine~~three months ended ~~September 30, 2016. In~~ March 2017, we issued $350.0 million aggregate principal amount of 3.70% senior notes in a private offering. We also repaid $30.0 million in long-term debt payments in the nine months ended September 30, 2017 and 2016. We had31, 2021. This change was primarily due to higher proceeds from ~~short-term~~ borrowings (net of ~~$275.0 million and $155.0~~repayment) amounting to $241.5 million in the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively, of which $275.0~~March 31, 2022 compared to $89.6 million ~~and $61.5 million was repaid during~~in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021, and 2016, respectively. For additional information, see Notes 11 and 12—“Short-term borrowings” and “Long-term debt” under Part I, Item 1—“Financial Statements” above. Additionally, proceedspayments for share repurchases (including expenses related to repurchases) amounting to $76.0 million in the three months ended March 31, 2022 compared to $134.2 million in the three months ended March 31, 2021. The change was partially offset by (i) an increase in payments in connection with the net settlement of common shares under our stock-based compensation plans, amounting to $41.9 million in the three months ended March 31, 2022 compared to $28.7 million in the three months ended March 31, 2021, (ii) a $3.3 million reduction in proceeds from the issuance of common shares under our stock-based compensation plans ~~(net of payments) were $2.5 million~~ in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 compared to ~~$12.3~~the three months ended March 31, 2021, and (iii) a $3.0 million increase in dividend payments in the ~~nine~~three months ended ~~September 30, 2016. Payments related~~March 31, 2022 compared to ~~earn-out or deferred consideration were $4.8 million higher in the nine~~three months ended September 30, 2017 than in the nine months ended September 30, 2016. In the nine months ended September 30, 2017, we paid cash dividends in an aggregate amount of $35.1 million. No dividends were paid in the nine months ended September 30, 2016. Payments for share repurchases were $219.8 million in the nine months ended September 30, 2017 compared to $242.6 million in the nine months ended September 30, 2016.

March 31, 2021.

Financing Arrangements

~~In June 2015, we refinanced our 2012 credit facility through a new credit facility comprised of a term loan of $800 million and a revolving credit facility of $350 million.~~

As of December 31, ~~2016~~2021 and ~~September 30, 2017,~~March 31, 2022, our outstanding term loan, ~~debt,~~ net of debt amortization expense of ~~$2.7~~$0.7 million and ~~$2.1~~$0.6 million, respectively, was ~~$737.3~~$560.3 million and ~~$708.0~~$551.9 million, respectively. We also have fund-based and non-fund based credit facilities with banks, which are available for operational requirements in the form of overdrafts, letters of credit, guarantees and short-term loans. As of December 31, ~~2016~~2021 and ~~September 30, 2017,~~March 31, 2022, the limits available under such facilities were ~~$15.4~~$24.7 million and ~~$14.7~~$24.3 million, respectively, of which ~~$11.0~~$5.8 million and ~~$7.4~~$5.8 million, respectively, was utilized, constituting non-funded drawdown. As of ~~both~~ December 31, ~~2016~~2021 and ~~September 30, 2017,~~March 31, 2022, a total of ~~$161.0~~$2.0 million and $252.0 million, respectively, of our revolving credit facility was utilized, of which ~~$160.0~~$0 million and $250.0 million, respectively, constituted funded drawdown and ~~$1.0~~$2.0 million and $2.0 million, respectively, constituted non-funded ~~drawdown in both periods.~~

drawdown.

~~In March 2017, we~~Genpact Luxembourg S.à r.l. (“Genpact Luxembourg”), a wholly-owned subsidiary of the Company, issued ~~$350.0~~$350 million aggregate principal amount of 3.70% senior notes in ~~a private offering, resulting~~March 2017 (the “2017 Senior Notes”) and $400 million aggregate principal amount of 3.375% senior notes in ~~cash proceeds of approximately $348.5 million~~November 2019 (the “2019 Senior Notes”). The 2017 Senior Notes and ~~an underwriting fee of approximately $1.5 million. In addition, there were other debt issuance related costs of $1.2 million.~~the 2019 Senior Notes are fully guaranteed by the Company and Genpact USA, Inc. The total debt issuance cost of $2.6 million and $2.9 million incurred in connection with the ~~offering of the notes is~~2017 Senior Notes and 2019 Senior Notes offerings, respectively, are being amortized over the ~~life~~respective lives of the notes as additional interest expense. As of ~~September 30, 2017,~~December 31, 2021 and March 31, 2022, the amount outstanding under the ~~notes,~~2017 Senior Notes, net of debt amortization expense of ~~$2.4~~$0.1 million and $0 million, respectively, was $349.9 million and $350.0 million, respectively, which was payable on April 1, 2022. As of December 31, 2021 and March 31, 2022, the amount outstanding under the 2019 Senior Notes, net of debt amortization expense of $1.7 million and $1.6 million, was ~~$347.6~~$398.3 million and $398.4 million, respectively, which is payable on December 1, 2024.

In March 2021, Genpact Luxembourg and Genpact USA, Inc., both wholly-owned subsidiaries of the Company, co-issued $350 million aggregate principal amount of 1.750% senior notes (the "2021 Senior Notes"), resulting in cash proceeds of approximately $348.1 million, net of an underwriting commission of $1.4 million and a discount of $0.5 million. Other debt issuance costs incurred in connection with the offering of the 2021 Senior Notes amounted to $1.1 million. The 2021 Senior Notes are fully guaranteed by the Company. The total debt issuance cost of $3.0 million incurred in connection with the 2021 Senior Notes offerings is being amortized over the lives of the notes as additional interest expense. As of December 31, 2021 and March 31, 2022, the amount outstanding under the 2021 Senior Notes, net of debt amortization expense of $2.6 million and $2.4 million, respectively, was $347.2 million and $347.6 million, respectively, which is payable on April 10, 2026.

We pay interest on (i) the 2017 Senior Notes semi-annually in arrears on April 1 and October 1 of each year, (ii) the 2019 Senior Notes semi-annually in arrears on June 1 and December 1 of each year, and (iii) the 2021 Senior Notes semi-annually in arrears on April 10 and October 10 of each year, ending on the maturity dates of April 1, 2022, ~~when the notes mature.~~ December 1, 2024 and April 10, 2026, respectively.

For additional information, see Notes 1110 and ~~12—~~11—“Short-term borrowings” and “Long-term debt” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements consist of foreign exchange ~~contracts and certain operating leases.~~contracts. For additional information, see Part I, Item 1A—“Risk ~~Factors—~~Factors”—“Currency exchange rate fluctuations in various currencies in which we do business, especially the Indian rupee, the ~~U.S. dollar~~euro and the ~~euro,~~U.S. dollar, could have a material adverse effect on our business, results of operations and financial condition” in our Annual Report on Form 10-K for the year ended December 31, ~~2016, the section titled “Contractual Obligations” below,~~2021, and Note ~~7 in~~6— "Derivative financial instruments" under Part I, Item 1—“Unaudited Consolidated Financial Statements” above.

~~Contractual Obligations~~

Other Liquidity and Capital Resources Information

As of December 31, 2021 and March 31, 2022, we have purchase commitments, net of capital advances, of $13.3 million and $12.7 million, respectively, to be paid in respect of such purchases over the next year. For additional information, see Note 23—“Commitments and contingencies” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above and Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations”—“Other Liquidity and Capital Resources Information” in our Annual Report on Form 10-K for the year ended December 31, 2021.

As of December 31, 2021 and March 31, 2022, we have operating and finance lease commitments of $420.6 million and $393.0 million, respectively, to be paid over the lease terms. For additional information, see Part II, Item 7

—“Management’s Discussion and Analysis of Financial Condition and Results of Operations”—“Other Liquidity and Capital Resources Information” in our Annual Report on Form 10-K for the year ended December 31, 2021.

Supplemental Guarantor Financial Information

As discussed in Note 11, “Long-term debt,” under Part I, Item 1—“Unaudited Consolidated Financial Statements” above, Genpact Luxembourg, a wholly-owned subsidiary of the Company, issued the 2017 Senior Notes and the 2019 Senior Notes, and Genpact Luxembourg and Genpact USA, Inc. (“Genpact USA”), a wholly-owned subsidiary of the Company, co-issued the 2021 Senior Notes. As of March 31, 2022, the outstanding balance for each of the 2017 Senior Notes, the 2019 Senior Notes and the 2021 Senior Notes was $350.0 million, $398.4 million and $347.3 million, respectively. Each series of Senior Notes is fully and unconditionally guaranteed by the Company. The 2017 Senior Notes and the 2019 Senior Notes are also fully and unconditionally guaranteed by Genpact USA. Our other subsidiaries do not guarantee the Senior Notes (such subsidiaries are referred to as the “non-Guarantors”).

The Company (with respect to all series of Senior Notes) and Genpact USA (with respect to the 2017 Senior Notes and the 2019 Senior Notes) have fully and unconditionally guaranteed (i) that the payment of the principal, premium, if any, and interest on the Senior Notes shall be promptly paid in full when due, whether at stated maturity of the Senior Notes, by acceleration, redemption or otherwise, and that the payment of interest on the overdue principal and interest on the Senior Notes, if any, if lawful, and all other obligations of the applicable issuer or issuers of the Senior Notes, respectively, to the holders of the Senior Notes or the trustee under the Senior Notes shall be promptly paid in full or performed, and (ii) in case of any extension of time of payment or renewal of any Senior Notes or any of such other obligations, that the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. With respect to the 2017 Senior Notes and the 2019 Senior Notes, failing payment by Genpact Luxembourg when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Company and Genpact USA shall be obligated to pay the same immediately. With respect to the 2021 Senior Notes, failing payment by Genpact Luxembourg or Genpact USA when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Company shall be obligated to pay the same immediately. The Company and Genpact USA have agreed that the guarantees described above are guarantees of payment of the Senior Notes and not guarantees of collection.

The following ~~table sets forth~~tables present summarized financial information for Genpact Luxembourg, Genpact USA and the Company (collectively, the “Debt Issuers and Guarantors”) on a combined basis after elimination of (i) intercompany transactions and balances among the Debt Issuers and Guarantors and (ii) equity in earnings from and investments in the non-Guarantors.


Summarized Statements of Income	Year ended December 31, 2021		Three months ended March 31, 2022
	(dollars in millions)
Net revenues	$	214.2	$	46.7
Gross profit	214.2		46.7
Net income	102.7		16.6

Below is a summary of transactions with non-Guarantors included in the summarized statement of income above:


	Year ended December 31, 2021		Three months ended March 31, 2022
	(dollars in millions)
Royalty income	$	4.4	$	—
Revenue from services	209.8		46.7
Interest income (expense), net	33.0		5.9
Other cost, net	17.7		4.4
Gain on sale of intellectual property	—		—


Summarized Balance Sheets	As of December 31, 2021		As of March 31, 2022
	(dollars in millions)
Assets
Current assets	$	2,257.8	$	2,663.9
Non-current assets	457.5		375.0

Liabilities
Current liabilities	$	3,758.5	$	4,196.9
Non-current liabilities	1,777.6		1,767.5

Below is a summary of the balances with non-Guarantors included in the summarized balance sheets above:


	As of December 31, 2021		As of March 31, 2022
	(dollars in millions)
Assets
Current assets	$	211.3	201.4
Accounts receivable, net	1,535.5		$	1,539.1
Loans receivable	410.1		440.4
Others	—		0.0

Non-current assets
Investment in debentures/bonds	$	296.1	$	211.1
Loans receivable	—		—
Others	31.5		37.9

Liabilities
Current liabilities
Loans payable	$	2,431.2	$	2,655.8
Others	914.0		864.6

Non-Current liabilities
Loans payable	$	500.0	$	500.0

The Senior Notes and the related guarantees rank pari passu in right of payment with all senior and unsecured debt of the Debt Issuers and Guarantors and rank senior in right of payment to all of the Debt Issuers’ and Guarantors’ future subordinated debt. The Senior Notes are effectively subordinated to all of the Debt Issuers’ and Guarantors’ existing and future secured debt to the extent of the value of the assets securing such debt. The Senior Notes are structurally subordinated to all of the existing and future debt and other liabilities of the non-Guarantors, including the liabilities of certain subsidiaries pursuant to our ~~total future contractual obligations as~~senior credit facility. The non-Guarantors are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due under the Senior Notes or to make the funds available to pay those amounts, whether by dividend, distribution, loan or other payment. Any right that the Debt Issuers and Guarantors have, to receive any assets of ~~September 30, 2017:~~

Total

Less than
1 year

1-3 years

3-5 years

After 5 years

(dollars in millions)

Long-term debt

$
1,164.9

$
71.6

$
726.0

$
367.3

$ —

— Principal payments

1,055.5

39.2

668.7

347.6

—

— Interest payments*

109.4

32.4

57.3

19.7

—

Short-term borrowings

161.1

161.1

—

—

—

— Principal payments

160.0

160.0

—

—

—

— Interest payments**

1.1

1.1

—

—

—

Capital leases

5.3

2.1

2.5

0.7

—

— Principal payments

4.3

1.5

2.2

0.6

—

— Interest payments

1.0

0.6

0.3

0.1

—

Operating leases

203.3

38.3

63.3

46.4

55.3

Purchase obligations

42.1

26.0

16.0

0.1

—

Capital commitments net of advances

6.2

6.2

—

—

—

Earn-out consideration

20.1

7.2

10.0

2.9

—

— Reporting date fair value

17.9

6.6

8.7

2.6

—

— Interest

2.2

0.6

1.3

0.3

—

Other liabilities

45.1

29.8

13.6

1.7

—

Total contractual obligations

$
1,648.1

$
342.3

$
831.4

$
419.1

$
55.3

Our interest payments on long-term debt are calculated based on our current debt rating at a rate equal to LIBOR plus a margin of 1.50% per annum as of September 30, 2017, which excludes the impact of interest rate swaps. Interest payments on long-term debt include interest on our senior notes due in 2022 at a rate of 3.70% per annum, which is not based on LIBOR.

any of the non-Guarantors upon the insolvency, liquidation, reorganization, dissolution or other winding-up of any non-Guarantor, all of that non-Guarantor’s creditors (including trade creditors) would be entitled to payment in full out of that non-Guarantor’s assets before the holders of the Senior Notes would be entitled to any payment. Claims of holders of the Senior Notes are structurally subordinated to the liabilities of certain non-Guarantors pursuant to their liabilities under our senior credit facility.

**	Our interest payments on short-term debt are calculated based on our current debt rating at a rate equal to LIBOR plus a margin of 1.50% per annum as of September 30, 2017 and our expectation for the repayment of such debt.

Recent Accounting Pronouncements

~~Recently adopted accounting pronouncements~~

For a description of ~~recently adopted~~recent accounting pronouncements, see Note 2—2(m)—“Recently issued accounting pronouncements” under Item 1—“Unaudited Consolidated Financial Statements” above and Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations”—“Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2021.

~~Recently issued accounting pronouncements~~

~~For a description of recently issued accounting pronouncements, see Note 2—“Recently issued accounting pronouncements” under~~

Item ~~1—“Financial Statements” above~~3. Quantitative and Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations”—“Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2016.

Qualitative Disclosures About Market Risk

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

We are exposed to interest rate risk arising from changes in interest rates on the floating rate indebtedness under our term ~~loan.~~loan and revolving credit facility and the Senior Notes. Borrowings under our term loan and revolving credit facility bear interest at floating rates based on LIBOR, but in no event less than the floor rate of 0.0% plus an applicable margin. The interest rate on our Senior Notes is subject to adjustment based on the ratings assigned to our debt by Moody’s Investors Service, Inc. and Standard & Poor’s Rating Services, Inc. from time to time. A decline in such ratings could result in an increase of up to 2% in the rate of interest on the Senior Notes. Accordingly, fluctuations in market interest rates or a decline in ratings may increase or decrease our interest expense which ~~will,~~would, in turn, increase or decrease our net income and cash flow.

We manage a portion of our interest rate risk related to floating rate indebtedness by entering into interest rate swaps under which we receive floating rate payments based on the greater of LIBOR and the floor rate under our term loan and make payments based on a fixed rate. As of ~~September 30, 2017,~~March 31, 2022, we were party to interest rate swaps covering a total notional amount of ~~$438.3~~$453 million. Under these swap agreements, the rate that we pay to banks in exchange for LIBOR ranges between ~~0.88%~~0.38% and ~~1.20%~~2.65%.

We executed a treasury rate lock agreement covering $350 million in connection with future interest payments to be made on our 2021 Senior Notes, and the treasury rate lock agreement was designated as a cash flow hedge. The treasury rate lock agreement was terminated on March 23, 2021, and a deferred gain was recorded in accumulated other comprehensive income and is being amortized to interest expense over the life of the 2021 Senior Notes. The remaining gain to be amortized related to the treasury rate lock agreement as of March 31, 2022 was $0.7 million.

For a discussion of our market risk associated with foreign currency risk, interest rate risk and credit risk, see Part II, Item 7A—“Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2021.

~~Item 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are the Company’s controls and other procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 ~~(“Exchange~~(the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to ~~the~~ Exchange Act Rule 13a-15(b). Based upon that evaluation, the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarterly period ended ~~September 30, 2017~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

In making its assessment of the changes in internal controls over financial reporting during the quarterly period ended September 30, 2017, management excluded an evaluation of the internal controls over financial reporting in respect of any acquisition made in the nine months ended September 30, 2017. See Note 3 to the Unaudited Consolidated Financial Statements for a discussion of acquisitions consummated during such period.

~~PAR~~T

PART II

– OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1. Legal Proceedings

There are no legal proceedings pending against us that we believe are likely to have a material adverse effect on our business, results of operations and financial condition.

~~Item 1A.~~

~~Risk Factors~~

Item 1A. Risk Factors

We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 the risk factors that 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 year ended December 31, ~~2016 and in our Quarterly Report on Form 10-Q for the period ended March 31, 2017~~2021 and the other information that appears elsewhere in our Annual Report on Form 10-K for the year ended December 31, ~~2016, in our Quarterly Report on Form 10-Q for the period ended March 31, 2017~~2021 and 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 ~~may~~ materially adversely affect our business, financial condition and/or results of operations.

~~Item 2.~~

~~Unregistered Sale of Equity Securities and Use of Proceeds~~

Item 2. Unregistered Sales of Equity Securities

~~None.~~

and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Use of Proceeds

None.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

~~None.~~

Share repurchase activity during the three months ended March 31, 2022 was as follows:


Period	Total Number of Shares Purchased	Weighted Average Price Paid per Share ($)	Total Number of Shares Purchased as Part of Publicly Announced Plan or Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Program ($)
January 1-January 31, 2022	533,947	52.44	533,947	310,910,848
February 1-February 28, 2022	1,096,586	43.77	1,096,586	262,911,319
March 1-March 31, 2022	—	—	—	262,911,319
Total	1,630,533	46.61	1,630,533

Since February 2017, our Board of Directors has authorized repurchases of up to $1.75 billion under our existing share repurchase program. This repurchase program does not obligate us to acquire any specific number of shares and does not specify an expiration date. All shares repurchased under the plan have been retired. For additional information, see Note 16—“Capital stock” under Part I, Item 1— “Unaudited Consolidated Financial Statements” above.

Item 6. Exhibits

~~Item 3.~~

~~Defaults Upon Senior Securities~~

~~None.~~

~~Item 5.~~

~~Other Information~~

~~None.~~

~~Item 6.~~

~~Exhibits~~

~~Exhibit~~ ~~Number~~	~~Description~~
Exhibit Number		Description
~~3.1~~
3.1		Memorandum of Association of the Registrant (incorporated by reference to Exhibit 3.1 to Amendment No. 2 of the Registrant’s Registration Statement on Form S-1 (File No. 333-142875) filed with the SEC on July 16, 2007).

~~3.3~~ 3.2		Bye-laws of the Registrant (incorporated by reference to Exhibit 3.3 to Amendment No. 4 of the Registrant’s Registration Statement on Form S-1 (File No. 333-142875) filed with the SEC on August 1, 2007).

~~31.1~~ 10.1*†		Form of 2022 Performance Share Award Agreement for executive officers under the Genpact Limited 2017 Omnibus Incentive Compensation Plan.

22.1		List of Issuers and Guarantor Subsidiaries (incorporated by reference to Exhibit 22.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33626) filed with the SEC on May 10, 2021).

31.1*		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

~~31.2~~ 31.2*		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

~~32.1~~ 32.1*		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*2 002.

~~32.2~~ 32.2*						Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

~~101.INS~~ 101.INS*						Inline XBRL Instance Document ~~(1)~~ — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

~~101.SCH~~ 101.SCH*						Inline XBRL Taxonomy Extension Schema Document ~~(1)~~

~~101.CAL~~ 101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document ~~(1)~~

~~101.DEF~~ 101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document ~~(1)~~

~~101.LAB~~ 101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document ~~(1)~~

~~101.PRE~~ 101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document ~~(1)~~

*			~~Filed with this Quarterly Report on Form 10-Q.~~
104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~(1)~~	Filed as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2016 and September 30, 2017, (ii) Consolidated Statements of Income for the three months and nine months ended September 30, 2016 and September 30, 2017, (iii) Consolidated Statements of Comprehensive Income (Loss) for the three months and nine months ended September 30, 2016 and September 30, 2017, (iv) Consolidated Statements of Equity and Redeemable Non-controlling Interest for the nine months ended September 30, 2016 and September 30, 2017, (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and September 30, 2017, and (vi) Notes to the Consolidated Financial Statements.

* Filed or furnished with this Quarterly Report on Form 10-Q.

~~SIGNATURES~~

† Indicates a management contract or compensatory plan, contract or arrangement in which any director or executive officer participates.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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: ~~November 9, 2017~~

May 10, 2022

GENPACT LIMITED

~~By:~~
By:						/s/ N.V. T~~YAGARAJAN~~ Tyagarajan
						N.V. Tyagarajan
						Chief Executive Officer

By:						/s/ E~~DWARD~~ ~~J. FITZPATRICK~~ Michael Weiner
						~~Edward J. Fitzpatrick~~ Michael Weiner
						Chief Financial Officer

	Three months ended September 30,											Nine months ended September 30,
	2016 (1)					2017						2016 (1)						2017
	Genpact Limited Shareholders		Redeemable Non-controlling interest			Genpact Limited Shareholders			Redeemable Non-controlling interest			Genpact Limited Shareholders			Redeemable Non- controlling interest			Genpact Limited Shareholders			Redeemable Non- controlling interest
Net Income (loss)	$	68,922	$	(734	)	$	73,745		$	(584	)	$	193,385		$	(1,905	)	$	196,029		$	(1,326	)
Other comprehensive income:
Currency translation adjustments		11,224		14			(4,185	)		(256	)		(8,614	)		53			67,527			(334	)
Net income (loss) on cash flow hedging derivatives, net of taxes (Note 7)		19,772		—			(14,874	)		—			18,187			—			(5,627	)		—
Retirement benefits, net of taxes		561		—			369			—			701			—			711			—
Other comprehensive income (loss)	$	31,557	$	14		$	(18,690	)	$	(256	)	$	10,274		$	53		$	62,611		$	(334	)
Comprehensive income (loss)	$	100,479	$	(720	)	$	55,055		$	(840	)	$	203,659		$	(1,852	)	$	258,640		$	(1,660	)

(1) Net income for the three months and nine months ended September 30, 2016 have been restated due to the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016.

													Accumulated
	Common shares						Additional Paid-			Retained			Other Comprehensive			Total			Redeemable non-controlling
	No. of Shares			Amount			in Capital (1)			Earnings (1)			Income (Loss)			Equity			interest
Balance as of January 1, 2016		211,472,312		$	2,111		$	1,342,022		$	411,508		$	(451,285	)	$	1,304,356		$	—
Issuance of common shares on exercise of options (Note 16)		655,717			7			10,348			—			—			10,355			—
Issuance of common shares under the employee stock purchase plan (Note 16)		105,856			1			2,452			—			—			2,453			—
Net settlement on vesting of restricted share units (Note 16)		120,307			1			(462	)		—			—			(461	)		—
Net settlement on vesting of performance units (Note 16)		—			—			—			—			—			—			—
Stock repurchased and retired (Note 17)		(9,615,323	)		(96	)		—			(242,456	)		—			(242,552	)		—
Deferred tax assets recognized on early adoption of ASU 2016-09		—			—			—			24,912			—			24,912			—
Expenses related to stock purchase (Note 17)		—			—			—			(192	)		—			(192	)		—
Stock-based compensation expense (Note 16)		—			—			18,344			—			—			18,344			—
Acquisition of redeemable non controlling interest		—			—			—			—			—			-			3,910
Comprehensive income:
Net income		—			—			—			193,385			—			193,385			(1,905	)
Other comprehensive income		—			—			—			—			10,274			10,274			53
Balance as of September 30, 2016		202,738,869		$	2,024		$	1,372,704		$	387,157		$	(441,011	)	$	1,320,874		$	2,058

(1) Net income, additional paid-in capital and retained earnings for the three and nine months ended September 30, 2016 have been restated due to the adoption of ASU No. 2016-09 in 2016 with effect from January 1, 2016.

	Year ended			Nine months ended
	December 31, 2016			September 30, 2017
Opening balance as of January 1	$	11,530		$	15,519
Additions due to acquisitions		-			235
Additions charged to cost and expense		7,282			4,871
Deductions/effect of exchange rate fluctuations		(3,293	)		(49	)
Closing balance	$	15,519		$	20,576

	As of December 31, 2016
	Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Derivative instruments (Note a, c)	$	55,386	$	—	$	55,386	$	—
Total	$	55,386	$	—	$	55,386	$	—
Liabilities
Earn-out consideration (Note b, d)	$	22,435	$	—	$	—	$	22,435
Derivative instruments (Note b, c)	$	17,353	$	—	$	17,353	$	—
Total	$	39,788	$	—	$	17,353	$	22,435
Redeemable non-controlling interest (Note e)	$	4,520	$	—	$	—	$	4,520

	As of September 30, 2017
	Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Derivative instruments (Note a, c)	$	55,080	$	—	$	55,080	$	—
Total	$	55,080	$	—	$	55,080	$	—
Liabilities
Earn-out consideration (Note b, d)	$	17,999	$	—		—	$	17,999
Derivative instruments (Note b, c)	$	27,763	$	—	$	27,763	$	—
Total	$	45,762	$	—	$	27,763	$	17,999
Redeemable non-controlling interest (Note e)	$	3,839	$	—	$	—	$	3,839

	Three months ended September 30,						Nine months ended September 30,
	2016			2017			2016			2017
Opening balance	$	18,438		$	23,274		$	22,820		$	22,435
Earn-out consideration payable in connection with acquisitions		4,360			-			14,550			2,320
Payments of earn-out consideration		(357	)		(5,756	)		(1,509	)		(7,239	)
Changes in fair value of earn-out consideration (note a)		-			11			(14,997	)		(1,414	)
Others (note b)		545			470			2,122			1,897
Ending balance	$	22,986		$	17,999		$	22,986		$	17,999

	Notional principal amounts (note a)				Balance sheet exposure asset (liability) (note b)
	As of December 31, 2016		As of September 30, 2017		As of December 31, 2016			As of September 30, 2017
Foreign exchange forward contracts denominated in:
United States dollars (sell) Indian rupees (buy)	$	1,108,400	$	1,274,026	$	6,669		$	30,464
United States dollars (sell) Mexican peso (buy)		9,120		2,280		(187	)		362
United States dollars (sell) Philippines peso (buy)		70,050		66,800		(1,036	)		(1,635	)
Euro (sell) United States dollars (buy)		138,613		161,783		9,180			(1,760	)
Pound sterling (buy) United States dollars (sell)		-		16,077		-			40
Euro (sell) Romanian leu (buy)		29,805		36,662		(152	)		(481	)
Japanese yen (sell) Chinese renminbi (buy)		77,267		71,832		(742	)		306
Pound sterling (sell) United States dollars (buy)		104,142		94,728		14,228			(605	)
Australian dollars (sell) United States dollars (buy)		114,412		145,679		2,328			(5,934	)
Interest rate swaps (floating to fixed)		456,810		438,290		7,746			6,560
						38,034			27,317



	Amount of gain (loss)												Amount of gain (loss)
	recognized in OCI on												reclassified from OCI into
Derivatives in	derivatives (effective portion)											Location of gain (loss) reclassified	statement of income (effective portion)
Cash Flow	Three months ended					Nine months ended						from OCI into	Three months ended					Nine months ended
Hedging	September 30,					September 30,						statement of income	September 30,					September 30,
Relationships	2016		2017			2016			2017			(effective portion)	2016			2017		2016			2017
Forward foreign exchange contracts	$	28,287	$	(7,779	)	$	26,612		$	33,132		Revenue	$	2,599		$	403	$	8,596		$	6,429
Interest rate swaps		718		19			(3,794	)		(1,386	)	Cost of revenue		(2,823	)		11,666		(11,540	)		26,655
												Selling, general and administrative expenses		(693	)		3,213		(3,073	)		7,368
												Interest expense		(667	)		169		(1,054	)		(201	)
	$	29,005	$	(7,760	)	$	22,818		$	31,746			$	(1,584	)	$	15,451	$	(7,071	)	$	40,251

		Amount of gain (loss)
		recognized in statement of
		income on derivatives
Derivatives not designated as hedging	Location of gain (loss) recognized in statement of	Three months ended September 30,					Nine months ended September 30,
instruments	income on derivatives	2016		2017			2016		2017
Forward foreign exchange contracts (Note a)	Foreign exchange gains (losses), net	$	2,599	$	(1,350	)	$	2,838	$	8,763
		$	2,599	$	(1,350	)	$	2,838	$	8,763

	As of December 31, 2016						As of September 30, 2017
	Gross carrying amount		Accumulated amortization & impairment		Net		Gross carrying amount		Accumulated amortization & impairment		Net
Customer-related intangible assets	$	312,041	$	260,018	$	52,023	$	362,496	$	283,459	$	79,037
Marketing-related intangible assets		45,098		30,571		14,527		52,275		36,355		15,920
Technology-related intangible assets		26,116		21,026		5,090		51,487		26,438		25,049
Other intangible assets		2,875		2,466		409		3,062		1,956		1,106
Intangible assets under development		6,897		-		6,897		17,103		-		17,103
	$	393,027	$	314,081	$	78,946	$	486,423	$	348,208	$	138,215

	Nine months ended September 30, 2016	Nine months ended September 30, 2017
Dividend yield	—			0.97%
Expected life (in months)	84			84
Risk-free rate of interest	1.42%-1.56%		2.25%
Volatility	25.60%-27.22%		24.28%

	Nine months ended September 30, 2017
	Shares arising out of options			Weighted average exercise price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Outstanding as of January 1, 2017		5,707,690		$	18.65		5.8	$	—
Granted		250,000			24.74		—		—
Forfeited		(80,000	)		20.63		—		—
Expired		—			—		—		—
Exercised		(641,900	)		14.40		—		8,707
Outstanding as of September 30, 2017		5,235,790		$	19.44		5.8	$	48,770
Vested as of September 30, 2017 and expected to vest thereafter (Note a)	5,036,756			$	19.22		5.8	$	47,981
Vested and exercisable as of September 30, 2017		2,304,291		$	16.12		4.3	$	29,095
Weighted average grant date fair value of grants during the period	$	6.62

	Nine months ended September 30, 2017
	Number of Performance Units			Weighted Average Grant Date Fair Value		Maximum Shares Eligible to Receive
Outstanding as of January 1, 2017		3,772,128		$	23.04		5,524,114
Granted		1,811,292			25.22		3,622,584
Vested (Note a)		(1,136,047)			16.78		(1,136,047)
Forfeited (Note b)		(1,557,067	)		27.62		(1,580,267	)
Adjustment upon final determination of level of performance goal achievement (Note c)							(1,747,586)
Outstanding as of September 30, 2017		2,890,306		$	24.40		4,682,798
Expected to vest (Note d)		2,248,990

	2017
Opening balance at January 1	$	23,467
Increase related to prior year tax positions, including recorded in acquisition accounting		515
Decrease related to prior year tax positions		(1,203	)
Decrease related to prior year tax positions due to lapse of applicable statute of limitation		(663	)
Effect of exchange rate changes		853
Closing balance at September 30	$	22,969

	Three months ended September 30,						As a Percentage of Total Net Revenues
	2016			2017			2016			2017
	(dollars in millions)
Personnel expenses	$	269.8		$	293.3			41.6	%		41.4	%
Operational expenses		111.4			124.0			17.2			17.5
Depreciation and amortization	11.2				11.9			1.7			1.7
Cost of revenue	$	392.4		$	429.2			60.5	%		60.5	%
Gross margin		39.5	%		39.5	%

	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
	(dollars in millions)
Long-term debt	$	1,164.9	$	71.6	$	726.0	$	367.3	$ —
— Principal payments		1,055.5		39.2		668.7		347.6	—
— Interest payments*		109.4		32.4		57.3		19.7	—
Short-term borrowings		161.1		161.1	—		—		—
— Principal payments		160.0		160.0	—		—		—
— Interest payments**		1.1		1.1	—		—		—
Capital leases		5.3		2.1		2.5		0.7	—
— Principal payments		4.3		1.5		2.2		0.6	—
— Interest payments		1.0		0.6		0.3		0.1	—
Operating leases		203.3		38.3		63.3		46.4		55.3
Purchase obligations		42.1		26.0		16.0		0.1	—
Capital commitments net of advances		6.2		6.2	—		—		—
Earn-out consideration		20.1		7.2		10.0		2.9	—
— Reporting date fair value		17.9		6.6		8.7		2.6	—
— Interest		2.2		0.6		1.3		0.3	—
Other liabilities		45.1		29.8		13.6		1.7	—
Total contractual obligations	$	1,648.1	$	342.3	$	831.4	$	419.1	$	55.3