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WNS WNS Holdings Limited

Filed: 14 May 21, 1:21pm
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 20-F

 

 

 

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

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

For the fiscal year ended March 31, 2021

OR

 

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

For the transition period from              to             

OR

 

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

Date of event requiring this shell company report

Commission file number 001-32945

 

 

WNS (Holdings) Limited

(Exact name of Registrant as specified in its charter)

 

 

Not Applicable

(Translation of Registrant’s name into English)

Jersey, Channel Islands

(Jurisdiction of incorporation or organization)

Gate 4, Godrej & Boyce Complex

Pirojshanagar, Vikhroli (W)

Mumbai 400 079, India

(Address of principal executive offices)

Gopi Krishnan

General Counsel

Gate 4, Godrej & Boyce Complex

Pirojshanagar, Vikhroli (W)

Mumbai 400 079, India

(91-22) 4095-2100

gopi.krishnan@wns.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which  registered

American Depositary Shares, each represented by WNS The New York Stock Exchange
one Ordinary Share, par value 10 pence per share  

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As at March 31, 2021, 49,402,203 ordinary shares, par value 10 pence per share, were issued and outstanding, of which 49,122,862 ordinary shares were held in the form of American Depositary Shares (“ADSs”). Each ADS represents one ordinary share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ☒  Yes    ☐  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    ☐  Yes    ☒  No

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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 every Interactive Data File required to be submitted 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 such files).     ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company,” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☒

  Accelerated filer  ☐            Non-accelerated filer  ☐
    Emerging growth company  ☐

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.    ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP  ☐

  

International Financial Reporting Standards as issued

by the International Accounting Standards Board  ☒

  Other  ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:    ☐  Item 17     ☐  Item 18

If this report is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    ☒  No

 

 

 


Table of Contents

TABLE OF CONTENTS

WNS (HOLDINGS) LIMITED

 

   Page 

PART I

  

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

   4 

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

   4 

ITEM 3. KEY INFORMATION

   4 

ITEM 4. INFORMATION ON THE COMPANY

   35 

ITEM 4A. UNRESOLVED STAFF COMMENTS

   76 

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

   77 

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

   126 

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

   153 

ITEM 8. FINANCIAL INFORMATION

   156 

ITEM 9. THE OFFER AND LISTING

   160 

ITEM 10. ADDITIONAL INFORMATION

   161 

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   187 

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

   188 

PART II

  

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

   189 

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

   189 

ITEM 15. CONTROLS AND PROCEDURES

   189 

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

   191 

ITEM 16B. CODE OF ETHICS

   191 

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

   191 

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

   192 

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

   192 

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

   194 

ITEM 16G. CORPORATE GOVERNANCE

   194 

ITEM 16H. MINE SAFETY DISCLOSURE

   194 

PART III

  

ITEM 17. FINANCIAL STATEMENTS

   195 

ITEM 18. FINANCIAL STATEMENTS

   195 

ITEM 19. EXHIBITS

   196 

SIGNATURES

   198 

INDEX TO WNS (HOLDINGS)  LIMITED’S CONSOLIDATED FINANCIAL STATEMENTS

   F-1 

Ex-2.3 Description of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended

Ex 4.9 Lease Deed dated December 16, 2020 between WNS Global Services Private Limited and DLF Assets Private Limited with respect to the lease of office premises on the 10th floor of Block 10 at DLF IT Park.

Ex 4.10 Leave and License Agreement dated Feb 15, 2021 between Godrej and Boyce Manufacturing Company Limited and WNS Global Services Private Limited with respect to the lease of the office premises with an aggregate area of 84,429 square feet at plant 10.

Ex 4.11 Leave and License Agreement dated Feb 15, 2021 between Godrej and Boyce Manufacturing Company Limited and WNS Global Services Private Limited with respect to the lease of the office premises with an aggregate area of 1,08,000 square feet at plant 5.

Ex 4.12 Leave and License Agreement dated Feb 15, 2021 between Godrej and Boyce Manufacturing Company Limited and WNS Global Services Private Limited with respect to the lease of the office premises with an aggregate area of 84,934 square feet at plant 11.

Ex-4.13 Facility Agreement dated March 10, 2017 among WNS (Mauritius) Limited, HSBC Bank (Mauritius) Limited and Standard Chartered Bank, UK

Ex-8.1 List of subsidiaries of WNS (Holdings) Limited

Ex-12.1 Certification by the Chief Executive Officer to 17 CFR 240, 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Ex-12.2 Certification by the Chief Financial Officer to 17 CFR 240, 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Ex-13.1 Certification by the Chief Executive Officer to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Ex-13.2 Certification by the Chief Financial Officer to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Ex-15.1 Consent of Grant Thornton Bharat LLP (formerly “Grant Thornton India LLP”), independent registered public accounting firm

 

1


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CONVENTIONS USED IN THIS ANNUAL REPORT

In this annual report, references to “US” are to the United States of America, its territories and its possessions. References to “UK” are to the United Kingdom. References to “EU” are to the European Union. References to “India” are to the Republic of India. References to “China” are to the People’s Republic of China. References to “South Africa” are to the Republic of South Africa. References to “$” or “dollars” or “US dollars” are to the legal currency of the US, references to “  ” or “Indian rupees” are to the legal currency of India, references to “pound sterling” or “£” are to the legal currency of the UK, references to “pence” are to the legal currency of Jersey, Channel Islands, references to “Euro” are to the legal currency of the European Monetary Union, references to “South African rand” or “R” or “ZAR” are to the legal currency of South Africa, references to “A$” or “AUD” or “Australian dollars” are to the legal currency of Australia, references to “CHF” or “Swiss Franc” are to the legal currency of Switzerland, references to “RMB” are to the legal currency of China, references to “LKR” or “Sri Lankan rupees” are to the legal currency of Sri Lanka, references to “PHP” or “Philippine Peso” are to the legal currency of the Philippines and references to “NZD” or “New Zealand Dollar” are to the legal currency of New Zealand. Our financial statements are presented in US dollars. Our financial statements included in this annual report are prepared in accordance with the International Financial Reporting Standards and its interpretations (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). Unless otherwise indicated, references to “GAAP” in this annual report are to IFRS, as issued by the IASB.

References to a particular “fiscal” year are to our fiscal year ended March 31 of that calendar year. Any discrepancies in any table between totals and sums of the amount listed are due to rounding. Any amount stated to be $0.0 million represents an amount less than $5,000.

In this annual report, unless otherwise specified or the context requires, the term “WNS” refers to WNS (Holdings) Limited, a public company incorporated under the laws of Jersey, Channel Islands, and the terms “our company,” “we,” “our” and “us” refer to WNS (Holdings) Limited and its subsidiaries.

In this annual report, references to “SEC” or “Commission” are to the United States Securities and Exchange Commission.

We also refer in various places within this annual report to “revenue less repair payments,” which is a non-GAAP financial measure that is calculated as (a) revenue less (b) in our auto claims business, payments to repair centers for “fault” repair cases where we act as the principal in our dealings with the third party repair centers and our clients. This non-GAAP financial information is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

We refer to information regarding the business process management (“BPM”) industry, our company and our competitors from market research reports, analyst reports and other publicly available sources. Although we believe that this information is reliable, we have not independently verified the accuracy and completeness of the information. We caution you not to place undue reliance on this data. BPM services are also sometimes referred to as business process outsourcing (“BPO”) services.

 

2


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains “forward-looking statements” that are based on our current expectations, assumptions, estimates and projections about our company and our industry. The forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “project,” “seek,” “should” and similar expressions. Those statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and future capital expenditures. We caution you that reliance on any forward-looking statement inherently involves risks and uncertainties, and that although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions could be materially incorrect. These risks and uncertainties include but are not limited to:

 

  

worldwide economic and business conditions;

 

  

our dependence on a limited number of clients in a limited number of industries;

 

  

the impact of the ongoing coronavirus disease 2019 (“COVID-19”) pandemic on our and our clients’ business, financial condition, results of operations and cash flows;

 

  

currency fluctuations among the Indian rupee, the pound sterling, the US dollar, the Australian dollar, the Euro, the South African rand and the Philippine peso;

 

  

political or economic instability in the jurisdictions where we have operations;

 

  

regulatory, legislative and judicial developments;

 

  

increasing competition in the BPM industry;

 

  

technological innovation;

 

  

our liability arising from fraud or unauthorized disclosure of sensitive or confidential client and customer data;

 

  

telecommunications or technology disruptions;

 

  

our ability to attract and retain clients;

 

  

negative public reaction in the US or the UK to offshore outsourcing;

 

  

our ability to collect our receivables from, or bill our unbilled services to, our clients;

 

  

our ability to expand our business or effectively manage growth;

 

  

our ability to hire and retain enough sufficiently trained employees to support our operations;

 

  

the effects of our different pricing strategies or those of our competitors;

 

  

our ability to successfully consummate, integrate and achieve accretive benefits from our strategic acquisitions, and to successfully grow our revenue and expand our service offerings and market share;

 

  

future regulatory actions and conditions in our operating areas; and

 

  

volatility of our ADS price.

These and other factors are more fully discussed in “Part I — Item 3. Key Information — D. Risk Factors,” “Part I — Item 5. Operating and Financial Review and Prospects” and elsewhere in this annual report. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans, objectives or projected financial results referred to in any of the forward-looking statements. Except as required by law, we do not undertake to release revisions of any of these forward-looking statements to reflect future events or circumstances.

 

3


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PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.  KEY INFORMATION

A. Selected Financial Data

Our consolidated financial statements as at and for the years ended March 31, 2021, 2020, 2019, 2018 and 2017 have been prepared in conformity with IFRS, as issued by the IASB.

The following selected financial data should be read in conjunction with “Part I — Item 5. Operating and Financial Review and Prospects” and our consolidated financial statements included elsewhere in this annual report.

The following selected consolidated statement of income data for fiscal 2021, 2020 and 2019 and selected consolidated statement of financial position data as at March 31, 2021 and 2020 have been derived from our audited consolidated financial statements included elsewhere in this annual report. The selected consolidated statement of income data for fiscal 2018 and 2017 and selected consolidated statement of financial position data as at March 31, 2019, 2018 and 2017 have been derived from our audited consolidated financial statements which are not included in this annual report.

 

   For the year ended March 31, 
   2021  2020  2019  2018  2017 
   (US dollars in millions, except share and per share data) 

Consolidated statement of income data:

      

Revenue

  $912.6  $928.3  $809.1  $758.0  $602.5 

Cost of revenue (1) (2)

   587.2   583.9   518.2   503.1   403.3 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Gross profit

   325.4   344.3   290.9   254.8   199.2 

Operating expenses:

      

Selling and marketing expenses (1)

   49.6   52.8   44.6   41.8   32.6 

General and administrative expenses (1)

   126.3   128.6   115.2   117.6   91.7 

Foreign exchange gains, net (3)

   0.8   (3.4  (4.5  (15.0  (14.5

Impairment of goodwill

   —     4.1   —     —     21.7 

Amortization of intangible assets

   13.7   15.7   15.8   15.5   20.5 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating profit

   135.1   146.6   119.8   94.9   47.2 

Other income, net

   (12.5  (14.4  (14.6  (11.2  (8.7

Finance expense (2)

   14.8   17.0   3.2   4.3   0.5 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Profit before income taxes

   132.7   144.0   131.1   101.8   55.3 

Income tax expense

   30.1   27.2   25.7   15.4   17.5 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Profit after tax

  $102.6  $116.8  $105.4  $86.4  $37.8 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Earnings per share of ordinary share:

      

Basic

  $2.06  $2.35  $2.10  $1.72  $0.75 

Diluted

  $1.97  $2.24  $2.02  $1.63  $0.71 

Basic weighted average ordinary shares outstanding

   49,765,672   49,726,636   50,139,389   50,388,440   50,582,852 

Diluted weighted average ordinary shares outstanding

   52,108,749   52,036,940   52,278,113   52,915,600   52,940,308 

 

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   As at March 31, 
   2021  2020   2019  2018  2017 
   (US dollars in millions) 

Consolidated statement of financial position data:

    

Assets

    

Cash and cash equivalents

  $105.6  $96.9   $85.4  $99.8  $69.8 

Investments

   203.7   125.6    67.9   121.0   112.0 

Trade receivables including unbilled revenue, net

   149.5   147.8    140.6   133.1   109.3 

Contract assets(4)

   7.8   7.5    4.2   —     —   

Other current assets (5)

   43.3   51.0    37.3   46.7   71.9 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total current assets

   509.9   428.8    335.4   400.6   363.0 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Goodwill and intangible assets, net

   189.1   191.4    211.0   224.9   230.6 

Property and equipment, net

   52.3   57.0    61.0   60.6   54.8 

Right-of-use assets (2)

   166.8   159.1    —     —     —   

Deferred tax assets

   33.0   28.9    23.8   27.4   16.7 

Investments

   85.8   80.1    82.5   0.5   0.4 

Contract assets (4)

   27.1   28.9    22.0   —     —   

Other non-current assets (6)

   42.1   38.0    49.9   45.6   38.5 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total non-current assets

   596.2   583.5    450.2   359.0   341.1 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total assets

   1,016.1   1,012.3    785.6   759.6   704.1 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Liabilities and equity

    

Current portion of long-term debt

   16.7   16.7    28.0   27.7   27.6 

Trade payables

   28.0   29.3    17.8   19.7   14.2 

Lease liabilities (2)

   26.0   23.4    —     —     —   

Other current liabilities (7)

   136.8   136.4    116.2   119.9   106.9 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total current liabilities

   207.5   205.8    162.0   167.3   148.7 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Long-term debt

   —     16.7    33.4   61.4   89.1 

Lease liabilities(2)

   165.9   155.5    —     —     —   

Other non-current liabilities (8)

   48.7   47.2    37.8   35.9   51.2 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total non-current liabilities

   214.6   219.4    71.2   97.3   140.3 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Share capital (ordinary shares $0.16 (10 pence) par value, authorized 60,000,000 shares; issued: 50,502,203, 49,733,640, 51,153,220 54,834,080 and 53,312,559 shares each as at March 31, 2021, 2020, 2019, 2018 and 2017, respectively)

   7.9   7.9    8.1   8.5   8.3 

Share premium

   227.7   187.3    269.5   371.8   338.3 

Other shareholders’ equity (9)

   527.1   392.0    331.2   248.9   163.2 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total shareholders’ equity, including shares held in treasury

   762.7   587.1    608.8   629.2   509.8 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Less: 1,100,000 shares as at March 31, 2021, Nil shares as at March 31, 2020, 1,101,300 shares as at March 31, 2019, 4,400,000 shares as at March 31, 2018 and 3,300,000 shares as at March 31, 2017, held in treasury, at cost

   (78.6  —      (56.4  (134.2  (94.7
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total shareholders’ equity

   684.1   587.1    552.4   495.0   415.1 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total liabilities and equity

  $1,016.1  $1,012.3   $785.6  $759.6  $704.1 
  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

 

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The following table sets forth for the periods indicated selected consolidated financial data, non-GAAP financial data and operating data:

 

   For the year ended March 31, 
   2021  2020  2019  2018  2017 
   (US dollars in millions, except percentages
and employee data)
 

Other Consolidated Financial Data:

      

Revenue

  $912.6  $928.3  $809.1  $758.0  $602.5 

Gross profit as a percentage of revenue

   35.7%  37.1%  36.0%  33.6%  33.1%

Operating profit as a percentage of revenue

   14.8%  15.8%  14.8%  12.5%  7.8%

Non-GAAP Financial Data:

      

Revenue less repair payments (non-GAAP) (10)

  $868.7  $896.2  $794.0  $741.0  $578.4 

Gross profit as a percentage of revenue less repair payments (non-GAAP)

   37.5%  38.4%  36.6%  34.4%  34.4%

Operating profit as a percentage of revenue less repair payments (non-GAAP)

   15.5%  16.4%  15.1%  12.8%  8.2%

Operating Data:

      

Number of employees (at year end) (11)

   43,997   44,292   39,898   36,540   34,547 

Notes:

 

(1) 

Includes the following share-based compensation expense amounts:

 

   For the year ended March 31, 
   2021   2020   2019   2018   2017 
   (US dollars in millions) 

Cost of revenue

  $4.9   $4.6   $4.3   $3.8   $2.8 

Selling and marketing expenses

  $4.3   $4.8   $4.0   $2.6   $1.7 

General and administrative expenses

  $ 29.0   $ 28.1   $ 22.0   $ 24.2   $ 18.5 

 

(2) 

Disclosed separately on adoption of IFRS 16 “Leases” with effect from April 1, 2019. The comparative information has not been restated and continues to be reported in accordance with the principles of IAS 17 “Leases.” Finance cost includes interest on lease liabilities which was earlier accounted as part of facilities cost included in cost of revenue as per IAS 17 “Leases.”

(3) 

On adoption of IFRS 9 “Financial Instruments” (“IFRS 9”) with effect from April 1, 2018, cash flow hedging gains and losses, which were previously reported in foreign exchange gains or losses, net, are now reported in revenue. The comparative information has not been restated and continues to be reported in accordance with the principles of IAS 39 –“Financial Instruments: Recognition and Measurement.”

(4) 

Disclosed separately on adoption of IFRS 15 “Revenue from Contracts with Customers” with effect from April 1, 2018. The comparative information has not been restated and continues to be reported in accordance with the principles of IAS 18 “Revenue.

(5) 

Consists of funds held for clients, derivative assets, and prepayments and other current assets.

(6) 

Consists of non-current portion of derivative assets, and other non-current assets.

(7) 

Consists of provisions and accrued expenses, derivative liabilities, pension and other employee obligations, contract liabilities, current taxes payable and other liabilities.

(8) 

Consists of non-current portion of derivatives liabilities, pension and other employee obligations, contract liabilities, deferred tax liabilities, trade receivable and other non-current liabilities.

(9) 

Consists of retained earnings and other components of equity.

 

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(10) 

Revenue less repair payments is a non-GAAP financial measure which is calculated as (a) revenue less (b) in our auto claims business, payments to repair centers for “fault” repair cases where we act as the principal in our dealings with the third party repair centers and our clients. The following table reconciles our revenue (a GAAP financial measure) to revenue less repair payments (a non-GAAP financial measure) for the indicated periods:

 

   For the year ended March 31, 
   2021   2020   2019   2018   2017 
   (US dollars in millions) 

Revenue (GAAP)

  $912.6   $928.3   $809.1   $758.0   $602.5 

Less: Payments to repair centers (a)

   43.9    32.0    15.2    17.0    24.1 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue less repair payments (non-GAAP)

  $ 868.7   $ 896.2   $ 794.0   $ 741.0   $ 578.4 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note:

 

(a) 

Consists of payments to repair centers in our auto claims business for “fault” repair cases where we act as the principal in our dealings with the third party repair centers and our clients.

We have two reportable segments for financial statement reporting purposes — WNS Global BPM and WNS Auto Claims BPM. In our WNS Auto Claims BPM segment, we provide both “fault” and “non-fault” repairs and legal services in relation to personal injury claims. For “fault” repairs, we provide claims handling and repair management services, where we arrange for automobile repairs through a network of third party repair centers. In our repair management services, where we act as the principal in our dealings with the third party repair centers and our clients, the amounts which we invoice to our clients for payments made by us to third party repair centers are reported as revenue. Where we are not the principal in providing the services, we record revenue from repair services net of repair cost. Since we wholly subcontract the repairs to the repair centers, we evaluate the financial performance of our “fault” repair business based on revenue less repair payments (non-GAAP) to third party repair centers, which is a non-GAAP financial measure. We believe that revenue less repair payments (non-GAAP) for “fault” repairs reflects more accurately the value addition of the business process management services that we directly provide to our clients.

For our “non-fault” repairs business, we generally provide a consolidated suite of accident management services including credit hire and credit repair, and we believe that measurement of such business on a basis that includes repair payments in revenue is appropriate. Revenue including repair payments is therefore used as a primary measure to allocate resources and measure operating performance for accident management services provided in our “non-fault” repairs business. Our “non-fault” repairs business, where we provide accident management services, accounts for a relatively small portion of our revenue for our WNS Auto Claims BPM segment.

This non-GAAP financial information is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. We believe that the presentation of this non-GAAP financial measure in this annual report provides useful information for investors regarding the financial performance of our business and our two reportable segments. Our revenue less repair payments (non-GAAP) may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation.

 

(11) 

Commencing fiscal 2018, we have included in our disclosed total “headcount” the number of apprentices employed under the India government scheme, National Employability Enhancement Mission, pursuant to which apprentices undergo a three to 36 month apprenticeship to enhance their employability. There is no guarantee of employment with WNS following the completion of the apprenticeship. Our previously disclosed total “headcount” does not include apprentices. The total “headcount” presented for the prior period in the table above has been re-computed to include apprentices for comparative purposes.

B. Capitalization and Indebtedness

Not applicable.

 

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C. Reason for the Offer and the Use of Proceeds

Not applicable.

D. Risk Factors

This annual report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those described in the following risk factors and elsewhere in this annual report. If any of the following risks actually occur, our business, financial condition, results of operations and cash flows could suffer and the trading price of our ADSs could decline.

Risks Related to Our Business

The global economic and geo-political conditions have been and continue to be challenging and have had, and may continue to have, an adverse effect on the financial markets and the economy in general, which has had, and may continue to have, a material adverse effect on our business, financial performance, results of operations and cash flows and the prices of our equity shares and ADSs.

The recent global outbreak and spread of the disease caused by the severe acute respiratory syndrome coronavirus known as COVID-19, which was reported to have surfaced in December 2019, has caused, and is likely to continue to cause an additional slowdown in the global economy, as is evidenced by the recent declines in investments, exports and industrial production. In March 2020, the International Monetary Fund officially declared that the global economy has entered into a recession, as a result of the spread of COVID-19. The global spread of COVID-19 has created, and is likely to continue to create, significant volatility and uncertainty and economic disruption. In addition, volatility in the domestic politics of major markets may lead to changes in the institutional framework of the international economy. For further information, see “— Our business operations and future growth have been, and may continue to be, negatively impacted on account of the COVID-19 pandemic.”

The withdrawal of the UK from the EU in January 2020, commonly referred to as “Brexit,” has also created significant political and economic uncertainty regarding the future trading relationship between the UK and the EU. In particular, the UK has ratified a trade and cooperation agreement governing its future relationship with the EU. The agreement, which is being applied provisionally from January 1, 2021 until it is ratified by the European Parliament and the Council of the European Union, addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework including procedures for dispute resolution, among other things. Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the UK and the EU as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before withdrawal. These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and financial markets, and may significantly reduce global market liquidity, restrict the ability of key market participants to operate in certain financial markets or restrict our access to capital. Any of these factors could have a material adverse effect on our business, financial condition, results of operations and cash flows.

28.0% of our revenues and 24.4% of our revenue less repair payments (non-GAAP) in fiscal 2021 and 28.5% of our revenues and 26.0% of our revenue less repair payments (non-GAAP) in fiscal 2020 are denominated in pound sterling. The extent and duration of the decline in the value of the pound sterling to the US dollar and other currencies is unknown at this time. A long-term reduction in the value of the pound sterling as a result of Brexit or otherwise could adversely impact our earnings growth rate and profitability. We believe that our hedging program is effective, however there is no assurance that it will protect us against fluctuations in foreign currency exchange rates.

In the US, the National Bureau of Economic Research declared in June 2020 that the US economy officially entered a recession in February 2020, and there are concerns over the possibility of its economy entering into a deep recession, including on account of the COVID-19 pandemic. There continue to be similar signs of continued economic slowdown and weakness in parts of Europe and India. Globally, countries have and may continue to require additional financial support, sovereign credit ratings have and may continue to decline, and there may be default on sovereign debt obligations of certain countries. Any of these global economic conditions may increase the cost of borrowing and cause credit to become more limited, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. The global economic slowdown may be further prolonged by subsequent outbreaks of COVID-19 in countries which are taking, or which have taken, steps to ease lockdown measures; such outbreaks may require those countries to extend their lockdown measures or roll-back previous measures taken to facilitate the re-opening of their economies.

 

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These economic and geo-political conditions have affected, and may continue to affect, our business in a number of ways, as we have operations in 13 countries and we service clients across multiple geographic regions. The general level of economic activity, such as decreases in business and consumer spending, has resulted, and may continue to result in, a decrease in demand for our services, thus reducing our revenue. The cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. The current global economic slowdown and the possibility of continued turbulence or uncertainty in the European, US, Asian and international financial markets and economies, and the political climate in the US and the UK, has, and may continue to, adversely affect our liquidity and financial condition, and the liquidity and financial condition of our clients. If these market conditions continue or worsen, they may further limit our ability to access financing or increase our cost of financing to meet liquidity needs, and further affect the ability of our clients to use credit to purchase our services or to make timely payments to us, resulting in adverse effects on our financial condition and results of operations. In the US, there is concern over slowing economic growth and continuing trade tensions.

Changing economic conditions may also have an effect on foreign exchange rates, which in turn may affect our business. For further information, see “— Currency fluctuations among the Indian rupee, the pound sterling, the US dollar, the Australian dollar, the Euro, the South African rand and the Philippine peso could have a material adverse effect on our results of operations.”

The current global economic slowdown and uncertainty about the future global economic conditions could also continue to increase the volatility of our ADS price. We cannot predict the timing or duration of an economic slowdown or the timing or strength of a subsequent economic recovery generally or in our targeted industries, including the insurance and travel and leisure industries. If macroeconomic conditions worsen or the current global economic conditions continue for a prolonged period of time, we are not able to predict the impact that such conditions will have on our targeted industries, in general, and our results of operations specifically.

A few major clients account for a significant portion of our revenue and any loss of business from these clients could reduce our revenue and significantly harm our business.

We have derived and believe that we will continue to derive in the near term a significant portion of our revenue from a limited number of large clients. In fiscal 2021 and 2020, our five largest clients accounted for 26.8% and 25.1% of our revenue and 27.6% and 26.0% of our revenue less repair payments (non-GAAP), respectively. In fiscal 2021 and 2020, our three largest clients accounted for 19.2% and 17.7% of our revenue and 20.2% and 18.4% of our revenue less repair payments (non-GAAP), respectively. In fiscal 2021, our largest client individually accounted for 8.1% and 8.5% of our revenue and revenue less repair payments (non-GAAP), respectively, as compared to 6.9% and 7.1% in fiscal 2020, respectively. Any loss of business from any major client could reduce our revenue and significantly harm our business.

For example, one of our top five clients by revenue contribution in fiscal 2014, an online travel agency (“OTA”), provided us with lower volume of business in fiscal 2015 as the OTA entered into a strategic marketing agreement with another OTA in August 2013, pursuant to which it, over a period of time, from the fourth quarter of fiscal 2014 to the fourth quarter of fiscal 2015, moved its customer care and sales processes that were previously managed by us to a technology platform managed by the other OTA. As a result, we lost most of our business from that OTA and in June 2015, we ceased to provide services to that OTA. That OTA accounted for 2.5% and 6.1% of our revenue and 2.6% and 6.5% of our revenue less repair payments (non-GAAP) in fiscal 2015 and 2014, respectively. The other OTA uses several BPM vendors to manage such processes on its technology platform. We are approved as one of the other OTA’s providers of BPM services. We have managed to compete with incumbent BPM vendors for the other OTA’s business and the other OTA has become one of our large clients.

We have derived, and we expect to continue deriving for the foreseeable future, a significant portion of our revenue from Aviva Global Services (Management Services) Private Limited (“Aviva MS”). Under our master services agreement with Aviva MS, Aviva MS is permitted to terminate the agreement without cause with 180 days’ notice upon payment of a termination fee.

In addition, the volume of work performed for specific clients is likely to vary from year to year, particularly since we may not be the exclusive outside service provider for our clients. Thus, a major client in one year may not provide the same level of revenue in any subsequent year. For example, until fiscal 2018, Aviva MS was our largest client and revenue from Aviva MS decreased from $54.5 million in fiscal 2017 to $51.9 million in fiscal 2018 to $50.1 million in fiscal 2019 and increased to $53.3 million in fiscal 2020. Part of this decline in revenue of fiscal 2018 and 2019 was attributable to revised pricing terms and part was attributable to a reduction of services due to automation performed by Aviva MS and the automation of certain services by WNS. The loss of some or all of the business of any large client could have a material adverse effect on our business, results of operations, financial condition and cash flows. A number of factors other than our performance could cause the loss of or reduction in business or revenue from a client, and these factors are not predictable. For example, a client may demand price reductions, change its outsourcing strategy or move work in-house. A client may also be acquired by a company with a different outsourcing strategy that intends to switch to another business process management service provider or return work in-house.

 

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Our revenue is highly dependent on clients concentrated in a few industries, as well as clients located primarily in the US, the UK, Europe and Australia. Economic slowdowns or factors that affect these industries or the economic environment in the US, the UK, Europe or Australia could reduce our revenue and seriously harm our business.

A substantial portion of our clients are concentrated in the insurance industry and the travel and leisure industry. In fiscal 2021 and 2020, 29.2% and 27.7% of our revenue, respectively, and 25.6% and 25.2% of our revenue less repair payments (non-GAAP), respectively, was derived from clients in the insurance industry. During the same periods, clients in the travel and leisure industry contributed 14.2% and 18.0% of our revenue, respectively, and 14.9% and 18.6% of our revenue less repair payments (non-GAAP), respectively. Our business and growth largely depend on continued demand for our services from clients in these industries and other industries that we may target in the future, as well as on trends in these industries to outsource business processes.

The current global economic slowdown has affected, and may continue to affect, both the industries in which our clients are concentrated and the geographies in which we do business. For more information, see “— The global economic and geo-political conditions have been and continue to be challenging and have had, and may continue to have, an adverse effect on the financial markets and the economy in general, which has had, and may continue to have, a material adverse effect on our business, financial performance, results of operations and cash flows and the prices of our equity shares and ADSs.” Certain of our targeted industries are especially vulnerable to crises in the financial and credit markets and potential economic downturns. Our results of operations depend on, among other things, our ability to maintain and increase our sales volume with existing clients and to attract new clients. The impact of the COVID-19 pandemic has affected, and we expect it to continue to affect, the demand for our services across industries, depending on the ability of each client, and the nature of their industries, products and services, in coping with the crisis. A downturn in any of our targeted industries, a slowdown or reversal of the trend to offshore business process outsourcing in any of these industries or the introduction of regulation which restricts or discourages companies from outsourcing could result in a decrease in the demand for our services and adversely affect our results of operations. For instance, the travel and leisure industry is presently impacted on account of travel restrictions imposed by governments across the globe, as a response to the COVID-19 outbreak, and the resultant reduction in business and personal travel. While we expect such restrictions to be gradually eased over time, the volume of business from our travel and leisure clients would be lower than in previous years until such restrictions cease to be in force. Our business has been, and we expect will be, impacted across industry verticals as the COVID-19 pandemic continues to affect the global economy across industries. We have observed demand reductions in a range of verticals, particularly travel and leisure, insurance, diversified businesses (especially manufacturing and retail) and utilities during fiscal 2021.

In addition, any further weakening of or continuing uncertainty in worldwide economic and business conditions could result in a few of our clients reducing or postponing their outsourced business requirements. Additionally, the COVID-19 pandemic has caused, and may continue to cause significant financial distress to some of our clients. These issues impacting our clients have in turn reduced, and may continue to reduce the demand for our services and adversely affect our results of operations. In particular, our revenue is highly dependent on the economic environments in the US, the UK, Europe and Australia. In fiscal 2021 and 2020, 44.2% and 42.3% of our revenue, respectively, and 46.5% and 43.8% of our revenue less repair payments (non-GAAP), respectively, were derived from clients located in the US. During the same periods, 31.4% and 31.4% of our revenue, respectively, and 27.9% and 28.9% of our revenue less repair payments (non-GAAP), respectively, were derived from clients located in the UK, 6.7% and 8.0% of our revenue, respectively, and 7.1% and 8.3% of our revenue less repair payments (non-GAAP), respectively, were derived from clients located in Europe (excluding the UK), and 7.7% and 8.6% of our revenue, respectively, and 8.1% and 8.9% of our revenue less repair payments (non-GAAP), respectively, were derived from clients located in Australia. Although we have not had any significant project cancelations to date, we have agreed to limited volume commitment and payment term concessions with certain clients that have been significantly affected by the COVID-19 pandemic. Any further weakening of or continuing uncertainty in the US, UK, European or Australian economy will likely have a further adverse impact on our revenue.

Other developments may also lead to a decline in the demand for our services in our targeted industries. Significant changes in the financial services industry or any of the other industries on which we focus, or a consolidation in any of these industries or acquisitions, particularly involving our clients, may decrease the potential number of buyers of our services and have an adverse impact on our profitability. Any significant reduction in or the elimination of the use of the services we provide within any of these industries would result in reduced revenue and harm our business. Our clients may experience rapid changes in their prospects, substantial price competition and pressure on their profitability. Although such pressures can encourage outsourcing as a cost reduction measure, they may also result in increasing pressure on us from clients in these key industries to lower our prices which could negatively affect our business, results of operations, financial condition and cash flows.

 

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Our business operations and future growth have been, and may continue to be, negatively impacted on account of the COVID-19 pandemic.

The global outbreak of COVID-19 continues to rapidly evolve. The COVID-19 pandemic has spread to a majority of countries around the world, including countries where all of our delivery centers are located, and has created, and continues to create, significant uncertainty and disruption. Most recently, since March 2021, India has been experiencing a surge of the COVID-19 outbreak following the discovery of a “double mutant” coronavirus variant in the country. The surge appears to be ascending faster than previous outbreaks in the country. Governmental measures and regulations, such as city or country-wide lockdowns, local, domestic and international travel restrictions as well as closures of the enabling ecosystem necessary for our business to operate smoothly, have impacted, and continue to impact, our ability to fully deliver services to our clients especially from our delivery centers. Such measures present concerns that may have affected, and continue to affect, our ability to conduct our business effectively, including, but not limited to adverse effects on employees’ health, a slowdown and often a stoppage of delivery, work, travel and other activities which are essential and critical for maintaining on-going business activities. Our ability to continue operations is dependent on a number of factors, such as the continued availability of high-quality internet bandwidth, an uninterrupted supply of electricity and the sustainability of social infrastructure to enable our remote-working employees to continue delivering services.

Given the uncertainty around the extent and timing of the future spread or mitigation of the COVID-19 and around the imposition or relaxation of protective measures, we cannot reasonably estimate the impact to our future results of operations, cash flows or financial condition. In addition, the unknown scale and duration of these developments has had, and continues to have, macro and micro negative effects on the financial markets and global economy, which has resulted in an economic downturn that has affected, and may continue to affect, demand for our services and has had, and may continue to have, a material adverse effect on our operations and financial results, earnings, cash flow, financial condition and our ADS price. These effects could be material and long-term in duration. For instance, certain regions (such as certain states in the US) which were in the process of lifting lockdown restrictions have experienced subsequent outbreaks of COVID-19 infections, necessitating the extension (or re-imposing) of lockdown measures, and/or rollback of other measures taken to facilitate the economic re-opening of such areas. Such subsequent outbreaks of COVID-19 could therefore prolong the economic impact of the COVID-19 pandemic.

Following guidance from local public health authorities in the countries in which we operate, we have taken various measures, and transitioned into new processes, to help reduce the spread of the virus and maintain the health and safety of our workforce, including but not limited to, implementing remote-working arrangements, restricting access to sites and implementing other measures to help maintain the safety of our workforce, which will allow us to carry out operations from our delivery centers when the local public health authorities allow it. The effects of these policies have negatively impacted, and may continue to negatively impact productivity and the magnitude of any effect will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. Some of these measures have required, and continue to require, us to provide services and operate client processes in an unsupervised environment, and while this has been acknowledged by our clients, such alternative operating models may result in breaches of our contractual obligations. Also, if a natural disaster, power outage, connectivity issue, or other event occurs that impacts our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time. The increase in remote working may also result in client privacy, IT security and fraud concerns as well as increase our exposure to potential wage and hour issues.

For example, in India, the Philippines, South Africa and the United States, we have large concentrations of employees performing critical operations. The closure or partial closure of those facilities, or restrictions inhibiting our employees’ ability to access those facilities, has disrupted, and could in the future disrupt our ability to provide our services and solutions and result in, among other things, terminations of client contracts and losses of revenue. In addition, depending on our clients’ locations, the COVID-19 pandemic may have had and may continue to have different levels of impacts on them due to a number of factors including differences in the pace of vaccination programs and underlying infection rates. This could present novel challenges for the delivery of services to our clients, and our clients could have different expectations for us depending on their circumstances. Clients may also defer decision making or delay planned work. Certain of our clients have entered into insolvency proceedings as a result of the COVID-19 pandemic, and terminated their current agreements with us. International, as well as domestic, travel bans imposed as emergency measures by governments, our reduced ability to hire new employees, disruptions to our supply chain, lockdowns in geographies where clients are located and temporary closure of our delivery centers have impaired, and may continue to impair, our ability to sell new business or expand our relationships with existing clients and hence may have an impact on our growth, financial condition, results and/or ADS price. Further, we might suffer delays in managerial and financial reporting and SEC filings, inability to perform audits and apply effective financial controls, or failures under other regulatory or compliance requirements to which we are subject.

To the extent that the COVID-19 pandemic has adversely affected, and continues to adversely affect, our business, financial condition, results of operations and cash flows, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as, but not limited to, those relating to:

 

  

the global economic and geo-political conditions and financial markets and the economy in general and the resultant potential fluctuations in foreign exchange rates;

 

  

our revenue being highly dependent on clients concentrated in a few industries, as well as clients located primarily in the US, the UK, Europe and Australia;

 

  

us potentially causing disruptions to our clients’ businesses, providing inadequate service or being in breach of our representations or obligations;

 

  

the negative public reaction to offshore outsourcing, proposed legislation or otherwise;

 

  

our operating results, which may differ from period to period and make it difficult for us to prepare accurate internal financial forecasts for responding in a timely manner to offset such period to period fluctuations;

 

  

a substantial portion of our assets and operations being located in India and we being subjected to regulatory, economic, social and political uncertainties in India;

 

  

restrictions on entry visas that may affect our ability to compete for and provide services to clients in the US and the UK; and

 

  

our ability to maintain effective controls that may materially impact or are reasonably likely to materially impact our disclosure controls and procedures and internal controls over financial reporting.

 

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Currency fluctuations among the Indian rupee, the pound sterling, the US dollar, the Australian dollar, the Euro, the South African rand and the Philippine peso could have a material adverse effect on our results of operations.

Although substantially all of our revenue is denominated in pound sterling, US dollars, and to a lesser extent, Australian dollars, Euro and South African rand, a significant portion of our expenses (other than payments to repair centers, which are primarily denominated in pound sterling) are incurred and paid in Indian rupees and, to a lesser extent, in South African rand and Philippine peso. Therefore, a weakening of the rate of exchange for the pound sterling, the US dollar, Euro or the Australian dollar against the Indian rupee or, to a lesser extent, a weakening of the pound sterling against the South African rand or the Philippine peso would adversely affect our results. Furthermore, we report our financial results in US dollars and our results of operations would be adversely affected if the pound sterling, Euro or the Australian dollar depreciates against the US dollar, or if the Indian rupee or, to a lesser extent, the South African rand or the Philippine peso appreciates against the US dollar. Fluctuations between the Indian rupee, the Philippine peso, the pound sterling, the South African rand, the Euro or the Australian dollar, on the one hand, and the US dollar, on the other hand, expose us to translation risk when transactions denominated in such currencies are translated to US dollars, our reporting currency. The exchange rates between each of the Indian rupee, the Philippine peso, the pound sterling, the South African rand, the Euro or the Australian dollar, on the one hand, and the US dollar, on the other hand, have changed substantially in recent years and may fluctuate substantially in the future. In addition, the COVID-19 pandemic has impacted, and may continue to impact, the proper functioning of financial and capital markets and may result in unpredictable fluctuations in foreign currency exchange rates.

The withdrawal of the UK from the EU in January 2020 has created significant political and economic uncertainty regarding the future trading relationship between the UK and the EU. See “—The UK’s withdrawal from the EU may have a negative effect on global economic conditions, financial markets and our operations in the UK and EU, which could reduce the value of our ADS.” These developments have caused, and may continue to cause, volatility in the exchange rates between the pound sterling and other currencies.

The average Indian rupee to US dollar exchange rate was approximately 74.25 per $1.00 in fiscal 2021, which represented a depreciation of the Indian rupee by an average of 4.7% as compared with the average exchange rate of approximately 70.91 per $1.00 in fiscal 2020, which in turn represented a depreciation of the Indian rupee by an average of 1.4% as compared with the average exchange rate of approximately 69.92 per $1.00 in fiscal 2019.

The average pound sterling to US dollar exchange rate was approximately £0.77 per $1.00 in fiscal 2021, which represented an appreciation of the pound sterling by an average of 2.7% as compared with the average exchange rate of approximately £0.79 per $1.00 in fiscal 2020, which in turn represented a depreciation of the pound sterling by an average of 3.2% as compared with the average exchange rate of approximately £0.76 per $1.00 in fiscal 2019.

The average Australian dollar to US dollar exchange rate was approximately A$1.39 per $1.00 in fiscal 2021, which represented an appreciation of the Australian dollar by an average of 5.3% as compared with the average exchange rate of approximately A$1.47 per $1.00 in fiscal 2020, which in turn represented a depreciation of the Australian dollar by an average of 6.5% as compared with the average exchange rate of approximately A$1.37 per $1.00 in fiscal 2019.

The average Euro to US dollar exchange rate was approximately €0.86 per $1.00 in fiscal 2021, which represented an appreciation of the Euro by an average of 5.0% as compared with the average exchange rate of approximately €$0.90 per $1.00 in fiscal 2020, which in turn represented a depreciation of the Euro by an average of 4.1% as compared with the average exchange rate of approximately €0.86 per $1.00 in fiscal 2019.

The average South African rand to US dollar exchange rate was approximately R16.37 per $1.00 in fiscal 2021, which represented a depreciation of the South African rand by an average of 10.9% as compared with the average exchange rate of approximately R14.76 per $1.00 in fiscal 2020, which in turn represented a depreciation of the South African rand by an average of 7.3% as compared with the average exchange rate of approximately R13.76 per $1.00 in fiscal 2019.

The average Philippine peso to US dollar exchange rate was approximately PHP49.00 per $1.00 in fiscal 2021, which represented an appreciation of the Philippine peso by an average of 4.7% as compared with the average exchange rate of approximately PHP51.43 per $1.00 in fiscal 2020, which in turn represented an appreciation of the Philippine peso by an average of 2.8% as compared with the average exchange rate of approximately PHP52.91 per $1.00 in fiscal 2019.

Our results of operations would be adversely affected if the Indian rupee appreciates significantly against the pound sterling or the US dollar or if the pound sterling or the Australian dollar depreciates against the US dollar or, to a lesser extent, if the South African rand or the Philippine peso appreciates significantly against the US dollar.

 

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For example, the depreciation of the Indian rupee and the South African rand and the appreciation of the pound sterling and the Australian dollar against the US dollar in fiscal 2021 positively impacted our results of operations whereas the appreciation of the Philippines peso against the US dollar negatively impacted our results of operations during that year.

The depreciation of the Indian rupee and the South African rand against the US dollar in fiscal 2020 positively impacted our results of operations whereas the depreciation of the pound sterling and the Australian dollar against the US dollar negatively impacted our results of operations during that year.

We hedge a portion of our foreign currency exposures using options and forward contracts. We cannot assure you that our hedging strategy will be successful or will mitigate our exposure to currency risk.

The international nature of our business exposes us to several risks, such as unexpected changes in the regulatory requirements and governmental policy changes of multiple jurisdictions.

We have operations in Australia, China, Costa Rica, India, the Philippines, Poland, Romania, South Africa, Spain, Sri Lanka, Turkey, the UK and the US, and we service clients across Asia, Europe, South Africa, Australia and North America. Our corporate structure also spans multiple jurisdictions, with our parent holding company incorporated in Jersey, Channel Islands, and intermediate and operating subsidiaries (including branch offices) incorporated in Australia, China, Costa Rica, France, India, Mauritius, the Netherlands, the Philippines, Romania, South Africa, Singapore, Sri Lanka, Spain, Turkey, the United Arab Emirates, the UK and the US. As a result, we are exposed to risks typically associated with conducting business internationally, many of which are beyond our control. These risks include:

 

  

legal uncertainty owing to the overlap of different legal regimes, and problems in asserting contractual or other rights across international borders;

 

  

potentially adverse tax consequences, such as scrutiny of transfer pricing arrangements by authorities in the countries in which we operate;

 

  

potential tariffs and other trade barriers;

 

  

unexpected changes in legal regimes and regulatory requirements;

 

  

policy changes due to changes in government;

For example, during the fourth quarter of fiscal 2017, proposed changes to the laws of the UK governing personal injury claims generated uncertainty regarding the future earnings trajectory of our legal services business in our WNS Auto Claims BPM segment, as a result of which we had expected that we would eventually exit from providing legal services in relation to personal injury claims. We also experienced a decrease in volume of and loss of business from certain clients of our traditional repair services in our WNS Auto Claims BPM segment in fiscal 2017. As a result, we had in fiscal 2017 expected the future performance of our WNS Auto Claims BPM segment to decline significantly and therefore significantly reduced our financial projections and estimates of our WNS Auto Claims BPM segment. Accordingly, we performed an impairment review of the goodwill associated with the companies we had acquired for our auto claims business and recorded an impairment charge of $21.7 million to our results of operations in fiscal 2017.

During the fourth quarter of fiscal 2020, Brexit had a negative impact on the insurance industry and applied downward pressure on the expected future performance of the WNS Auto Claims reportable segment, due to contract renegotiations and loss of certain clients. These factors, together with the highly uncertain operating environment in the UK, have negatively impacted and caused us to significantly reduce our financial projections and estimates of the WNS Auto Claims BPM reportable segment from our previous estimates. Accordingly, we performed an impairment review of the goodwill associated with the companies we had acquired for our auto claims business and recorded an impairment charge of $4.1 million to our results of operations in fiscal 2020 for the remaining goodwill balance of our auto claims business.

The occurrence of other changes in legal regimes or regulatory requirements, or any other events associated with the risks of conducting business internationally, could have a material adverse effect on our results of operations and financial condition.

Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements. Failure to adhere to the laws and regulations that govern our business or our clients’ businesses that we are required to comply with in performing our services could harm our business.

We have operations in 13 countries and our corporate structure spans multiple jurisdictions. Further, we service clients across multiple geographic regions and multiple industries. We are required to comply with numerous, and sometimes conflicting and uncertain, laws and regulations including on matters relating to import/export controls, trade restrictions, taxation, immigration, internal disclosure and control obligations, securities regulation, anti-competition, data privacy and protection, anti-corruption, and employment and labor relations. In addition, we are required to obtain and maintain permits and licenses for the conduct of our business in various jurisdictions. Our clients’ business operations are also subject to numerous regulations in the jurisdiction in which they operate or that are applicable to their industry, and our clients may contractually require that we perform our services in compliance with regulations applicable to them or in a manner that will enable them to comply with such regulations. For example, regulations to which our and our clients’ business operations are subject include the Gramm-Leach-Bliley Act, the Health Insurance Portability and Accountability Act, the Health Information Technology for Economic and Clinical Health Act and the California Consumer Privacy Act in the US, the Financial Services Act in the UK and the General Data Protection Regulation in the EU. In addition, HealthHelp, which we acquired in March 2017, administers programs offered by the Centers for Medicare & Medicaid Services, a United States federal agency that administers Medicare and Medicaid. Regulatory changes may result in our exiting certain parts of our business.

On account of the global nature of our and our clients’ operations, compliance with diverse legal and regulatory requirements is difficult, time-consuming and requires significant resources. Further, the extent of development of legal systems varies across the countries in which we operate and local laws may not be adequately developed or be able to provide us clear guidance to sufficiently protect our rights. Specifically, in many countries including those in which we operate and/or seek to expand to, the practices of local businesses may not be in accordance with international business standards and could violate anti-corruption laws and regulations, including the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act 1977. Our employees, subcontractors, agents, business partners, the companies we acquire and their employees, subcontractors and agents, and other third parties with which we associate, could act in a manner which violates policies or procedures intended to ensure compliance with laws and regulations, including applicable anti-corruption laws or regulations.

Violations of such laws or regulations by us, our employees or any of these third parties could subject us to criminal or civil enforcement actions (whether or not we participated or were aware of the actions leading to the violations), including fines or penalties, breach of contract damages, disgorgement of profits and suspension or disqualification from work, any of which could materially and adversely affect our business, including our results of operations and our reputation. If we are unable to maintain our licenses, permits or other qualifications necessary to provide our services, we may not be able to provide services to existing clients or be able to attract new clients and could lose revenue, which could have a material adverse effect on our business.

 

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We face competition from onshore and offshore business process management companies and from information technology companies that also offer business process management services. Our clients may also choose to run their business processes themselves, either in their home countries or through captive units located offshore.

The market for outsourcing services is very competitive and we expect competition to intensify and increase from a number of sources. We believe that the principal competitive factors in our markets are price, service quality, sales and marketing skills, business process transformation capabilities and industry expertise. We face significant competition from our clients’ own in-house groups including, in some cases, in-house departments operating offshore or captive units. Clients who currently outsource a significant proportion of their business processes or information technology services to vendors in India may, for various reasons, including diversifying geographic risk, seek to reduce their dependence on any one country. We also face competition from onshore and offshore business process management and information technology services companies. In addition, the trend toward offshore outsourcing, international expansion by foreign and domestic competitors and continuing technological changes will result in new and different competitors entering our markets.

These competitors may include entrants from the communications, software and data networking industries or entrants in geographic locations with lower costs than those in which we operate. Technological changes include the development of complex automated systems for the processing of transactions that are formerly labor intensive, which may reduce or replace the need for outsourcing such transaction processing.

Some of these existing and future competitors have greater financial, human and other resources, longer operating histories, greater technological expertise, more recognizable brand names and more established relationships in the industries that we currently serve or may serve in the future. In addition, some of our competitors may enter into strategic or commercial relationships among themselves or with larger, more established companies in order to increase their ability to address client needs, or enter into similar arrangements with potential clients. Increased competition, our inability to compete successfully against competitors, pricing pressures or loss of market share could result in reduced operating margins which could harm our business, results of operations, financial condition and cash flows.

Changes in technology could lead to changes in our clients’ businesses as well as their requirements for business process services, which may adversely impact our business and results of operations.

Proliferation of accessible technology, such as smartphones and internet, has had an impact on the manner in which customers and businesses interact with each other. Companies are increasingly adopting social media platforms, online self-help portals and mobile applications for communicating with and servicing their customers rather than utilizing business process management companies such as ourselves to manage these interactions. Our clients also continue to invest in technology by upgrading their platforms and application capabilities towards increased automation of transactions. Advances in software, such as artificial intelligence, machine learning, robotic process automation and voice recognition, have the potential to reduce dependency on human processing transactions. Such developments and other innovations, such as autonomous vehicles, have the potential to significantly change the way our clients’ businesses operate and may reduce their dependency on business process management companies, including our company, for managing their business processes. We are therefore subject to a risk of disintermediation on account of such changes in technology, which could impact our future growth prospects and may require continued investments in our business.

If we cause disruptions to our clients’ businesses, provide inadequate service or are in breach of our representations or obligations, our clients may have claims for substantial damages against us. Our insurance coverage may be inadequate to cover these claims and, as a result, our profits may be substantially reduced.

Most of our contracts with clients contain service level and performance requirements, including requirements relating to the quality of our services and the timing and quality of responses to the client’s customer inquiries. In some cases, the quality of services that we provide is measured by quality assurance ratings and surveys which are based in part on the results of direct monitoring by our clients of interactions between our employees and our clients’ customers. Lockdowns and other measures imposed by governments around the world, as well as other resulting impacts of the COVID-19 pandemic, may result in our temporary inability to meet the service level and performance requirements of our clients. Failure to consistently meet service level requirements of a client or errors made by our associates or the software and/or platforms we use in the course of delivering services to our clients could disrupt the client’s business and result in a reduction in revenue or a claim for substantial damages against us. For example, some of our agreements stipulate standards of service that, if not met by us, will require us to pay penalties to our clients or result in lower payment to us. Failure to meet these service level requirements could result in the payment of significant penalties by us to our clients which in turn could have an adverse effect on our business, results of operations, financial condition and cash flows. In addition, in connection with acquiring new business from a client or entering into client contracts, our employees may make various representations, including representations relating to the quality of our services, abilities of our associates and our project management techniques. A failure or inability to meet a contractual requirement or our representations could seriously damage our reputation and affect our ability to attract new business or result in a claim for substantial damages against us.

 

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Our dependence on our offshore delivery centers requires us to maintain active data and voice communications between our main delivery centers in Australia, China, Costa Rica, India, the Philippines, Poland, Romania, South Africa, Spain, Sri Lanka, Turkey, the UK and the US, our international technology hubs in the UK and the US and our clients’ offices. Although we maintain redundant facilities and communications links, disruptions could result from, among other things, technical and electricity breakdowns, computer glitches and viruses and adverse weather conditions. Any significant failure of our equipment or systems, or any major disruption to basic infrastructure like power and telecommunications in the locations in which we operate, could impede our ability to provide services to our clients, have a negative impact on our reputation, cause us to lose clients, reduce our revenue and harm our business.

We depend on human resources to process transactions for our clients. Disruptive incidents, including man-made events such as civil strikes and shutdowns, may impact the ability of our employees to commute to and from our operating premises. Non-natural disasters, whether unintentional (such as those caused by accidents) or intentional (such as those caused by terrorist attacks), may also disrupt our operations. While we have implemented business continuity plans for clients where we have contractually agreed to do so, we may not always be able to provide services to our clients for the duration of such incidents. For further information on the impact of the COVID-19 pandemic on our human resources planning, see “— Our business operations and future growth have been, and may continue to be, negatively impacted on account of the COVID-19 pandemic.”

Although under most of our contracts with our clients, our liability for breach of our obligations is limited to actual damages suffered by the client and capped at a portion of the fees paid or payable to us under the relevant contract, our liability for breach of our obligations under certain of our contracts is unlimited. With respect to those of our contracts that contain limitations on liability, such limitations may be unenforceable or otherwise may not protect us from liability for damages. In addition, certain liabilities, such as claims of third parties for which we may be required to indemnify our clients, are generally not limited under those agreements. Further, although we have professional indemnity insurance coverage, the coverage may not continue to be available on reasonable terms or in sufficient amounts to cover one or more large claims and our insurers may disclaim coverage as to any future claims. The successful assertion of one or more large claims against us that exceed available insurance coverage, or changes in our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have a material adverse effect on our business, reputation, results of operations, financial condition and cash flows.

We are liable to our clients for damages caused by unauthorized disclosure of sensitive or confidential information, whether through a breach or circumvention of our or our clients’ computer systems and processes, through our employees or otherwise. Further, cybersecurity and data privacy considerations could impact our business.

We are typically required to manage, utilize and store sensitive or confidential client data in connection with the services we provide. Under the terms of our client contracts, we are required to keep such information strictly confidential. Our client contracts do not include any limitation on our liability to them with respect to breaches of our obligation to maintain confidentiality of the information we receive from them. Although we seek to implement measures to protect sensitive and confidential client data, there can be no assurance that we would be able to prevent breaches of security. Further, some of our projects require us to conduct business functions and computer operations using our clients’ systems over which we do not have control and which may not be compliant with industry security standards. In addition, some of the client designed processes that we are contractually required to follow for delivering services to them and which we are unable to unilaterally change, could be designed in a manner that allows for control weaknesses to exist and be exploited. Any vulnerability in a client’s system or client designed process, if exploited, could result in breaches of security or unauthorized transactions and result in a claim for substantial damages against us. Although we have implemented appropriate policies, procedures and infrastructure to reduce the possibility of physical, logical and personnel security breaches, along with appropriate audit oversight for verifying continued operating effectiveness of the same through internal audits and external SSAE18 / ISAE3402, ISO27001 and PCI-DSS reviews, such measures can never completely eliminate the risk of cybersecurity attacks. Additionally, remote-working solutions deployed during the COVID-19 pandemic situation could potentially result in heightened information technology security and data protection risks on account of services being delivered in a physically unsupervised environment. If any person, including any of our employees, penetrates our or our clients’ network security or otherwise mismanages or misappropriates sensitive or confidential client data, we could be subject to significant liability and lawsuits from our clients or their customers for breaching contractual confidentiality provisions or privacy laws.

To date, although there has not been a material cybersecurity attack that has had an adverse effect on our operations, there can be no assurance that there will be no material adverse effect in the future. Rapid advancements and changes to the technological landscape may require us to make significant further investments in the domain of cybersecurity in order to protect our and our clients’ data and infrastructure. In addition, such advancements coupled with the rise in the sophisticated nature of cyber threats and attacks make it possible that certain threats or vulnerabilities may not be detected in time to prevent an attack on our or our clients’ business. On account of the interconnected nature of our business, there is an interdependency between our clients, business partners and our business to implement appropriate cybersecurity controls in order to mitigate cybersecurity risk. A failure of cybersecurity controls at our client or business partners could therefore result in a breach at our company.

 

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While we have insurance coverage for mismanagement or misappropriation of such information by our employees, that coverage may not continue to be available on reasonable terms or in sufficient amounts to cover one or more large claims against us, and our insurers may disclaim coverage as to any future claims. Penetration of the network security of our or our clients’ data centers or computer systems or unauthorized use or disclosure of sensitive or confidential client data, whether through breach of our or our clients’ computer systems, systems failure, loss or theft of assets containing confidential information or otherwise, could also have a negative impact on our reputation which would harm our business.

We also cannot be certain that advances in criminal capabilities (including cyber-attacks or cyber intrusions over the internet, malware, computer viruses and the like), discovery of new vulnerabilities or attempts to exploit existing vulnerabilities in our or our clients’ or business partners’ systems, other data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology protecting our or our client’s or business partners’ computer systems and networks that access and store sensitive information. Cyber threats, such as phishing and trojans, could intrude into our or our clients’ or business partners’ network to steal data or to seek sensitive information. Any intrusion into our network or our clients’ or business partners’ network (to the extent attributed to us or perceived to be attributed to us) that results in any breach of security could cause damage to our reputation and adversely impact our business and financial results. A significant failure in security measures could have a material adverse effect on our business, reputation, results of operations and financial condition.

Our business could be materially and adversely affected if we do not protect our intellectual property or if our services are found to infringe on the intellectual property of others.

Our success depends in part on certain methodologies, practices, tools and technical expertise we utilize in designing, developing, implementing and maintaining applications and other proprietary intellectual property rights. In order to protect our rights in such intellectual properties, we rely upon a combination of nondisclosure and other contractual arrangements as well as trade secret, copyright and trademark laws. We also generally enter into confidentiality agreements with our employees, consultants, clients and potential clients, and limit access to and distribution of our proprietary information to the extent required for our business purpose.

India is a member of the Berne Convention, an international intellectual property treaty, and has agreed to recognize protections on intellectual property rights conferred under the laws of other foreign countries, including the laws of the United States. There can be no assurance that the laws, rules, regulations and treaties in effect in the United States, India and the other jurisdictions in which we operate and the contractual and other protective measures we take, are adequate to protect us from misappropriation or unauthorized use of our intellectual property, or that such laws will not change. We may not be able to detect unauthorized use and take appropriate steps to enforce our rights, and any such steps may not be successful. Infringement by others of our intellectual property, including the costs of enforcing our intellectual property rights, may have a material adverse effect on our business, results of operations and financial condition.

Our clients may provide us with access to, and require us to use, third party software in connection with our delivery of services to them. Our client contracts generally require our clients to indemnify us for any infringement of intellectual property rights or licenses to third party software when our clients provide such access to us. If the indemnities under our client contracts are inadequate to cover the damages and losses, we suffer due to infringement of third party intellectual property rights or licenses to third party software to which we were given access, our business and results of operations could be adversely affected. We are also generally required by our client contracts to indemnify our clients for any breaches of intellectual property rights by our services. Although we believe that we are not infringing on the intellectual property rights of others, claims may nonetheless be successfully asserted against us in the future. The costs of defending any such claims could be significant, and any successful claim may require us to modify, discontinue or rename any of our services. Any such changes may have a material adverse effect on our business, results of operations and financial condition.

Our clients may terminate contracts before completion or choose not to renew contracts, which could adversely affect our business and reduce our revenue.

The terms of our client contracts typically range from three to five years. Many of our client contracts can be terminated by our clients with or without cause, with three to six months’ notice and, in most cases, without penalty. The termination of a substantial percentage of these contracts could adversely affect our business and reduce our revenue. Contracts that will expire on or before March 31, 2022 (including work orders/statement of works that will expire on or before March 31, 2022) represented approximately 22.3% of our revenue and 23.4% of our revenue less repair payments (non-GAAP) from our clients in fiscal 2021. Failure to meet contractual requirements could result in cancellation or non-renewal of a contract. Some of our contracts may be terminated by the client if certain of our key personnel working on the client project leave our employment and we are unable to find suitable replacements. In addition, a contract termination or significant reduction in work assigned to us by a major client could cause us to experience a higher than expected number of unassigned employees, which would increase our cost of revenue as a percentage of revenue until we are able to reduce or reallocate our headcount. We may not be able to replace any client that elects to terminate or not renew its contract with us, which would adversely affect our business and revenue. Further, we may face difficulties in providing end-to-end business solutions or delivering complex, large or unique projects for our clients that could cause clients to terminate or not renew their contracts with us, which in turn could harm our business and our reputation.

 

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For example, one of our top five clients by revenue contribution in fiscal 2014, an OTA, provided us with a lower volume of business in fiscal 2015 as the OTA entered into a strategic marketing agreement with another OTA in August 2013 pursuant to which it over a period of time, from the fourth quarter of fiscal 2014 to the fourth quarter of fiscal 2015, moved its customer care and sales processes that were previously managed by us to a technology platform managed by the other OTA. As a result, we lost most of our business from that OTA and since June 2015, we ceased to provide services to that OTA. That OTA accounted for 2.5% and 6.1% of our revenue and 2.6% and 6.5% of our revenue less repair payments (non-GAAP) in fiscal 2015 and 2014, respectively. The other OTA uses several BPM vendors to manage such processes on their technology platform. We are approved as one of the other OTA’s providers of BPM services. We have managed to compete with incumbent BPM vendors for the other OTA’s business and the other OTA has become one of our largest clients. For more information, see “— A few major clients account for a significant portion of our revenue and any loss of business from these clients could reduce our revenue and significantly harm our business.”

Some of our client contracts contain provisions which, if triggered, could result in lower future revenue and have an adverse effect on our business.

In many of our client contracts, we agree to include certain provisions which provide for downward revision of our prices under certain circumstances. For example, certain contracts allow a client in certain limited circumstances to request a benchmark study comparing our pricing and performance with that of an agreed list of other service providers for comparable services. Based on the results of the study and depending on the reasons for any unfavorable variance, we may be required to make improvements in the service we provide or to reduce the pricing for services to be performed under the remaining term of the contract. Some of our contracts also provide that, during the term of the contract and for a certain period thereafter ranging from six to 12 months, we may not provide similar services to certain or any of their competitors using the same personnel. These restrictions may hamper our ability to compete for and provide services to other clients in the same industry, which may result in lower future revenue and profitability.

Some of our contracts specify that if a change in control of our company occurs during the term of the contract, the client has the right to terminate the contract. These provisions may result in our contracts being terminated if there is such a change in control, resulting in a potential loss of revenue.

Fraud on account of circumvention of controls within our or our clients’ computer systems and processes could adversely impact our business.

Our business is dependent on the secure and reliable operation of controls within our and our clients’ information systems and processes, whether operated or executed by our clients themselves or by us in connection with our provision of services to them. Although we take adequate measures to safeguard against system-related and other fraud, there can be no assurance that we would be able to prevent fraud or even detect them on a timely basis, particularly where it relates to our clients’ information systems which are not managed by us. For example, we have identified incidences where our employees have allegedly exploited weaknesses in information systems as well as processes in order to record fraudulent transactions. Additionally, the physically unsupervised nature of remote-working solutions adopted during the COVID-19 pandemic could potentially expose us to potential instances of fraud. We are generally required to indemnify our clients from third party claims arising out of such fraudulent transactions and our client contracts generally do not include any limitation on our liability to our clients’ losses arising from fraudulent activities by our employees. Our expansion into new markets may create additional challenges with respect to managing the risk of fraud due to the increased geographical dispersion and use of intermediaries. Accordingly, we may have significant liability arising from fraudulent transactions which may materially affect our business and financial results. Although we have professional indemnity insurance coverage for losses arising from fraudulent activities by our employees, that coverage may not continue to be available on reasonable terms or in sufficient amounts to cover one or more large claims against us, and our insurers may also disclaim coverage as to any future claims. We may also suffer reputational harm as a result of fraud committed by our employees, or by our perceived inability to properly manage fraud related risks, which could in turn lead to enhanced regulatory oversight and scrutiny.

 

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Our business may not develop in ways that we currently anticipate due to negative public reaction to offshore outsourcing, proposed legislation or otherwise.

We have based our strategy of future growth on certain assumptions regarding our industry, services and future demand in the market for such services. However, the trend to outsource business processes may not continue and could reverse. In addition, we cannot accurately predict the impact that the COVID-19 pandemic might have on our clients’ outsourcing demands and efforts, which might be lower in the future, as some of our clients might decide to refrain from offshore outsourcing due to the pressures they face from increased unemployment in the regions in which they operate as a result of the COVID-19 pandemic.

The issue of domestic companies outsourcing services to organizations operating in other countries is a topic of political discussion in the United States, as well as in Europe, Asia Pacific and other regions in which we have clients. Some countries and special interest groups have expressed concerns about a perceived association between offshore outsourcing and the loss of jobs in the domestic economy. This has resulted in increased political and media attention, especially in the United States, where the subject of outsourcing and immigration reform has been a focus of the current presidential administration. It is possible that there could be a change in the existing laws that would restrict or require disclosure of offshore outsourcing or impose new standards that have the effect of restricting the use of certain visas in the foreign outsourcing context. The measures that have been enacted to date are generally directed at restricting the ability of government agencies to outsource work to offshore business service providers. These measures have not had a significant effect on our business because governmental agencies are not a focus of our operations. However, some legislative proposals would, for example, require contact centers to disclose their geographic locations, require notice to individuals whose personal information is disclosed to non-US affiliates or subcontractors, require disclosures of companies’ foreign outsourcing practices, or restrict US private sector companies that have federal government contracts, federal grants or guaranteed loan programs from outsourcing their services to offshore service providers. Potential changes in tax laws may also increase the overall costs of outsourcing or affect the balance of offshore and onshore business services. Such changes could have an adverse impact on the economics of outsourcing for private companies in the US, which could in turn have an adverse impact on our business with US clients.

Such concerns have also led the UK and other EU jurisdictions to enact regulations which allow employees who are dismissed as a result of transfer of services, which may include outsourcing to non-UK or EU companies, to seek compensation either from the company from which they were dismissed or from the company to which the work was transferred. This could discourage EU companies from outsourcing work offshore and/or could result in increased operating costs for us. In addition, there has been publicity about the negative experiences, such as theft and misappropriation of sensitive client data, of various companies that use offshore outsourcing, particularly in India.

Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services from onshore to offshore providers to avoid negative perceptions that may be associated with using an offshore provider. Any slowdown or reversal of existing industry trends towards offshore outsourcing would seriously harm our ability to compete effectively with competitors that operate out of facilities located in the UK or the US.

Adverse changes to our relationships with the companies with whom we have an alliance or in the business of the companies with whom we have an alliance could adversely affect our results of operations.

We have alliances with companies whose capabilities complement our own. For example, some of our services and solutions are based on technology, software or platforms provided by these companies. The priorities and objectives of these companies with whom we have an alliance may differ from ours. As most of our alliance relationships are non-exclusive, these companies with whom we have an alliance are not prohibited from competing with us or forming closer or preferred arrangements with our competitors. One or more of these companies with whom we have an alliance may be acquired by a competitor, or may merge with each other, either of which could reduce our access over time to the technology, software or platforms provided by those companies. In addition, these companies with whom we have an alliance could experience reduced demand for their technology, software or platforms, including, for example, in response to changes in technology, which could lessen related demand for our services and solutions. If we do not obtain the expected benefits from our alliance relationships for any reason, we may be less competitive and our ability to offer attractive solutions to our clients may be negatively affected, which could have an adverse effect on our results of operations.

 

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If we are unable to collect our receivables from, or bill our unbilled services to, our clients, our results of operations and cash flows could be adversely affected.

Our business depends on our ability to successfully obtain payment from our clients for work performed. We evaluate the financial condition of our clients and usually bill and collect on relatively short cycles. We maintain allowances, using the expected credit loss model, against receivables and unbilled services. Actual losses on client balances could differ from those that we currently anticipate and, as a result, we might need to adjust our allowances. We might not accurately assess the creditworthiness of our clients. Macroeconomic conditions, such as any domestic or global credit crisis and disruption of the global financial system, including on account of the COVID-19 pandemic, have also and may continue to result in financial difficulties for our clients, including, but not limited to, limited access to the credit markets, insolvency or bankruptcy and, as a result, have caused and may continue to cause, clients to delay payments to us, request modifications to their payment arrangements that could increase our receivables balance, or default on their payment obligations to us. Timely collection of client balances also depends on our ability to complete our contractual commitments and bill and collect our contracted revenues. If we are unable to meet our contractual requirements, we might experience delays in collection of and/or be unable to collect our client balances, and if this occurs, our results of operations and cash flows could be adversely affected. In addition, if we experience an increase in the time to bill and collect for our services, our cash flows could be adversely affected.

We may face difficulties as we expand our operations to establish delivery centers in onshore locations and offshore in countries in which we have limited or no prior operating experience.

In April 2014 our delivery center in South Carolina in the US became fully operational. We also opened an additional delivery center in Pennsylvania in the US in September 2014. In 2016, we opened an additional delivery center in the Philippines at Iloilo, and in fiscal 2017 we expanded into France, Germany and Turkey. In fiscal 2019, we added new facilities in Palma, Spain, and the Philippines. In fiscal 2020, we added new facilities in Pune and Gurgaon, India and the Philippines. In fiscal 2021, we added new facilities in Gurgaon, India, Australia and the Philippines. We intend to continue to expand our global footprint in order to maintain an appropriate cost structure and meet our clients’ delivery needs. We plan to establish additional delivery centers in the Asia Pacific, North America and Europe, which may involve expanding into countries other than those in which we currently operate. Our expansion plans may also involve expanding into less developed countries, which may have less political, social or economic stability and less developed infrastructure and legal systems. As we expand our business into new countries, we may encounter regulatory, personnel, technological and other difficulties that increase our expenses or delay our ability to start up our operations or become profitable in such countries. This may affect our relationships with our clients and could have an adverse effect on our business, results of operations, financial condition and cash flows.

We may be unable to effectively manage our growth and maintain effective internal controls, which could have a material adverse effect on our operations, results of operations and financial condition.

We were founded in April 1996, and we have experienced growth and significantly expanded our operations. For example, over the last five fiscal years, our employees have increased to 43,997 as at March 31, 2021 from 32,388 as at March 31, 2016. In fiscal 2015, our delivery centers in South Carolina and Pennsylvania, in the US, as well as in South Africa, became fully operational, as did our newest facility in China. In fiscal 2016, we added new facilities in Durban and Port Elizabeth, South Africa and Iloilo, the Philippines. In fiscal 2017, we added new facilities in Durban and Centurion, South Africa. In fiscal 2019, we added new facilities in Palma, Spain and the Philippines. In fiscal 2020, we added new facilities in Pune and Gurgaon, India and the Philippines. In fiscal 2021, we added new facilities in Gurgaon, India, Australia and the Philippines. We have delivery centers across 13 countries in Australia, China, Costa Rica, India, the Philippines, Poland, Romania, South Africa, Spain, Sri Lanka, Turkey, the UK, and the US. We intend to further expand our global delivery capability, and we are exploring plans to do so in Asia Pacific, North America and Europe.

We have also completed numerous acquisitions. For example, in the first quarter of fiscal 2017, we acquired Value Edge, a provider of commercial research and analytics services to clients in the pharma industry based in India, the US and Europe. In January 2017, we acquired Denali, a leading provider of strategic procurement BPM solutions based in the United States. In March 2017, we acquired HealthHelp, an industry leader in care management based in the United States. For more information about more recent acquisitions, see “—We may not succeed in identifying suitable acquisition targets or integrating any acquired business into our operations, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.”

 

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This growth places significant demands on our management and operational resources. In order to manage growth effectively, we must implement and improve operational systems, procedures and internal controls on a timely basis. If we fail to implement these systems, procedures and controls on a timely basis, we may not be able to service our clients’ needs, hire and retain new employees, pursue new business, complete future acquisitions or operate our business effectively. Failure to effectively transfer new client business to our delivery centers, properly budget transfer costs or accurately estimate operational costs associated with new contracts could result in delays in executing client contracts, trigger service level penalties or cause our profit margins not to meet our expectations or our historical profit margins. As a result of any of these potential problems associated with expansion, our business, results of operations, financial condition and cash flows could be materially and adversely affected.

Our executive and senior management team and other key team members in our business units are critical to our continued success and the loss of such personnel could harm our business.

Our future success substantially depends on the performance of the members of our executive and senior management team and other key team members in each of our business units. These personnel possess technical and business capabilities including domain expertise that are difficult to replace. There is intense competition for experienced senior management and personnel with technical and industry expertise in the business process management industry, and we may not be able to retain our key personnel due to various reasons, including the compensation philosophy followed by our company as described in “Part I — Item 6. Directors, Senior Management and Employees — Compensation.”. Although we have entered into employment contracts with our executive officers, certain terms of those agreements may not be enforceable and in any event these agreements do not ensure the continued service of these executive officers. In the event of a loss of any key personnel, there is no assurance that we will be able to find suitable replacements for our key personnel within a reasonable time. The loss of key members of our senior management or other key team members, particularly to competitors, could have a material adverse effect on our business, results of operations, financial condition and cash flows. A loss of several members of our senior management at the same time or within a short period may lead to a disruption in the business of our company, which could materially adversely affect our performance.

We may fail to attract and retain enough sufficiently trained employees to support our operations, as competition for highly skilled personnel is significant and we experience significant employee attrition. These factors could have a material adverse effect on our business, results of operations, financial condition and cash flows.

The business process management industry relies on large numbers of skilled employees, and our success depends to a significant extent on our ability to attract, hire, train and retain qualified employees. The business process management industry, including our company, experiences high employee attrition. During each of fiscal 2021, 2020 and 2019, the attrition rate for our employees who have completed six months of employment with us was 22%, 30% and 31%, respectively. The attrition rate for our employees decreased in fiscal 2021, however, we cannot assure you that our attrition rate will not continue to decrease or increase in the future. There is significant competition in the jurisdictions where our operation centers are located, including India, the Philippines, Romania, South Africa and Sri Lanka, for professionals with the skills necessary to perform the services we offer to our clients. Increased competition for these professionals, in the business process management industry or otherwise, could have an adverse effect on us. A significant increase in the attrition rate among employees with specialized skills could decrease our operating efficiency and productivity and could lead to a decline in demand for our services.

In addition, our ability to maintain and renew existing engagements and obtain new business will depend largely on our ability to attract, train and retain personnel with skills that enable us to keep pace with growing demands for outsourcing, evolving industry standards and changing client preferences. Our failure either to attract, train and retain personnel with the qualifications necessary to fulfill the needs of our existing and future clients or to assimilate new employees successfully could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Employee strikes and other labor-related disruptions may adversely affect our operations.

Our business depends on a large number of employees executing client operations. Strikes or labor disputes with our employees at our delivery centers may adversely affect our ability to conduct business. Our employees are not unionized, although they may in the future form unions. We cannot assure you that there will not be any strike, lock out or material labor dispute in the future. Work interruptions or stoppages could have a material adverse effect on our business, results of operations, financial condition and cash flows.

 

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Our loan agreements impose operating and financial restrictions on us and our subsidiaries.

We have incurred a substantial amount of indebtedness in connection with recent acquisitions. As at March 31, 2021, we had total indebtedness of $16.7 million in secured bank loans. See “Part I — Item 5. Operating and Financial Review and Prospects — Liquidity and Capital Resources.” Our loan agreements contain a number of covenants and other provisions that, among other things, may impose operating and financial restrictions on us and our subsidiaries. These restrictions could put a strain on our financial position. For example:

 

  

they may increase our vulnerability to general adverse economic and industry conditions;

 

  

they may require us to dedicate a substantial portion of our cash flow from operations to payments on our loans, thereby reducing the availability of our cash flow to fund capital expenditure, working capital and other general corporate purposes;

 

  

they may require us to seek lenders’ consent prior to paying dividends on our ordinary shares;

 

  

they may limit our ability to incur additional borrowings or raise additional financing through equity or debt instruments; and

 

  

they may impose certain financial covenants on us that we may not be able to meet, which may cause the lenders to accelerate the repayment of the remaining loan outstanding.

Further, the restrictions that may be contained in our loan agreements may limit our ability to plan for or react to market conditions, meet capital needs or make acquisitions or otherwise restrict our activities or business plans. Our ability to comply with the covenants of our loan agreements may be affected by events beyond our control, and any material deviations from our forecasts could require us to seek waivers or amendments of covenants or alternative sources of financing or to reduce expenditures. We cannot assure you that such waivers, amendments or alternative financing could be obtained, or if obtained, would be on terms acceptable to us.

To fund our capital expenditures, service our indebtedness and fund other potential liquidity requirements, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control and we may need to access the credit market to meet our liquidity requirements.

Our ability to fund planned capital expenditures and to make payments on our outstanding loans will depend on our ability to generate cash in the future. This, to a large extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Furthermore, given the recent global economic slowdown and that uncertainty over global economic conditions remains, including on account of the COVID-19 pandemic, there can be no assurance that our business activity will be maintained at our expected level to generate the anticipated cash flows from operations, or that our credit facilities will be available or sufficient. If the current global economic slowdown and uncertainties continue, we may experience a decrease in demand for our services, resulting in our cash flows from operations being lower than anticipated. This may in turn result in our need to obtain financing, which may not be available to us on favorable terms or at all.

If we cannot fund our capital expenditures, service our indebtedness or fund our other potential liquidity requirements, we may have to take actions such as seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions and investments. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all.

 

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If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent or detect fraud. As a result, current and potential investors could lose confidence in our financial reporting, which could harm our business and have an adverse effect on our ADS price.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports. The effective internal controls together with adequate disclosure controls and procedures are designed to prevent or detect fraud. Deficiencies in our internal controls may adversely affect our management’s ability to record, process, summarize, and report financial data on a timely basis. As a public company, we are required by Section 404 of the Sarbanes-Oxley Act of 2002 to include a report of management’s assessment on our internal control over financial reporting and an independent auditor’s attestation report on our internal control over financial reporting in our annual reports on Form 20-F.

If material weaknesses are identified in our internal controls over financial reporting, we could be required to implement remedial measures. If we fail to maintain effective disclosure controls and procedures or internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have a material adverse effect on our ADS price.

Wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin.

Salaries and related benefits of our operations staff and other employees in countries where we have delivery centers, in particular India, are among our most significant costs. Wage costs in India have historically been significantly lower than wage costs in the US and Europe for comparably skilled professionals, which has been one of our competitive advantages. However, rapid economic growth in India, increased demand for business process management outsourcing to India, increased competition for skilled employees in India, and regulatory developments resulting in wage increases in India, may reduce this competitive advantage. For example, the Code on Wages 2019, Industrial Relations Code 2020, Social Security Code 2020 and Occupational Safety, Health & Working Condition Code 2020 received assent from the President of India on September 28, 2020. However, the rules for these Acts have not yet been published and the effective date from which these changes are applicable is yet to be notified. Accordingly, while we are unable to ascertain with certainty the financial impact due to these changes, it is possible that our wage costs in India may increase as a result of these changes when they become effective. In addition, if the US dollar or the pound sterling declines in value against the Indian rupee, wages in the US or the UK will further decrease relative to wages in India, which may further reduce our competitive advantage. We may need to increase our levels of employee compensation more rapidly than in the past to remain competitive in attracting the quantity and quality of employees that our business requires. Wage increases may reduce our profit margins and have a material adverse effect on our financial condition and cash flows.

Further, following the establishment of our delivery centers in the US in 2014, our operations in the US have expanded and our wage costs for employees located in the UK and the US now represent a larger proportion of our total wage costs. Wage increases in the UK and the US may therefore also reduce our profit margins and have a material adverse effect on our financial condition and cash flows.

Our operating results may differ from period to period, which may make it difficult for us to prepare accurate internal financial forecasts and respond in a timely manner to offset such period to period fluctuations.

Our operating results may differ significantly from period to period due to factors such as client losses, variations in the volume of business from clients resulting from changes in our clients’ operations, the business decisions of our clients regarding the use of our services, delays or difficulties in expanding our operational facilities and infrastructure, changes to our pricing structure or that of our competitors, inaccurate estimates of resources and time required to complete ongoing projects, currency fluctuations and seasonal changes in the operations of our clients. For example, our clients in the travel and leisure industry experience seasonal changes in their operations in connection with the US summer holiday season, as well as episodic factors such as adverse weather conditions. Transaction volumes have been, and continue to be impacted by market conditions affecting the travel industry, including natural disasters, outbreak of infectious diseases (such as the COVID-19 pandemic, which has led to a significant fall in air travel volumes) or other serious public health concerns and terrorist attacks. In addition, our contracts do not generally commit our clients to provide us with a specific volume of business.

 

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In addition, the long sales cycle for our services, which typically ranges from three to 12 months, and the internal budget and approval processes of our prospective clients make it difficult to predict the timing of new client engagements. The extent to which the COVID-19 pandemic impacts the length of sales cycle for our services will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; the effect on our potential and existing clients and client demand for our services and solutions; our ability to sell and provide our services and solutions; the ability of our clients to pay for our services and solutions; and any further closures of our and our clients’ offices and facilities. Commencement of work and ramping up of volume of work with certain new and existing clients have in the past been slower than we had expected and may in the future be slower than we expect. Revenue is recognized upon actual provision of services and when the criteria for recognition are achieved. Accordingly, the financial benefit of gaining a new client may be delayed due to delays in the implementation of our services. These factors may make it difficult for us to prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of those delays. Due to the above factors, it is possible that in some future quarters our operating results may be significantly below the expectations of the public market, analysts and investors.

If our pricing structures do not accurately anticipate the cost and complexity of performing our work, our profitability may be negatively affected.

The terms of our client contracts typically range from three to five years. In many of our contracts, we commit to long-term pricing with our clients, and we negotiate pricing terms with our clients utilizing a range of pricing structures and conditions. Depending on the particular contract, these include input-based pricing (such as full-time equivalent-based pricing arrangements), fixed-price arrangements, output-based pricing (such as transaction-based pricing), outcome-based pricing, and contracts with features of all these pricing models. Our pricing is highly dependent on our internal forecasts and predictions about our projects and the marketplace, which are largely based on limited data and could turn out to be inaccurate. If we do not accurately estimate the costs and timing for completing projects, our contracts could prove unprofitable for us or yield lower profit margins than anticipated. Some of our client contracts do not allow us to terminate the contracts except in the case of non-payment by our client. If any contract turns out to be economically non-viable for us, we may still be liable to continue to provide services under the contract.

We intend to focus on increasing our service offerings that are based on non-linear pricing models (such as fixed-price and outcome-based pricing models) that allow us to price our services based on the value we deliver to our clients rather than the headcount deployed to deliver the services to them. Non-linear revenues may be subject to short-term pressure on margins as initiatives in developing the products and services take time to deliver. The risk of entering into non-linear pricing arrangements is that if we fail to properly estimate the appropriate pricing for a project, we may incur lower profits or losses as a result of being unable to execute projects with the amount of labor we expected or at a margin sufficient to recover our initial investments in our solutions. While non-linear pricing models are expected to result in higher revenue productivity per employee and improved margins, they also mean that we continue to bear the risk of cost overruns, wage inflation, fluctuations in currency exchange rates and failure to achieve clients’ business objectives in connection with these projects.

Our profit margin, and therefore our profitability, is largely a function of our asset utilization and the rates we are able to recover for our services. An important component of our asset utilization is our seat utilization rate, which is the average number of work shifts per day, out of a maximum of three, for which we are able to utilize our work stations, or seats. During fiscal 2021, 2020 and 2019, we incurred significant expenditures to increase our number of seats by establishing additional delivery centers or expanding production capacities in our existing delivery centers. If we are not able to maintain the pricing for our services or an appropriate seat utilization rate, without corresponding cost reductions, our profitability will suffer. The rates we are able to recover for our services are affected by a number of factors, including our clients’ perceptions of our ability to add value through our services, competition, introduction of new services or products by us or our competitors, our ability to accurately estimate, attain and sustain revenue from client contracts, margins and cash flows over increasingly longer contract periods and general economic and political conditions. Our profitability is also a function of our ability to control our costs and improve our efficiency. As we increase the number of our employees and execute our strategies for growth, we may not be able to manage the significantly larger and more geographically diverse workforce that may result, which could adversely affect our ability to control our costs or improve our efficiency. Further, because there is no certainty that our business will ramp-up at the rate that we anticipate, we may incur expenses for the increased capacity for a significant period of time without a corresponding growth in our revenue. Commencement of work and ramping up of volume of work with certain new and existing clients have in the past been slower than we had expected and may in the future be slower than we expect. If our revenue does not grow at our expected rate, we may not be able to maintain or improve our profitability. The COVID-19 pandemic has also led to, and may continue to lead to, increased costs, as we have to incur additional expenses in relation to the measures we have implemented to safeguard our employees’ health and safety and client operations, such as enhanced sanitization measures at our office premises, laptop rental costs for employees who are working remotely, telecommunications costs for mobile broadband devices, additional software licenses and logistics costs for the movement of equipment and we may need to pay higher costs for compensation, rental, accommodation and other fixed costs as a result of disruptions caused by the continued spread of the virus.

 

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We have in the past and may in the future enter into subcontracting arrangements for the delivery of services. For example, in China, in addition to delivering services from our own delivery center, we used to deliver services through a subcontractor’s delivery center. We could face greater risk when pricing our outsourcing contracts, as our outsourcing projects typically entail the coordination of operations and workforces with our subcontractor, and utilizing workforces with different skill sets and competencies. Furthermore, when outsourcing work we assume responsibility for our subcontractors’ performance. Our pricing, cost and profit margin estimates on outsourced work may include anticipated long-term cost savings from transformational and other initiatives that we expect to achieve and sustain over the life of the outsourcing contract. There is a risk that we will underprice our contracts, fail to accurately estimate the costs of performing the work or fail to accurately assess the risks associated with potential contracts. In particular, any increased or unexpected costs, delays or failures to achieve anticipated cost savings, or unexpected risks we encounter in connection with the performance of this work, including those caused by factors outside our control, could make these contracts less profitable or unprofitable, which could have an adverse effect on our profit margin.

We may not succeed in identifying suitable acquisition targets or integrating any acquired business into our operations, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our growth strategy involves gaining new clients and expanding our service offerings, both organically and through strategic acquisitions. It is possible that in the future we may not succeed in identifying suitable acquisition targets available for sale or investments on reasonable terms, have access to the capital required to finance potential acquisitions or investments, or be able to consummate any acquisition or investments. Future acquisitions or joint ventures may also result in the incurrence of indebtedness or the issuance of additional equity securities, which may present difficulties in financing the acquisition or joint venture on attractive terms. The inability to identify suitable acquisition targets or investments or the inability to complete such transactions may affect our competitiveness and our growth prospects.

Historically, we have expanded some of our service offerings and gained new clients through strategic acquisitions. For example, in January 2017, we acquired Denali, a leading provider of strategic procurement BPM solutions in the high technology, retail and CPG, banking and financial services, utilities and healthcare verticals, and in March 2017, we acquired HealthHelp, an industry leader in care management whose solutions are delivered by combining a proprietary technology platform rooted in evidence-based medical research, high-end predictive analytics, and deep healthcare industry expertise. In June 2016, we acquired Value Edge, a provider of commercial research and analytics services to clients in the pharma industry. The lack of profitability of any of our acquisitions or joint ventures could have a material adverse effect on our operating results.

In addition, our management may not be able to successfully integrate any acquired business into our operations or benefit from any joint ventures that we enter into, and any acquisition we do complete or any joint venture we do enter into may not result in long-term benefits to us. For instance, if we acquire a company, we could experience difficulties in assimilating that company’s personnel, operations, technology and software, or the key personnel of the acquired company may decide not to work for us. There is no assurance that these acquisitions will be profitable for us. Further, we face the risk that the legal regime or regulatory requirements imposed on any business that we acquire may change following our acquisition and such changes may adversely affect our ability to achieve the expected accretive benefits from the acquisition, which could in turn require us to recognize an impairment of goodwill associated with the acquired business. For more information see “—The international nature of our business exposes us to several risks, such as unexpected changes in the regulatory requirements and government policy changes of multiple jurisdictions.”

We also face risks arising from acquisitions of businesses reliant upon a small number of key clients. The value of such acquisitions may decline in the event that their key clients decide not to renew their contracts, or decrease their volume of business or the prices paid for services. For example, HealthHelp is primarily reliant on one client. A decline in the volume of business from this client or in the pricing of our services to this client would likely adversely affect our ability to achieve the expected accretive benefits from our acquisition of HealthHelp.

Further, we may receive claims or demands by the sellers of the entities acquired by us on the indemnities that we have provided to them for losses or damages arising from any breach of contract by us. Conversely, while we may be able to claim against the sellers on their indemnities to us for breach of contract or breach of the representations and warranties given by the sellers in respect of the entities acquired by us, there can be no assurance that our claims will succeed, or if they do, that we will be able to successfully enforce our claims against the sellers at a reasonable cost. Acquisitions and joint ventures also typically involve a number of other risks, including diversion of management’s attention, legal liabilities and the need to amortize acquired intangible assets, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

 

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Goodwill, intangible or other assets that we carry on our balance sheet could give rise to significant impairment charges in the future.

As at March 31, 2021, we had goodwill and intangible assets of approximately $189.1 million, which primarily resulted from our acquisitions of HealthHelp, Denali and Value Edge. Under IFRS, we are required to review our goodwill, intangibles or other assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. In addition, goodwill, intangible or other assets with indefinite lives are required to be tested for impairment at least annually. For example, during the fourth quarter of fiscal 2017, proposed changes to the laws of the UK governing personal injury claims generated uncertainty regarding the future earnings trajectory of our legal services business in our WNS Auto Claims BPM segment, as a result of which we had expected that we would eventually exit from providing legal services in relation to personal injury claims. We also experienced a decrease in volume of and loss of business from certain clients of our traditional repair services in our WNS Auto Claims BPM segment in fiscal 2017. As a result, we had in fiscal 2017 expected the future performance of our WNS Auto Claims BPM segment to decline significantly and therefore significantly reduced our financial projections and estimates of our WNS Auto Claims BPM segment. Accordingly, we performed an impairment review of the goodwill associated with the companies we had acquired for our auto claims business and recorded an impairment charge of $21.7 million to our results of operations in fiscal 2017. During the fourth quarter of fiscal 2020, Brexit had a negative impact on the insurance industry and applied downward pressure on the expected future performance of the WNS Auto Claims reportable segment, due to contract renegotiations and loss of certain clients. These factors, together with the highly uncertain operating environment in the UK, have negatively impacted and caused us to significantly reduce our financial projections and estimates of the WNS Auto Claims BPM reportable segment from our previous estimate. Accordingly, we performed an impairment review of the goodwill associated with the companies we had acquired for our auto claims business and recorded an impairment charge of $4.1 million to our results of operations in fiscal 2020 for the remaining goodwill balance of our auto claims business. See also “—The international nature of our business exposes us to several risks, such as unexpected changes in the regulatory requirements of multiple jurisdictions.” We may be required to record further impairment charges to our goodwill and intangible assets associated with other acquisitions in the future. For example, if the research and analytics industry experiences a significant decline in business and we determine that we will not be able to achieve the cash flows that we had expected from our acquisitions of Marketics Technologies (India) Private Limited, a provider of offshore analytics services which we acquired in 2007, and Value Edge, we may have to record an impairment of all or a portion of the goodwill or intangible assets relating to those acquisitions. Any further impairment to our goodwill or intangible assets may have a significant adverse impact on our results of operations.

We are incorporated in Jersey, Channel Islands and are subject to Jersey laws and regulations. If the tax benefits enjoyed by our company are withdrawn or changed, we may be liable for higher tax, thereby reducing our profitability.

As a company incorporated in Jersey, Channel Islands, we are currently subject to Jersey income tax at a rate of 0%. Although we continue to enjoy the benefits of the Jersey business tax regime, if Jersey tax laws change or the tax benefits we enjoy are otherwise withdrawn or changed, we may become liable for higher tax, thereby reducing our profitability.

 

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Risks Related to Key Delivery Locations

A substantial portion of our assets and operations are located in India and we are subject to regulatory, economic, social and political uncertainties in India.

Our primary operating subsidiary, WNS Global Services Private Limited (“WNS Global”), is incorporated in India, and a substantial portion of our assets and employees are located in India. The Government of India, however, has exercised and continues to exercise significant influence over many aspects of the Indian economy. The Government of India has provided significant tax incentives and relaxed certain regulatory restrictions in order to encourage foreign investment in specified sectors of the economy, including the business process management industry. Those programs that have benefited us include tax holidays, liberalized import and export duties and preferential rules on foreign investment and repatriation. We cannot assure you that such liberalization policies will continue. The Government of India may also enact new tax legislation or amend the existing legislation that could impact the way we are taxed in the future. For more information, see “—Tax legislation and the results of actions by taxing authorities may have an adverse effect on our operations and our overall tax rate.” Other legislation passed by the Government of India may also impact our business. For example, the Code on Wages 2019, Industrial Relations Code 2020, Social Security Code 2020 and Occupational Safety, Health & Working Condition Code 2020 received assent from the President of India on September 28, 2020. However, the rules for these Acts have not yet been published and the effective date from which these changes are applicable is yet to be notified. Accordingly, while we are unable to ascertain with certainty the financial impact due to these changes, it is possible that our wage costs in India may increase as a result of these changes when they become effective. In December 2019, the Parliament of India passed the Citizenship (Amendment) Act, 2019, which provides citizenship to religious minorities in Pakistan, Bangladesh and Afghanistan, prompting protests across India. In addition, there are concerns over the slowing growth of India’s economy and the negative impact that COVID-19 has had, and may continue to have, on our business, financial condition, results of operations and cash flows. Our financial performance and the market price of our ADSs may be adversely affected by changes in inflation, exchange rates and controls, interest rates, Government of India policies (including taxation regulations and policies), social stability or other political, economic or diplomatic developments affecting India in the future.

India has witnessed communal clashes in the past. Although such clashes in India have, in the recent past, been sporadic and have been contained within reasonably short periods of time, any such civil disturbance in the future could result in disruptions in transportation or communication networks, as well as have adverse implications for general economic conditions in India. Such events could have a material adverse effect on our business, the value of our ADSs and your investment in our ADSs.

The UK’s withdrawal from the EU may have a negative effect on global economic conditions, financial markets and our operations in the UK and EU, which could reduce the value of our ADS.

We have operations in the UK, Romania, Spain and Poland. Brexit has created significant political and economic uncertainty regarding the future trading relationship between the UK and the EU and could cause disruptions to, and create uncertainty surrounding, our operations in the UK and the EU. The long-term effects of Brexit will depend on the agreements or arrangements with the EU for the UK to retain access to EU markets either during a transitional period or more permanently. These developments may have an adverse effect on our operations in the UK and the EU, the value of our ADSs and your investment in our ADSs.

Our business in South Africa is evaluated for compliance with the South African government’s Broad-Based Black Economic Empowerment (“BBBEE”) legislation. Failure to maintain a minimum BBBEE rating would result in a loss of certain government grants, and may also result in us losing certain business opportunities or clients imposing contractual penalties on us.

Our business in South Africa is evaluated for compliance with the South African government’s BBBEE legislation against a BBBEE scorecard, which has different levels based on various criteria. South African government grants are available to businesses that meet specified conditions, including achieving a specified minimum BBBEE rating. A level one BBBEE rating has the most rigorous criteria. Additionally, many South African companies require their service providers to maintain a minimum BBBEE rating, and many of our South African client contracts contain clauses that allow our clients to terminate their contracts with us or impose specified penalties on us if we do not maintain a minimum BBBEE rating.

We conduct our domestic business in South Africa (serving clients based in South Africa) through our South Africa subsidiary, WNS South Africa (Pty) Ltd, and our international business in South Africa (serving clients based outside South Africa) through our South Africa subsidiary, WNS Global Services SA (Pty) Limited. During fiscal 2020, pursuant to the requirements of the South African government’s BBBEE Codes of Good Practice, the WNS B-BBEE Staff Share Trust subscribed to one participating preference share issued by WNS Global Services SA (Pty) Ltd, which entitles it to 45.56% of voting rights in WNS South Africa (Pty) Ltd. We achieved a level two rating in respect of WNS South Africa (Pty) Ltd in December 2020, which is valid until December 2021. Our program developed for the purpose of meeting the criteria to achieve the requisite BBBEE rating in respect of WNS Global Services SA (Pty) Limited includes, among other measures, divesting some of our interests in such subsidiary to address the criterion relating to the percentage of ownership of an entity by “black people” (as defined under the applicable legislation). We achieved a level six rating in respect of WNS Global Services SA (Pty) Limited in our last BBBEE verification audit in February 2021, which is valid until February 2022.

With the achievement of a level six rating in respect of WNS Global Services SA (Pty) Limited and a level two rating in respect of WNS South Africa (Pty) Ltd, we currently continue to meet the minimum BBBEE rating required under our South African client contracts and be eligible for government grants associated with our domestic and international business.

However, there is no assurance that we will maintain our existing BBBEE rating with respect to WNS Global Services SA (Pty) Limited or WNS South Africa (Pty) Ltd in our next annual BBBEE verification audits or thereafter. If we fail to maintain or achieve the required minimum BBBEE ratings, we will cease to be eligible for government grants, will be disqualified from bidding for certain business, and certain of our clients may terminate their contracts with us or impose penalties on us. These outcomes would have an adverse effect on our business, results of operations, financial condition and cash flows.

 

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Our facilities are at risk of damage by natural disasters.

Our operational facilities and communication hubs may be damaged in natural disasters such as earthquakes, floods, heavy rains, tsunamis and cyclones. For example, Chennai was affected by severe flooding in November 2015. Although our clients experienced minimal disruptions during the Chennai flood due to the business continuity planning and infrastructure resiliency measures we have implemented with a view to minimizing the impact of natural disasters on our business, such measures may be rendered less effective in other circumstances. In addition, we have operational facilities and communication hubs located in regions which are considered to be particularly vulnerable to natural disasters, such as the Philippines and Houston in the United States, which have experienced severe natural disasters such as typhoons, hurricanes and floods. Such natural disasters may lead to disruption to information systems and telephone service for sustained periods. Damage or destruction that interrupts our provision of BPM services could damage our relationships with our clients and may cause us to incur substantial additional expenses to repair or replace damaged equipment or facilities. We may also be liable to our clients for disruption in service resulting from such damage or destruction. While we currently have property damage insurance and business interruption insurance, our insurance coverage may not be sufficient. Furthermore, we may be unable to secure such insurance coverage at premiums acceptable to us in the future or secure such insurance coverage at all. Prolonged disruption of our services as a result of natural disasters would also entitle our clients to terminate their contracts with us.

If the tax benefits and other incentives that we currently enjoy are reduced or withdrawn or not available for any other reason, our financial condition would be negatively affected.

We have benefitted from, and continue to benefit from, certain tax holidays and exemptions in various jurisdictions in which we have operations.

In fiscal 2021, fiscal 2020 and 2019, our tax rate in India, the Philippines and Sri Lanka impacted our effective tax rate. We would have incurred approximately $11.1 million, $17.7 million and $15.7 million in additional income tax expense on our combined operations in our Special Economic Zone operations in India, the Philippines and Sri Lanka, if the tax holidays and exemptions described below had not been available for the respective periods.

We expect our tax rate in India, the Philippines and Sri Lanka to continue to impact our effective tax rate.

In the past, the majority of our Indian operations were eligible to claim income tax exemption with respect to profits earned from export revenue from operating units registered under the Software Technology Parks of India (“STPI”). The benefit was available for a period of 10 years from the date of commencement of operations, but not beyond March 31, 2011. Effective April 1, 2011, upon the expiration of this tax exemption, income derived from our operations in India became subject to the prevailing annual tax rate of 34.95% in fiscal 2021, fiscal 2020 and 2019. In December 2019, the Government of India enacted the India Tax Law effective retroactively to April 1, 2019, which enables Indian companies to elect to be taxed at a lower income tax rate of 25.17% as compared to the current rate of 34.95%. Once a company elects into the lower income tax rate, a company may not benefit from any tax holidays associated with Special Economic Zones and certain other tax incentives and may not reverse its election. Our current intent is to continue to be subject to the current rate of 34.95% and claim tax holidays associated with SEZ. See “Part I — Item 4. Information on the Company — B. Business Overview — Regulations.”

When any of our tax holidays or exemptions expire or terminate, or if the applicable government withdraws or reduces the benefits of a tax holiday or exemption that we enjoy, our tax expense may materially increase and this increase may have a material impact on our results of operations. The applicable tax authorities may also disallow deductions claimed by us and assess additional taxable income on us in connection with their review of our tax returns.

Tax legislation and the results of actions by taxing authorities may have an adverse effect on our operations and our overall tax rate.

The government of India, the US or other jurisdictions where we have a presence could enact new tax legislation which would have a material adverse effect on our business, results of operations and financial condition. In addition, our ability to repatriate surplus earnings from our delivery centers in a tax-efficient manner is dependent upon interpretations of local laws, possible changes in such laws and the renegotiation of existing double tax avoidance treaties. Changes to any of these may adversely affect our overall tax rate, or the cost of our services to our clients, which would have a material adverse effect on our business, results of operations and financial condition.

The UK has revised the corporate tax rate from 19% to 25% from fiscal 2023. Once effective, this tax rate increase will have an impact on the various current and deferred tax items recorded by the Company’s subsidiaries.

 

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The US Government has proposed “The Made in America Tax Plan” which will increase the US corporate tax rate from 21 percent to 28 percent. Further this proposed tax plan would increase the global intangible low-tax income (“GILTI”) minimum tax rate to 21 percent. The GILTI minimum tax would be calculated on a per-country basis. The plan also proposes a minimum tax of 15 percent on book income. This proposed tax plan when it comes into force may have an impact on the various current and deferred tax items recorded by the Company’s subsidiaries.

We are subject to transfer pricing and other tax related regulations and any determination that we have failed to comply with them could materially adversely affect our profitability.

Transfer pricing regulations to which we are subject require that any international transaction among our company and its subsidiaries, or the WNS group enterprises, be on arm’s-length terms. We believe that the international transactions among the WNS group enterprises are on arm’s-length terms. If, however, the applicable tax authorities determine that the transactions among the WNS group enterprises do not meet arm’s-length criteria, we may incur increased tax liability, including accrued interest and penalties. This would cause our tax expense to increase, possibly materially, thereby reducing our profitability and cash flows. We have signed an advance pricing agreement with the Government of India providing for the agreement on transfer pricing matters over certain transactions covered thereunder for a period of five years starting from April 2013, which has been renewed on similar terms for another five years starting from April 2018.

We may be required to pay additional taxes in connection with audits by the tax authorities.

From time to time, we receive orders of assessment from Indian tax authorities assessing additional taxable income on us and/or our subsidiaries in connection with their review of our tax returns. We currently have orders of assessment in fiscal 2003 through fiscal 2016 pending before various appellate authorities. These orders assess additional taxable income that could in the aggregate give rise to an estimated 2,007.9 million ($27.5 million based on the exchange rate on March 31, 2021) in additional taxes, including interest of 690.9 million ($9.5 million based on the exchange rate on March 31, 2021).

These orders of assessment allege, among others, that the transfer prices we applied to certain of the international transactions between WNS Global or WNS Business Consulting Services Private Limited (“WNS BCS”), each of which is one of our Indian subsidiaries, as the case may be, and our other wholly-owned subsidiaries were not on arm’s-length terms, disallow a tax holiday benefit claimed by us, deny the set-off of brought forward business losses and unabsorbed depreciation and disallow certain expenses claimed as tax deductible by WNS Global or WNS BCS, as the case may be. As at March 31, 2021 we have provided a tax reserve of 774.3 million ($10.6 million based on the exchange rate on March 31, 2021) primarily on account of the Indian tax authorities’ denying the set off of brought forward business losses and unabsorbed depreciation. We have appealed against these orders of assessment before higher appellate authorities. For more details on these assessments, See “Part I — Item 5. Operating and Financial Review and Prospects—Tax Assessment Orders.”

In addition, we currently have orders of assessment pertaining to similar issues that have been decided in our favor by appellate authorities, vacating tax demands of 4,180.1 million ($57.2 million based on the exchange rate on March 31, 2021) in additional taxes, including interest of 1,417.0 million ($19.4 million based on the exchange rate on March 31, 2021). The income tax authorities have filed or may file appeals against these orders at higher appellate authorities.

In case of disputes, the Indian tax authorities may require us to deposit with them all or a portion of the disputed amounts pending resolution of the matters on appeal. Any amount paid by us as deposits will be refunded to us with interest if we succeed in our appeals. We have deposited 916.4 million ($12.5 million based on the exchange rate on March 31, 2021) of the disputed amount with the tax authorities and may be required to deposit the remaining portion of the disputed amount with the tax authorities pending final resolution of the respective matters.

As at March 31, 2021, corporate tax returns in fiscal 2017 and thereafter remain subject to examination by tax authorities in India.

After consultation with our Indian tax advisors and based on the facts of these cases, certain legal opinions from counsel, the nature of the tax authorities’ disallowances and the orders from appellate authorities deciding similar issues in our favor in respect of assessment orders for earlier fiscal years, we believe these orders are unlikely to be sustained at the higher appellate authorities and we intend to vigorously dispute the orders of assessment.

In fiscal 2021, the Company received an assessment order from the Indian service tax authority, demanding payment of 148.9 million ($2.0 million based on the exchange rate on March 31, 2021) towards service tax for the period April 1, 2014 to June 30, 2017. The tax authorities have rejected input service tax credit on certain type of input services. The Company has orders of assessment pertaining to similar issues for earlier fiscal years that have been decided in favor of the Company by appellate authorities. We intend to vigorously dispute the order of assessment.

 

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In 2016, we also received an assessment order from the Sri Lankan Tax Authority, demanding payment of LKR 25.2 million ($0.1 million based on the exchange rate on March 31, 2021) in connection with the review of our tax return in fiscal 2012. The assessment order challenges the tax exemption that we have claimed for export business. We have filed an appeal against the assessment order with the Sri Lankan Tax Appeal Commission. Based on consultations with our tax advisors, we believe this order of assessment is more likely than not to be upheld in our favor. We intend to continue to vigorously dispute the assessment.

No assurance can be given, however, that we will prevail in our tax disputes. If we do not prevail, payment of additional taxes, interest and penalties may adversely affect our results of operations, financial condition and cash flows. There can also be no assurance that we will not receive similar or additional orders of assessment in the future.

Terrorist attacks and other acts of violence involving India or its neighboring countries could adversely affect our operations, resulting in a loss of client confidence and materially adversely affecting our business, results of operations, financial condition and cash flows.

Terrorist attacks and other acts of violence or war involving India or its neighboring countries may adversely affect worldwide financial markets and could potentially lead to economic recession, which could adversely affect our business, results of operations, financial condition and cash flows. South Asia has, from time to time, experienced instances of terrorism, civil unrest and hostilities in and among neighboring countries, including Sri Lanka, India and Pakistan. In April 2019, several churches and hotels in Sri Lanka, including premises within one kilometer of one of our delivery centers, were targeted in a series of coordinated terrorist bombings. In previous years, military confrontations between India and Pakistan have occurred in the region of Kashmir and along the India/Pakistan border. There have also been incidents in and near India, such as the bombings of the Taj Mahal Hotel and Oberoi Hotel in Mumbai in 2008, a terrorist attack on the Parliament of India, troop mobilizations along the India/Pakistan border and an aggravated geopolitical situation in the region. Such military activity or terrorist attacks in the future could disrupt our operations or influence the Indian economy by disrupting communications and making travel more difficult. Resulting political tensions could create a greater perception that investments in Indian companies involve a high degree of risk. Such political tensions could similarly create a perception that there is a risk of disruption of services provided by India-based companies, which could have a material adverse effect on the market for our services. Furthermore, if India were to become engaged in armed hostilities, particularly hostilities that were protracted or involved the threat or use of nuclear weapons, we might not be able to continue our operations.

Restrictions on entry visas may affect our ability to compete for and provide services to clients in the US and the UK, which could have a material adverse effect on future revenue.

The vast majority of our employees are Indian nationals. The ability of some of our executives to work with and meet our European and North American clients and our clients from other countries depends on the ability of our senior managers and employees to obtain the necessary visas and entry permits. In response to previous terrorist attacks and global unrest, US and European immigration authorities have sharply increased the level of scrutiny in granting visas. Immigration laws in those countries may also require us to meet certain other legal requirements as a condition to obtaining or maintaining entry visas. These restrictions have significantly lengthened the time requirements to obtain visas for our personnel, which has in the past resulted, and may continue to result, in delays in the ability of our personnel to meet with our clients. Further, the COVID-19 pandemic has resulted in the temporary suspension of existing visas and several governments not granting new visas. In addition, immigration laws are subject to legislative change and varying standards of application and enforcement due to political forces, economic conditions or other events, including terrorist attacks. We cannot predict the political or economic events that could affect immigration laws or any restrictive impact those events could have on obtaining or monitoring entry visas for our personnel. If we are unable to obtain the necessary visas for personnel who need to visit our clients’ sites or, if such visas are delayed, we may not be able to provide services to our clients or to continue to provide services on a timely basis, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

If more stringent labor laws become applicable to us, our profitability may be adversely affected.

India has stringent labor legislation that protects the interests of workers, including legislation that sets forth detailed procedures for dispute resolution and employee removal and legislation that imposes financial obligations on employers upon retrenchment. Though we are exempt from a number of these labor laws at present, there can be no assurance that such laws will not become applicable to the business process management industry in India in the future. In addition, our employees may in the future form unions. If these labor laws become applicable to our workers or if our employees unionize, it may become difficult for us to maintain flexible human resource policies, discharge employees or downsize, and our profitability may be adversely affected.

 

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Most of our delivery centers operate on leasehold property and our inability to renew our leases on commercially acceptable terms or at all may adversely affect our results of operations.

Most of our delivery centers operate on leasehold property. Our leases are subject to renewal and we may be unable to renew such leases on commercially acceptable terms or at all. Our inability to renew our leases, or a renewal of our leases with a rental rate higher than the prevailing rate under the applicable lease prior to expiration, may have an adverse impact on our operations, including disrupting our operations or increasing our cost of operations. In addition, in the event of non-renewal of our leases, we may be unable to locate suitable replacement properties for our delivery centers or we may experience delays in relocation that could lead to a disruption in our operations. Any disruption in our operations could have an adverse effect on our results of operations.

 

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Risks Related to our ADSs

Substantial future sales of our shares or ADSs in the public market could cause our ADS price to fall.

Sales by us or our shareholders of a substantial number of our ADSs in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. These sales, or the perception that these sales could occur, also might make it more difficult for us to sell securities in the future at a time or at a price that we deem appropriate or to pay for acquisitions using our equity securities. As at March 31, 2021, we had 49,402,203 ordinary shares outstanding (excluding 1,100,000 treasury shares), including 49,122,862 shares represented by 49,122,862 ADSs. In addition, as at March 31, 2021, a total of 2,897,811 ordinary shares or ADSs are issuable upon the exercise or vesting of options and restricted share units (“RSUs”) outstanding under our 2006 Incentive Award Plan (as amended and restated, the “2006 Incentive Award Plan”) and our 2016 Incentive Award Plan (as amended and restated, the “2016 Incentive Award Plan”). All ADSs are freely transferable, except that ADSs owned by our affiliates may only be sold in the US if they are registered or qualify for an exemption from registration, including pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). The remaining ordinary shares outstanding may also only be sold in the US if they are registered or qualify for an exemption from registration, including pursuant to Rule 144 under the Securities Act.

The market price for our ADSs may be volatile.

The market price for our ADSs is likely to be highly volatile and subject to wide fluctuations in response to factors including the following:

 

  

announcements of technological developments;

 

  

regulatory developments in our target markets affecting us, our clients or our competitors;

 

  

actual or anticipated fluctuations in our operating results;

 

  

changes in financial estimates by securities research analysts;

 

  

changes in the economic performance or market valuations of other companies engaged in business process management;

 

  

addition or loss of executive officers or key employees;

 

  

sales or expected sales of additional shares or ADSs;

 

  

loss of one or more significant clients; and

 

  

a change in control, or possible change of control, of our company.

In addition, securities markets generally and from time to time experience significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also have a material adverse effect on the market price of our ADSs.

 

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We may not be able to pay any dividends on our shares and ADSs.

We have never declared or paid any dividends on our ordinary shares. We cannot give any assurance that we will declare dividends of any amount, at any rate or at all. Because we are a holding company, we rely principally on dividends, if any, paid by our subsidiaries to us to fund our dividend payments, if any, to our shareholders. Any limitation on the ability of our subsidiaries to pay dividends to us could have a material adverse effect on our ability to pay dividends to you.

Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon our results of operations and cash flows, our financial position and capital requirements, general business conditions, legal, tax, regulatory and any contractual restrictions on the payment of dividends and any other factors our Board of Directors deems relevant at the time.

Subject to the provisions of the Companies (Jersey) Law 1991 (the “1991 Law”) and our Articles of Association, we may by ordinary resolution declare annual dividends to be paid to our shareholders according to their respective rights and interests in our distributable reserves. Any dividends we may declare must not exceed the amount recommended by our Board of Directors. Our Board of Directors may also declare and pay an interim dividend or dividends, including a dividend payable at a fixed rate, if paying an interim dividend or dividends appears to the Board to be justified by our distributable reserves. We can only declare dividends if our directors who are to authorize the distribution make a prior statement that, having made full enquiry into our affairs and prospects, they have formed the opinion that:

 

  

immediately following the date on which the distribution is proposed to be made, we will be able to discharge our liabilities as they fall due; and

 

  

having regard to our prospects and to the intentions of our directors with respect to the management of our business and to the amount and character of the financial resources that will in their view be available to us, we will be able to continue to carry on business and we will be able to discharge our liabilities as they fall due until the expiry of the period of 12 months immediately following the date on which the distribution is proposed to be made or until we are dissolved under Article 150 of the 1991 Law, whichever first occurs.

Subject to the deposit agreement governing the issuance of our ADSs, holders of ADSs will be entitled to receive dividends paid on the ordinary shares represented by such ADSs. See “ — Risks Related to Our Business — Our loan agreements impose operating and financial restrictions on us and our subsidiaries.”

Holders of ADSs may be restricted in their ability to exercise voting rights.

At our request, the depositary of our ADSs will mail to you any notice of shareholders’ meeting received from us together with information explaining how to instruct the depositary to exercise the voting rights of the ordinary shares represented by ADSs. If the depositary timely receives voting instructions from you, it will endeavor to vote the ordinary shares represented by your ADSs in accordance with such voting instructions. However, the ability of the depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the ordinary shares on deposit. We cannot assure you that you will receive voting materials in time to enable you to return voting instructions to the depositary in a timely manner. Ordinary shares for which no voting instructions have been received will not be voted.

As a foreign private issuer, we are not subject to the proxy rules of the Commission, which regulate the form and content of solicitations by US-based issuers of proxies from their shareholders. The form of notice and proxy statement that we have been using does not include all of the information that would be provided under the Commission’s proxy rules.

 

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Holders of ADSs may be subject to limitations on transfers of their ADSs.

The ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems necessary or advisable in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when the transfer books of the depositary are closed, or at any time or from time to time if we or the depositary deem it necessary or advisable to do so because of any requirement of law or of any government or governmental body or commission or any securities exchange on which the American Depositary Receipts or our ordinary shares are listed, or under any provision of the deposit agreement or provisions of or governing the deposited shares, or any meeting of our shareholders, or for any other reason.

Holders of ADSs may not be able to participate in rights offerings or elect to receive share dividends and may experience dilution of their holdings, and the sale, deposit, cancellation and transfer of our ADSs issued after exercise of rights may be restricted.

If we offer our shareholders any rights to subscribe for additional shares or any other rights, the depositary may make these rights available to them after consultation with us. We cannot make rights available to holders of our ADSs in the US unless we register the rights and the securities to which the rights relate under the Securities Act, or an exemption from the registration requirements is available. In addition, under the deposit agreement, the depositary will not distribute rights to holders of our ADSs unless we have requested that such rights be made available to them and the depositary has determined that such distribution of rights is lawful and reasonably practicable. We can give no assurance that we can establish an exemption from the registration requirements under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of our ADSs may be unable to participate in our rights offerings and may experience dilution of your holdings as a result. The depositary may allow rights that are not distributed or sold to lapse. In that case, holders of our ADSs will receive no value for them. In addition, US securities laws may restrict the sale, deposit, cancellation and transfer of ADSs issued after exercise of rights.

We may be classified as a passive foreign investment company, which could result in adverse US federal income tax consequences to US holders of our ADSs or ordinary shares.

Based on our financial statements and relevant market and shareholder data, we believe that we should not be treated as a passive foreign investment company for US federal income tax purposes (“PFIC”) with respect to our most recently closed taxable year. However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you that we will not be a PFIC for any taxable year. A non-US corporation will be a PFIC for any taxable year if either (i) at least 75% of its gross income for such year is passive income or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. A separate determination must be made after the close of each taxable year as to whether we were a PFIC for that year. Because the value of our assets for purposes of the PFIC test will generally be determined by reference to the market price of our ADSs and ordinary shares, fluctuations in the market price of the ADSs and ordinary shares may cause us to become a PFIC. In addition, changes in the composition of our income or assets may cause us to become a PFIC. If we are a PFIC for any taxable year during which a US holder (as defined in “Part I — Item 10. Additional Information — E. Taxation — US Federal Income Taxation”) holds an ADS or ordinary share, certain adverse US federal income tax consequences could apply to such US holder.

If a United States person is treated as owning at least 10% of our ordinary shares (or ADSs), such holder may be subject to adverse US federal income tax consequences.

If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our ordinary shares (or ADSs), such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any). Because our group includes one or more US subsidiaries, certain of our non-US subsidiaries could be treated as controlled foreign corporations regardless of whether we are or are not treated as a controlled foreign corporation (although there is currently a pending legislative proposal to limit the application of these rules). A United States shareholder of a controlled foreign corporation may be required to annually report and include in its US taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in US property by controlled foreign corporations, whether or not we make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a US corporation. A failure to comply with these reporting obligations may subject such holder to significant monetary penalties and may prevent the statute of limitations with respect to such holder’s US federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining whether any of our non-US subsidiaries are treated as a controlled foreign corporation or whether such investor is treated as a United States shareholder with respect to any of such controlled foreign corporations or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult its own advisors regarding the potential application of these rules to its investment in our ordinary shares (or ADSs).

 

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Our share repurchase programs could affect the price of our ADSs.

In September 2020, our shareholders authorized a new share repurchase program for the repurchase of up to 3,300,000 of our ADSs, each representing one ordinary share, at a price range of $10 to $110 per ADS. Pursuant to the terms of the repurchase program, our ADSs may be purchased in the open market from time to time for 36 months from April 1, 2021 to March 31, 2024.

In March 2018, our shareholders authorized our 2018 share repurchase program for the repurchase of up to 3,300,000 of our ADSs, each representing one ordinary share, at a price range of $10 to $100 per ADS. Pursuant to the terms of our 2018 share repurchase program, our ADSs may be purchased in the open market from time to time for 36 months from March 30, 2018, the date on which the shareholders approved our 2018 share repurchase program. To date, we have repurchased 3,300,000 ADSs in the open market under our 2018 share repurchase program and completed all repurchases under the program.

We have funded, and intend to continue to fund, the repurchases of ADSs under our repurchase programs with cash on hand. We are not obligated under our repurchase programs to repurchase a specific number of ADSs, and our repurchase programs may be suspended at any time at our discretion. We intend to hold the shares underlying any such repurchased ADSs as treasury shares.

Any repurchases pursuant to our repurchase programs could affect the price of our ADSs and increase its volatility. The existence of a repurchase program could also cause the price of our ADSs to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity of our ADSs. There can be no assurance that any repurchases will enhance shareholder value because the market price of our ADSs may decline below the levels at which we repurchase any ADSs. In addition, although our repurchase programs are intended to enhance long-term shareholder value, short-term price fluctuations in our ADSs could reduce the program’s effectiveness. Significant changes in the price of our ADSs and our ability to fund our repurchase programs with cash on hand could impact our ability to repurchase ADSs. The timing and amount of future repurchases is dependent on our cash flows from operations, available cash on hand and the market price of our ADSs. Furthermore, our programs do not obligate us to repurchase any dollar amount or number of ADSs and may be suspended at any time at our discretion, and any suspension or discontinuation could cause the market price of our ADSs to decline.

We have certain anti-takeover provisions in our Articles of Association that may discourage a change in control.

Our Articles of Association contain anti-takeover provisions that could make it more difficult for a third party to acquire us without the consent of our Board of Directors. These provisions include:

 

  

a classified Board of Directors with staggered three-year terms; and

 

  

the ability of our Board of Directors to determine the rights, preferences and privileges of our preferred shares and to issue the preferred shares without shareholder approval, which could be exercised by our Board of Directors to increase the number of outstanding shares and prevent or delay a takeover attempt.

These provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many shareholders. As a result, shareholders may be limited in their ability to obtain a premium for their shares.

It may be difficult for you to effect service of process and enforce legal judgments against us or our affiliates.

We are incorporated in Jersey, Channel Islands, and our primary operating subsidiary, WNS Global, is incorporated in India. A majority of our directors and senior executives are not residents of the US and the majority of our assets and the assets of those persons are located outside the US. As a result, it may not be possible for you to effect service of process within the US upon those persons or us. In addition, you may be unable to enforce judgments obtained in courts of the US against those persons outside the jurisdiction of their residence, including judgments predicated solely upon the securities laws of the US. Furthermore, Jersey companies may not have standing to initiate shareholders derivative action in a federal court in the US.

 

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ITEM 4. INFORMATION ON THE COMPANY

 

A.

History and Development of our Company

WNS (Holdings) Limited was incorporated as a private liability company on February 18, 2002 under the laws of Jersey, Channel Islands, and maintains a registered office in Jersey at 22 Grenville Street, St Helier, Jersey JE4 8PX, Channel Islands. We converted from a private limited company to a public limited company on January 4, 2006 in accordance with Article 17A of the 1991 Law, when we acquired more than 30 shareholders as calculated in accordance with Article 17A of the 1991 Law. We gave notice of this to the Jersey Financial Services Commission (“JFSC”) in accordance with Article 17(3) of the 1991 Law on January 12, 2006. Our principal executive office is located at Gate 4, Godrej & Boyce Complex, Pirojshanagar, Vikhroli (W), Mumbai 400 079, India, and the telephone number for this office is (91-22) 4095-2100. Our website address is www.wns.com. Information contained on our website does not constitute part of this annual report. Our agent for service in the US is our subsidiary, WNS North America Inc., 15 Exchange Place, 3rd Floor, Suite 310, Jersey City, New Jersey 07302, US.

We began operations as an in-house unit of British Airways in 1996 and became a business process outsourcing service provider for third parties in fiscal 2003. Warburg Pincus acquired a controlling stake in our company from British Airways in May 2002 and inducted a new senior management team.

Fiscal 2003- 2008

We made a number of acquisitions that helped expand our service offerings. These acquisitions included:

 

  

Town and Country Assistance Limited (which we subsequently rebranded as WNS Assistance and which is part of WNS Auto Claims BPM), a UK-based automobile claims handling company, in fiscal 2003;

 

  

the health claims management business of Greensnow Inc., in fiscal 2004;

 

  

Trinity Partners Inc. (which we subsequently merged into our subsidiary, WNS North America Inc.), a provider of BPM services to financial institutions, focusing on mortgage banking, in fiscal 2006;

 

  

The fare audit services business of PRG Airlines and the financial accounting business of GHS in fiscal 2007;

 

  

Marketics, a provider of offshore analytics services, in fiscal 2008; and

 

  

Flovate (which we subsequently renamed as WNS Workflow Technologies Limited), a company engaged in the development and maintenance of software products and solutions, in fiscal 2008

In July 2006, we completed our initial public offering, whereupon our ADSs became listed on the New York Stock Exchange (the “NYSE”) under the symbol “WNS.” In February 2012, in connection with our follow-on offering, we issued new ordinary shares in the form of ADSs, at a price of $9.25 per ADS, aggregating approximately $50.0 million and at the same time, Warburg Pincus divested 6,847,500 ordinary shares in the form of ADSs. In February 2013, Warburg Pincus sold its remaining 14,519,144 ordinary shares in the form of ADSs, thereby divesting its entire stake in our company.

We invested in our infrastructure to expand our service portfolio from data-oriented processing to include complex voice and blended data/voice service capabilities, and commenced offering comprehensive processes in the travel and leisure, banking and financial services and insurance industries.

We opened facilities in a number of locations, including Gurgaon, India; Colombo, Sri Lanka; and Bucharest, Romania, thereby expanding our operating footprint across India, Sri Lanka and Romania. We also expanded our facilities in Gurgaon, Mumbai and Pune, India. In fiscal 2008, we transferred our delivery center in Sri Lanka to Aviva Global pursuant to “build-operate-transfer” contractual arrangement we had with Aviva.

We entered into a joint venture with ACS, a provider in BPM services and customer care in the Philippines, to form WNS Philippines Inc. (which became our wholly owned subsidiary following our acquisition of ACS’s shareholding in WNS Philippines Inc, in fiscal 2012)

Fiscal 2009 – Fiscal 2013

We acquired a number of companies, including:

 

  

Chang Limited, an auto insurance claims processing services provider in the UK, in fiscal 2009;

 

  

BizAps, a provider of SAP® solutions, in fiscal 2008 to optimize the enterprise resource planning functionality for our finance and accounting processes;

 

  

Fusion (which we subsequently renamed as WNS Global Services SA (Pty) Ltd), a provider of a range of management services, including contact center, customer care and business continuity services, to both South African and international clients, in fiscal 2013.

We opened facilities in Manila, the Philippines; San Jose, Costa Rica; Vizag, India; and Gydnia, Poland; and also expanded various facilities in India, the Philippines, Costa Rica and Romania, as well as our sales office in the UK.

We completed a follow-on public offering of ADSs in fiscal 2012, which raised approximately $50.0 million to fund our growth initiatives and enhance delivery capability.

Fiscal 2014 – 2018

We acquired the following companies in fiscal 2017:

 

  

Value Edge Research Services Private Limited (“Value Edge”), a leading provider of commercial research and analytics services to clients in the pharmaceutical and biopharmaceutical industries;

 

  

Denali Sourcing Services Inc. (“Denali”), a leading provider of strategic procurement BPM services; and

 

  

MTS HealthHelp Inc. and its subsidiaries (“HealthHelp”), an industry leader in BPM care management.

 

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Most recently in April 2017, we established the WNS B-BBEE Staff Share Trust with the principal objective of creating meaningful participation of the Black employees (as defined in the applicable legislation) of our South African subsidiaries in the growth of the company. We are committed to transformation in South Africa and are implementing this structure to benefit Black People in accordance with the objectives and requirements of the Codes of Good Practice on Black Economic Empowerment as promulgated by section 9(1) of the Broad-Based Black Economic Empowerment Act No. 53 of 2003 of South Africa. In June 2017, we established WNS New Zealand Limited, a wholly owned subsidiary of WNS Global Services (Australia) Pty Ltd. In July 2017, we merged Value Edge into WNS Global Services Private Limited. In September 2018, we established WNS Global Services (UK) International Limited, a wholly owned subsidiary of WNS (Mauritius) Limited. In October 2018, we established WNS Global Services North Americas Inc., a wholly owned subsidiary of WNS Global Services (UK) International Limited and WNS Global Services (UK) Limited, Sucursal En España, a new branch of WNS Global Services (UK) Limited. In December 2018, we established WNS SA Domestic (Pty) Ltd, a wholly owned subsidiary of WNS Global Services SA (Pty) Limited and WNS-Healthhelp Philippines Inc, a wholly owned subsidiary of HealthHelp LLC. In September 2019, we changed the name of our wholly-owned South African subsidiary, WNS SA Domestic (Pty) Ltd to WNS South Africa (Pty) Ltd. In November 2019, we established WNS Denali Sourcing Services Inc, a wholly-owned subsidiary of Denali Sourcing Service Inc. On January 9, 2020, we changed the name of our wholly-owned Netherlands subsidiary, WNS Global Services Netherlands Cooperatief U.A., to WNS Global Services Netherlands B.V and our Ireland branch, WNS Global Services Netherlands Cooperatief U.A. (Ireland Branch), to WNS Global Services Netherlands B.V. (Ireland Branch). On March 17, 2020, we demerged our Netherlands subsidiary, WNS Global Services Netherlands B.V., and formed WNS Business Consulting Netherlands B.V. On April 28, 2020, we established a new entity in Canada, WNS Gestion des Processus d’Affaire Inc., a wholly-owned subsidiary of the Company. On July 3, 2020, we changed the name of our Turkey branch, WNS Global Services Netherlands Cooperatief U.A. Merkezi Hollanda Istanbul Merkez to WNS Global Services Netherlands B.V Merkezi Hollanda Istanbul Merkez Subesi. Our organizational structure now comprises 39 entities in 24 countries, and 10 branches in Poland, UAE, China, Singapore, France, Romania, Turkey, Ireland and Spain. Of these 39 entities, WNS Cares Foundation, which is a wholly-owned subsidiary of WNS Global, is a not-for-profit organization registered under the Section 8 of the Indian Companies Act, 2013, India. The WNS Cares Foundation was formed for the purpose of promoting corporate social responsibilities and does not qualify as a subsidiary under IFRS 10— Consolidated Financial Statements and hence is not considered for the purpose of preparing our consolidated financial statements.

We have our principal executive office in Mumbai, India, and we have client service offices in Beijing (China), Dubai (United Arab Emirates), Germany, London (the UK), New York (the US), Sydney (Australia) and Singapore, and we have delivery centers in Sydney (Australia) Guangzhou, Dalian and Shanghai (China), San Jose (Costa Rica), Bangalore, Chennai, Gurgaon, Mumbai, Nashik, Pune, Noida and Vizag (India), Manila, Iloilo and Alabang (the Philippines), Gydnia (Poland), Bucharest (Romania), Cape Town, Johannesburg, Durban and Port Elizabeth (South Africa), Colombo (Sri Lanka), Istanbul (Turkey), Ipswich and Manchester (the UK), Spain and Columbia, South Carolina, Pittsburgh, Bellevue, Houston and Texas (the US).

 

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Our capital expenditures in fiscal 2021, 2020 and 2019 amounted to $26.5 million, $27.9 million and $32.3 million, respectively. Our principal capital expenditures were incurred for the purposes of setting up new delivery centers, expanding existing delivery centers and developing new technology-enabled solutions to enable execution and management of clients’ business processes. We estimate that our expected capital expenditure in fiscal 2022 would be up to 35.0 million. The geographical distribution, timing and volume of our capital expenditures in the future will depend on new client contracts we may enter into or the expansion of our business under our existing client contracts.

As at March 31, 2021, we had commitments for capital expenditures of $7.0 million (net of advances to capital vendors) relating to the purchase of property and equipment for our delivery centers. Of this committed amount, we plan to spend approximately $3.1 million in India, approximately $1.0 million in Philippines, approximately $0.3 million in South Africa, and approximately $2.6 million in the rest of the world. We expect to fund these estimated capital expenditures from cash generated from operating activities, existing cash and cash equivalents and the use of existing credit facilities. See “Part I — Item 5. Operating and Financial Review and Prospects — Liquidity and Capital Resources” for more information.

Recent Developments

In response to the ongoing COVID-19 pandemic, we have implemented a number of strategic business initiatives designed to protect the health and safety of our employees, maximize our ability to service our clients, and manage the financial impacts to our business. For further information on COVID-19’s impact, see “Part I — Item 5. Operating and Financial Review and Prospects — Global Economic Conditions — Impact of COVID-19.”

Employee Health and Safety

We have taken the following measures to protect our employees:

 

  

Established a command and control center for communication and coordination across the organization;

 

  

Implemented proactive communication, education, and awareness programs on employee health, safety and prevention measures;

 

  

Provided for preventive and detective health measures at our offices, including conducting temperature checks upon entry and providing face masks and hand sanitizers;

 

  

Deployed trained medical staff on our premises;

 

  

Created procedures for cleaning, sanitization and quarantine measures in the event of potential contamination; and

 

  

Adhered to various advice, guidelines and directives of global, national, and local health and governmental agencies, including in relation to travel restrictions, social distancing, quarantines, virus prevention, and medical protocols.

Client Collaboration

We have been working closely with our clients to maximize our ability to service their rapidly changing business requirements. For example, we have taken the following actions:

 

  

Understand the changes to required volumes, so as to prioritize workloads, and modify service levels;

 

  

Obtain our clients’ approvals, where necessary, on the adoption of “work-from-home” delivery methods, solution changes, service-level revisions and risk or data privacy waivers; and

 

  

Discuss post-COVID-19 requirements, business needs and engagement models.

Business Continuity

We have activated business continuity programs to help manage our clients’ businesses. These programs include a combination of implementing “work-from-home” solutions, allowing work to continue to be provided from our facilities (where possible) and transitioning work to other WNS locations. These solutions have required us to:

 

  

Arrange for equipment (such as laptops and desktops), software and internet connectivity to be available at our employees’ homes. This has included moving existing WNS assets, and the renting and purchasing of new assets;

 

  

Organize our information security and IT teams to create revised solutions to address compatibility, data integrity, and risk mitigation issues;

 

  

Address productivity challenges, including those related to infrastructure, bandwidth, and connectivity capabilities; and

 

  

Create alternative transportation and provide accommodation for employees, who have been authorized to work from our facilities.

Financial Impacts

We have seen the following financial impacts to our business as a result of the COVID-19 pandemic:

 

  

Declining business volumes and activity levels for certain clients, resulting in revenue loss for certain services;

 

  

Not receiving approval from certain clients for some services to be performed through “work-from-home” models, because of the sensitive nature of the work involved;

 

  

Incurring costs associated with the additional compensation for overtime;

 

  

Experiencing reduced employee productivity in some “work-from-home” delivery locations, as a result of information technology or infrastructure challenges, including those related to internet access, connectivity and bandwidth issues;

 

  

Incurring additional costs from our service delivery, resulting from the shift to “work-from-home” delivery models, which include incurring expenses for equipment (such as the rental and purchase of desktops and laptops), providing or solving software, internet and connectivity capabilities or issues, providing hotel and local accommodations, meals and allowances and transportation, and ensuring facility monitoring, sanitizing, cleaning, protection and administration; and

 

  

Facing increased uncertainty, especially with respect to revenue and expense levels, resulting from currency fluctuations driven by the stock market and macro-economic volatility.

 

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B. Business Overview

We are a global BPM company, offering an array of end-to-end industry-specific and cross-industry solutions. We combine our deep industry knowledge with technology, analytics and process expertise to co-create innovative, digitally enabled transformational solutions with 384 clients across various industries as at March 31,2021 (with each client generating more than $0.01 million in revenue in fiscal 2021). Our solutions and capabilities encompass intelligent automation (robotic process automation (“RPA”), artificial intelligence (“AI”) and cognitive computing), natural language processing and machine learning, blockchain, internet of things (“IoT”), business process-as-a-service (“BPaaS”) platforms, embedded analytics and process re-engineering frameworks.

A key element in all our transformation engagements is our ability to deliver business value through the co-creation of solutions and products with our clients and strategic partners. We seek to help our clients “transform” their businesses by identifying business and process optimization opportunities through technology-enabled solutions, improvements to their processes, global delivery capabilities, analytics and an understanding of their business. This, combined with our client-centric approach, enables us to align our people, processes, technologies and delivery network with our clients’ businesses. Our industry-aligned approach helps us provide a specialized focus on each of the sectors that we target, effectively transform and manage our clients’ business processes, and offer customized solutions and business insights designed to improve their competitive positioning. The major industry verticals that we currently focus on are: insurance, healthcare, diversified businesses (including manufacturing, retail and consumer packaged goods (“CPG”), media and entertainment, and telecommunication (telecom)), travel and leisure, shipping and logistics, consulting and professional services, banking and financial services, and utilities.

Our cross-industry solutions, common across multiple industries, include customer experience services, finance and accounting (including procurement), human resources, research and analytics, technology, and governance, risk and compliance services.

We measure our execution of clients’ business processes against multiple performance parameters, and aim to consistently meet and exceed these parameters in order to maintain and expand our client relationships. We strive to build long-term client relationships, and typically sign multi-year contracts with our clients that provide us with recurring revenue. In fiscal 2021, 134 and 130 clients contributed more than $1 million to our revenue and revenue less repair payments (non-GAAP), respectively. In fiscal 2020, 140 and 132 clients contributed more than $1 million to our revenue and revenue less repair payments (non-GAAP), respectively.

As at March 31, 2021, we had 43,997 employees executing business processes for our 384 clients (with each client generating more than $0.01 million in revenue in fiscal 2021).

In fiscal 2021, our revenue was $912.6 million, our revenue less repair payments (non-GAAP) was $868.7 million and our profit was $102.6 million. Our revenue less repair payments is a non-GAAP financial measure. For a discussion of our revenue less repair payments (non-GAAP) and a reconciliation of our revenue less repair payments (non-GAAP) to revenue, see “Part I – Item 5. Operating and Financial Review and Prospects – Overview.”

 

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Industry Overview

The global BPM market continues to evolve in response to a disruptive business landscape. While companies are still looking to benefit from process efficiency, cost advantage and labor arbitrage from their BPM solution providers, there is now a broader and more strategic narrative with a strong focus on innovation-led value. Customer experience, data-led insights and digital solutions have become integral to business success, and enterprises now expect their BPM solution providers to play a bigger and more profound role in driving transformational outcomes. As companies outsource more of their complex and high-end business processes, the key consideration for them is the ability of the BPM provider to understand their requirements, develop transformational plans, execute intricate, multi-layered process transitions and successfully manage these processes on an ongoing basis. Increasingly, companies with the aim of optimizing processes and improving competitive positioning are demanding higher-value, technology-enabled, and cost-effective services such as process re-engineering, advanced analytics and business transformation from their BPM providers. The increased focus on variable cost structures and the creation of tangible business benefits have resulted in alternative service delivery and pricing models such as transaction-based, outcome-based and subscription models.

While BPM companies continue to address business disruptions caused by digital and technological changes and evolving customer expectations, they have also placed strong focus on raising business continuity planning to extreme crisis continuity planning levels. Going forward, clients will expect BPM service providers to co-architect new, resilient and flexible solutions and models that will enable business continuity during a wide array of adverse situations.

This ability to create and implement disaster recovery solutions is expected to become an important factor in evaluating BPM providers. BPM companies will be required to leverage a diversified geographical footprint and deliver continuity solutions that will enable clients to maximize operational agility, scalability and sustainability. These solutions will increasingly deploy technology and automation, and leverage the potential for increased adoption of “work-from-home” models.

In the next few years, clients will strengthen their focus on reducing costs, accelerating business transformation and digital adoption, and adopting outcome-based pricing models. We expect that BPM providers will play a key role in helping clients across industries to create and digitize end-to-end processes. Customized digital transformation solutions will be required to reduce operational costs, improve end-to-end customer experience, generate actionable insights, reduce risk, and improve competitive positioning.

In such an environment, businesses are thus undertaking a rigorous and multi-faceted evaluation process when selecting a BPM provider. Based on our experience, a client typically seeks the following key attributes in a business process management provider:

 

  

Domain knowledge and industry-specific expertise

 

  

Process expertise across horizontal service offerings

 

  

“Skin in the game” approach denoting the ability to work as a true partner, absorb risks and prioritize outcomes

 

  

Ability to innovate, automate, transform, provide operational expertise and drive best practices based on internal and external benchmarking

 

  

Proven ability to execute a diverse range of mission-critical and often complex business processes

 

  

Ability to tie service delivery, technology implementation and process automation with the client’s existing information technology (“IT”) infrastructure, negating the need for large IT overhauls

 

  

Capabilities to drive improved process standardization across business units and multiple locations, demonstrating strong global delivery capabilities

 

  

Comprehensive analytical capabilities to deliver actionable business insights; domain-led analytics solutions customized to industry requirements and embedded as part of the larger BPM services portfolio

 

  

Ability to deliver technology-enabled services and solutions, including RPA, cognitive computing, intelligent automation, AI, natural language processing, IoT, industrial robotics, blockchain, cloud-based offerings and platform-based BPM

 

  

Agility to build robust operational models that will swiftly and comprehensively manage disruptions and drive maximum business continuity, underpinned by an extensive geographical footprint, a seamless transition methodology, digital ways of working and a strong remote work model

 

  

Possesses a strong global presence through a mix of offshore, nearshore and onshore delivery centers to access talent and capabilities, create cultural alignment, leverage language skills, and mitigate risks

 

  

Capability to scale employees and infrastructure without a diminution in quality of service

 

  

Ability to raise client’s competitive positioning by improving operating efficiency, reducing cost, enhancing the end-client experience, delivering actionable insights, and creating differentiation

The global business process management industry is a large and growing industry. According to the Gartner Forecast: IT Services, Worldwide, 2019-2025, 1Q21 Update, the worldwide BPO market is estimated to be at $161.765 billion in 2020. Gartner has estimated that the revenue for the worldwide BPO market will grow from $161.765 billion in 2020 to $194.203 billion in 2025 at a compounded annual growth rate of 3.7% (compounded annual growth rate calculated by Gartner).

 

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The following chart sets forth the estimated growth in revenue generated in the Worldwide BPO market:

Worldwide BPO Revenue / End-User Spending ($ billion)

 

LOGO

Chart / Graph created by WNS Global Services based on Gartner research.

Source: Gartner, Inc., Forecast: IT Services, Worldwide, 2019-2025, 1Q21 Update. Dean Blackmore, TJ Singh, Cathy Tornbohm et al., March 25, 2021.

The Gartner content described herein (the “Gartner Content”) represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and are not representations of fact. Gartner Content speaks as of its original publication date (and not as of the date of this [type of filing]), and the opinions expressed in the Gartner Content are subject to change without notice.

The recent industry trends have driven BPM providers to be more innovative, strategic and forward-looking in their approach. Against the backdrop of this changing environment, we believe that WNS, with our focused domain, digital, and analytics capabilities, guiding principles of co-creation and client centricity, extensive global footprint, robust business continuity planning (BCP) methodologies, and transformational and re-engineering frameworks, is well positioned to deliver business value to our clients. We offer hyper-automated and technology-enabled BPaaS solutions that help companies adapt rapidly to changing business scenarios and accelerate their business transformation. Further, we offer customized engagement models that cater to each client’s scale and transformation journey. In addition to traditional pricing models based on headcount (often referred to as full-time equivalents (FTE)), we offer transaction-, subscription- and outcome-based pricing models to provide clients with cost flexibility and measurable business benefits.

In fiscal 2021, 35.0% of our total revenues were generated from “non-FTE” models. These “non-linear” pricing models, which de-link the relationship between headcount and revenue for BPM providers, create an incentive for the providers to improve the productivity of their employees, increase the use of technology, and enhance the overall efficiency of their operations.

Competitive Strengths

We believe that we have the competitive strengths necessary to maintain and enhance our position as a leading global provider of BPM services.

Well-positioned for the evolving BPM market

The BPM industry, which started with the first wave of simple outsourced processes, has now expanded to include complex business processes and higher-value services that involve process re-engineering, business and digital transformation, management of mission-critical operations, and generation of business insights to aid decision-making. We believe that our industry-specific expertise, end-to-end service offerings, transformation capabilities, technology-enabled solutions, process management skills, advanced analytics, global delivery network and customer-centric approach position us at the forefront of the evolving BPM market.

The BPM market continues to evolve amid growing need for more robust business continuity measures to help businesses remain resilient in times of crisis. WNS has implemented new processes and delivery solutions to address a wide range of matters such as employee health and safety and to maximize our ability to service client’s rapidly changing business requirements. For further information, see “Part I — Item 4. Information on the Company — Recent Developments” and “Part I — Item 5. Operating and Financial Review and Prospects — Global Economic Conditions — Impact of COVID-19.”

Deep industry expertise

We have established deep expertise in the industries we target as a result of our vertical organizational structure, legacy client relationships, proprietary technology offerings, key acquisitions, targeted training programs and the hiring of management with specific industry knowledge. Our deep domain expertise in each of the 13 industries we serve helps us develop keen insights and transform them into leading-edge impactful business solutions with the help of technology, analytics and process rigor. We have developed methodologies, frameworks, proprietary knowledge and industry-specific technology platforms applicable to our target industries that allow us to provide industry-focused solutions and help clients compete within these industries.

We have structured our company into business units aligned with each of the industries on which we focus. This gives us strong advantages of in-depth industry knowledge and industry-specific technology platforms and solutions, which in turn enable us to approach clients in each of our target industries with an integrated effort covering sales, marketing and delivery.

 

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We have received numerous recognitions for our industry leadership. Our awards and recognitions in fiscal 2021 and 2020 are set forth below:

Vertical-specific Recognitions Insurance:

 

  

A “Leader and Star Performer” in Everest Group’s Property and Casualty Insurance – Service Provider Landscape with Services PEAK Matrix® Assessment 2020

 

  

A “Leader” in NelsonHall’s Vendor Evaluation and Assessment Tool (“NEAT”) for Life & Annuity Pensions Business Process Services (“BPS”) 2020

 

  

A “Major Contender” in Everest Group’s Life & Pensions Insurance BPO – Service Provider Landscape with Services PEAK Matrix® Assessment 2020

 

  

A “Major Contender” in Everest Group’s Insurance Analytics and Insights (“A&I”) Third-party Services PEAK Matrix® Assessment 2020

Healthcare:

 

  

A “Major Contender” in Everest Group’s Healthcare Payer Operations – Services PEAK Matrix® Assessment 2020

 

  

A “Major Contender” in Everest Group’s Revenue Cycle Management (RCM) Operations – Services PEAK Matrix® Assessment 2020

Travel and Leisure:

 

  

#1 in HFS Research’s Top 10 Travel, Hospitality, and Logistics Service Providers 2020

Banking and Financial Services:

 

  

A “Major Contender” in Everest Group’s Financial Crime and Compliance Operations – Services PEAK Matrix® Assessment 2021

 

  

A “Major Contender” in Everest Group’s Mortgage Operations PEAK Matrix® Assessment 2020

 

  

A “Major Contender” in Everest Group’s Banking BPS Services PEAK Matrix® Assessment with Service Provider Landscape 2020

 

  

A “Leader” in NelsonHall’s NEAT for Mortgage & Loan Services in the New Digital Business Models category 2020

 

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Horizontal-specific Recognitions

Finance and Accounting:

 

  

A “Star Performer & Major Contender” in Everest Group’s Finance and Accounting Outsourcing (FAO) Service Provider Landscape with Services PEAK Matrix® Assessment 2020

 

  

A “Major Player” in the IDC MarketScape: Worldwide Digital Finance and Accounting Business Process Services 2020–2021 Vendor Assessment (Feb 2021)

 

  

#8 in HFS Research’s Top 10 FAO Service Providers 2020

Customer Experience Services:

 

  

A “Major Contender” in Everest Group’s Customer Experience Management – Service Provider Landscape with Services PEAK Matrix® Assessment 2020

 

  

A “Leader” in NelsonHall’s NEAT for Social Media Customer Experience (“CX”) 2021

Research and Analytics:

 

  

A “Major Contender” in Everest Group’s Advanced Analytics & Insights Services PEAK Matrix® Assessment 2021

 

  

A “Major Contender” in Everest Group’s Insurance A&I Third-party Services PEAK Matrix® Assessment 2020

Procurement:

 

  

A “Leader” in Procurement BPO and a “Leader” in Digital Transformation in Information Services Group Provider Lens Global Quadrant report 2021

 

  

A “Star Performer” and “Major Contender” in Everest Group’s Procurement BPS Service Provider Landscape with Services PEAK Matrix® Assessment 2020

 

  

#5 in HFS Research’s Top 10 Source-to-Pay Service Providers 2020

Human Resources:

 

  

A “Major Contender” in Everest Group’s Multi-Process Human Resources Outsourcing – Service Provider Landscape with Services PEAK Matrix® Assessment 2020

 

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Corporate:

 

  

Golden Peacock Business Excellence Award 2020

 

  

Stevie International Business Awards 2020

 

  

Content Analytics Solution (Gold Award)

 

  

Corporate Social Responsibility Program of the Year – Asia, Australia and New Zealand (Gold Award)

 

  

Achievement in Product Innovation (Silver Award)

 

  

Artificial Intelligence and Machine Learning Solution (Bronze Award)

 

  

Customer Service Department of the Year (Bronze Award)

 

  

Business Technology Solution (Bronze Award)

 

  

Golden Peacock National Quality Award 2020

 

  

Stevie Sales and Customer Service Awards 2020

 

  

COVID-19 Response Category (Silver Award)

 

  

Customer Service Team of the year (Bronze Award)

 

  

Customer Service Department of the Year (Bronze Award)

 

  

Customer Service Management Team of the Year (Bronze Award)

Technology:

 

  

CIO Powerlist 2020 - IT, Information Technology Enabled Services & BPO Icon category

 

  

IDG CIO 100 2020 Special Award

 

  

UiPath Partner Excellence Award 2020

Human Resources (“HR”):

 

  

Association for Talent Development (“ATD”) Best Award 2020 in Learning and Development Category

 

  

ATD Best Award 2021 in the Talent Development category

 

  

WNS China recognized as 2020 Best Employer in Northeast China by Liepin

 

  

2nd Runner-up position in the Excellence in Developing Leaders of Tomorrow Award category of the Society for Human Resource Management HR Excellence Awards 2020

 

  

Brandon Hall Human Capital Management Awards 2020 (2 Bronze):

 

  

Best Learning Program Supporting a Change Transformation Business Strategy

 

  

Best Advance in Leadership Development for Women

 

  

Stevie Great Employers Awards 2020 (3 Gold):

 

  

Achievement in HR Technology

 

  

Achievement in Leadership Development for Women

 

  

Best Learning & Development Strategy

Corporate Social Responsibility (“CSR”):

 

  

WNS Cares Foundation wins the Grant Thornton Sabera Award 2020 (Certificate) in the “Shiksha” category. This category includes but is not limited to affordable primary and secondary education, skill development, inclusive education and other areas

 

  

India CSR Award in the category “Best Digital Education Project 2021 (BPM industry)”

 

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End-to-end service portfolio including higher-value transformational services and technology-enabled solutions

We seek to focus our service portfolio on more complex processes and solutions, and to shift away from reliance on services that are less integral to our clients’ business operations, such as commoditized voice and transactional services (telemarketing and technical helpdesks), which characterized the business process outsourcing industry in its early days. We offer an array of higher-value, judgment-based services that seek to not only reduce cost and improve operating efficiency, but also enable improved decision-making, competitive positioning and business outcomes for our clients. These include high-end finance and accounting services, including strategic sourcing through supply chains, digital customer experience solutions, consulting and transformation services, technology-enabled offerings and analytics capabilities. We also provide a wide array of industry-specific solutions, which cut across traditional “horizontal” services. These solutions are designed to help clients address process efficiency requirements, provide digital capabilities, generate business insights, and improve competitive positioning within their respective industries.

We have also developed and continue to develop technology-enabled, or automated, solutions that utilize our proprietary software and licensed software in conjunction with our core business process management services. These integrated, technology-enabled solutions allow us to offer higher-value, differentiated services which are more scalable and repeatable and create value for our clients through increased process efficiency and quality. We also collaborate with technology companies, combining their software tools, platforms and expertise with our service capabilities to deliver business solutions to the marketplace. These technologies include RPA, cognitive computing, machine learning, AI, natural language processing and hyperautomation. We believe that technology-enabled automated solutions will enable us to grow our revenue in a non-linear way by decoupling revenue growth from headcount growth.

To this end, we offer platform-enabled BPM or BPaaS that tightly integrates our domain expertise, business processes, automation, embedded analytics and cloud-based infrastructure.

Proven global delivery platform

We deliver our services from 58 delivery centers in 13 countries around the world, located in Australia, China, Costa Rica, India, the Philippines, Poland, Romania, South Africa, Spain, Sri Lanka, Turkey, the UK and the US. Our ability to offer services delivered from a mix of onshore, nearshore and offshore locations benefits our clients from the perspectives of access to skills and talent, cultural alignment, language capabilities, business continuity, risk mitigation, scalability, efficiency and cost effectiveness.

We believe the breadth of our delivery capability allows us to meet our clients’ needs, diversifies our workforce and allows us to access local talent pools around the world. Additionally, we have put in place a distributed workforce model that comprises an efficient blend of in-office and remote working to tap the best talent and skills.

Our client-centric focus

We have a client-centric engagement model that leverages our industry-specific and shared-services expertise, flexible pricing models, “client-partner” relationship approach, as well as our global delivery platform to offer business solutions designed to meet our clients’ specific needs. We work closely with our clients to understand their specific requirements and to “co-create” unique, custom solutions that are designed to enable them to better compete and create differentiation within their respective industries.

We seek to enhance our value proposition to our clients by providing them with flexible pricing models that align our objectives with those of our clients. In addition to traditional full-time equivalent-based pricing, we provide alternative pricing models such as transaction-based pricing, outcome-based pricing and subscription pricing. A sizable percentage of our revenue, being 35.0% in fiscal 2021, is derived from these “non-FTE”-based pricing models. These models enable our clients to pay only for actual work performed or tangible benefit received.

We have also adopted a client-centric sales model, which is tightly integrated with our vertical organizational structure. Strategic client accounts are assigned a dedicated “client-partner” from our team who is responsible for managing the day-to-day relationship with the client. The “client-partner” is typically a seasoned resource with deep domain experience, who often works directly in the client’s local offices. Within our company, the “client-partner” is assigned to a specific vertical, and directly manages sales resources responsible for expanding client relationships. The “client-partner” is responsible for driving business value to our clients, monitoring quality of delivery and customer satisfaction, and managing account growth and profitability.

 

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Proven experience in transitioning processes and running them efficiently

Many of the business processes that clients outsource to us are core to their operations, requiring substantial program management expertise to enable the transition of work to us. A well-planned and effectively managed transition is the cornerstone of our business proposition and helps our clients outsource their operations effectively and efficiently, focus on their business priorities and implement operating models that are designed to help them achieve their business strategies.

Our transition approach is structured to help deliver business outcomes to our clients by:

 

  

Minimizing risk and achieving rapid transition of services;

 

  

Ramping up operations with minimal disruption to existing business, metrics, customers and suppliers;

 

  

Effectively managing changes brought about by transformative tools and technologies;

 

  

Managing a seamless transfer of responsibilities from any incumbent service provider to us; and

 

  

Continuing to engage with clients to adapt to and drive changes for a future-ready transition model by leveraging remote training.

At its core, all aspects of the transition process are governed by EnABLE, our proprietary transition toolkit, which has been tested and evolved over 20 years. EnABLE embeds multi-level governance, visibility, transparency, flexibility and compliance across the entire transition life cycle.

Our differentiators include:

 

  

Customer-centricity: Our practice of “early transition voice of customer” identifies and addresses opportunities to do better at meeting clients’ objectives and success criteria.

 

  

Robust governance: Our multi-level governance approach seeks to ensure that transition reviews are conducted at all levels up to executive leadership. Risks are assessed and proactive support is provided with a view to achieving clients’ objectives.

 

  

Strong leadership and experience: We have a robust and mature transition methodology with a strong record in managing and delivering transitions from clients as well as from major incumbent players.

 

  

Global presence: Our team of skilled transition managers operates from all our major global delivery locations. Our agile and readily deployable team is always available for clients’ needs.

Extensive investment in human capital development

At WNS, we have created a learning organization with the objective of empowering employees with skills that will help them to constantly collaborate, co-create and outperform in a changing business landscape. This learning organization is designed to offer developmental programs to every employee band level in the organization, across business units and enabling units. It is responsible for developing organization-wide skills within focus groups, such as behavioral, domain, technical, leadership, functional as well as process-related skills. See “– Human Capital – Training and Development.”

 

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The learning organization comprises the following building blocks:

 

  

Learning Academy (the “LA”): The LA not only focuses on developing initiatives and programs that aim to enable high-impact leadership and potential across all employee band levels and geographies, but also focuses on building internal capability to create a future-ready and digital-savvy workforce. The LA has over 300 unique programs for various employee band levels and behavioral skill areas that are conducted across locations based on the learning strategies defined for each team.

 

  

Digital Capability Building

 

  

WNS Education Program: In line with the digital transformation strategy, WNS Education Program (a niche arm of the LA) strives to create bespoke certifications for capabilities that are not readily available either in the education system or the industry. WNS Education aims to achieve the following:

 

  

Building capabilities to lead digital transformation in the BPM space;

 

  

Raise the organization’s digital quotient;

 

  

Prepare workforce as digital natives; and

 

  

Re-purpose and re-skill the workforce since BPM-specific education is not available in the ecosystem.

 

  

Digital Future (“DiFu”) Digital Competency Framework: This is a digital readiness assessment platform that helps employees assess their digital competencies based on their role and enables them to undertake a learning and skill-upgrading journey. The objective is to create a future-ready workforce through customized digital training. Recently, DiFu was launched for employees at the leadership level.

 

  

Immersive Learning Experience On-Demand (“GLINT”): This is an AI-led digital learning and knowledge platform comprising tailored modules mapped to specific business requirements. GLINT facilitates an environment of knowledge sharing and peer-to-peer learning, helping to drive collaboration among employees.

 

  

Domain University: The process and domain training team addresses process orientation, new hire training, basic soft skills training and refresher courses for various processes within the business vertical through an online portal called “Domain University.” WNS has strong offerings in travel, insurance, healthcare and banking and financial services. Hence, the Domain University was conceptualized to focus on consolidating, building and sharing our domain knowledge.

 

  

Center of Excellence (“CoE”): WNS has a CoE that focuses on nurturing and developing the future leaders of the organization:

 

  

Aspire Plus: A specially curated program for top talent at leadership levels in WNS. These employees are taken through a specially designed journey which includes, among others, tie-ups with reputed academic institutes, speaker sessions and live projects, all of which are aimed to give the organization a strong talent pipeline at the leadership level.

 

  

Centurion: This is a talent development program for future women leaders. It is an initiative to proactively identify and nurture women employees from the frontline manager population to build their capabilities for the next role and create an enabling environment for career opportunities.

 

  

Business Process Excellence and Transformation (“BPET”) Learning Center: The BPET learning center focuses on building capability to transform process quality. This team teaches process improvement through certifications such as Six Sigma, Lean, and Kaizen methodologies.

 

  

Developing Research and Analytics Capability – Mastermind: Mastermind training program is a series of dedicated technical trainings customized for certain employee role band levels that perform work relating to research and analytics. This initiative is primarily geared toward enhancing our employees’ research and analytics capabilities.

 

  

Culture Building and Transformation – Millennial Council: This is an initiative where our most junior employees get an opportunity to work closely with senior leaders in the company. The council members are tasked to help the WNS brand stay in alignment with changing trends.

 

  

Grooming Women Leaders

 

  

Women Talent Program: A marquee program developed in partnership with Cornell University, it specifically looks to develop women leadership in the organization across the globe. Our aim is to enable 100 women leaders to take up key positions over the next four years.

 

  

Nurturing Future “C-suite” Level Officers – Signature Leadership Development program (SLDP): An innovative leadership development program, SLDP has been created in partnership with Korn Ferry and Harvard Business Publishing. Its key focus areas include driving strategic agility, “BHAG” (which refers to big hairy audacious goals), client-wins, collaboration and building a renewed digital perspective.

 

  

Grooming Next-generation Leaders – The CEOs-Millennial Council: The “CEO’s-Millennial Council” is an ecosystem we have created for our millennial talent (who comprise 80% of our workforce), where they can influence and contribute to the organization’s strategic initiatives and success.

 

  

Nurturing world-class client partnerships –Trusted Client Advisor (TCA): The TCA program develops strategic client management capabilities of our client partnering teams across the globe to make them trusted advisors. This curated learning journey, spread over a total of 31 hours, comprises four modules, which are co-created with four leading learning providers.

Experienced management team

We benefit from the effective leadership of a global management team with diverse backgrounds, including extensive experience in outsourcing. Members of our executive and senior management team have, on average, more than 20 years of experience in diverse industries, including in the business process and information technology outsourcing sector, and in the course of their respective careers have gathered experience in developing long-standing client relationships, leveraging technology, launching practices in new geographies, developing new service offerings and successfully integrating acquisitions.

 

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Business Strategy

Our objective is to further strengthen our position as a leading global business process management provider and continue to be a partner of choice for our clients. Our various awards, new digital capabilities and more than 200 unique solutions are proof of progress. We seek to increase our client base and expand our existing relationships through deep industry expertise, our ability to develop trusted client relationships and by being a strategic partner to support our clients’ business strategies and transformational requirements. To serve our clients better, we continue to invest in domain expertise, digital capabilities including data and analytics, technology, customer experience, intelligent automation, agile execution, consulting and transformation, and our employees to serve our clients better. We also intend to make select acquisitions to fill capability gaps.

We believe that WNS’ strategic investment programs are well aligned with where the expanding BPM market is headed. We remain confident that our differentiated capabilities, solid business momentum and proven ability to execute render us well-positioned to drive long-term sustainable value for all of our key stakeholders. We have made significant investments with a view to accelerate our growth and ensure we are competitive in a changing industry environment with a stronger focus on digital transformation requirements. These investments include:

 

  

Expansion and re-organization of our sales force and the development of onshore digital transformation teams, so as to be closer to our clients and address their business challenges and needs;

 

  

Expansion of other sales channels including the development of new partnerships and alliances, and broadening our engagement with industry advisors and analysts;

 

  

Increase in the range of services and solutions offered to our clients across different industries and business functions, including services to assess, design and execute digital transformations such as:

 

  

Building industry-specific and cross-industry digital BPM solutions, and augmenting our digital capabilities through strategic partnerships and targeted acquisitions;

 

  

Building our digital transformation capabilities including digital business solutions, hyperautomation, intelligent automation, customer/user experience and design, technology, and data and analytics capabilities through new talent, internally developed intellectual property, strategic partnerships and acquisitions; and

 

  

Applying agile practices and approaches and our WNS Co-creation Labs (London, New York, Pune) to support the design and delivery of our customer experience services, including the use of targeted operating model design, CoE or shared services approaches, business transformation assessments, solutions and execution, customer experience, and user experience and design thinking.

 

  

Increasing expertise, management and digital capability of our workforce;

 

  

Expansion of our global delivery platform; and

 

  

Focused strategic acquisitions to improve our capabilities.

The key elements of our growth strategy are described below:

Increase business from existing clients and new clients

We are focused on building a sales team with strategic offerings, and more consultative skills including transformation, digital technology enablement, and new operating models. We have organized our company into vertical business units. The addition of vertically focused practice leaders in key geographies is bringing senior-level domain and market focus, especially for large deals and strategic client relationships. These client-facing investments are expected to enable WNS to further drive innovation and co-creation.

Our sales force of 112 members as at March 31, 2021, provides broad sales coverage and management experience. Our sales force is organized into two groups, one focused primarily on expanding existing client relationships (which we refer to as “farmers”) and another focused on adding new clients (which we refer to as “hunters”).

We seek to expand our relationships with existing clients by cross-selling new services (such as digital transformations including technology, automation, and data and analytics offerings), moving up the value chain, and expanding into other lines of business and geographies within each client. Our account managers and “client-partners” have industry-specific knowledge and expertise, and are responsible for maintaining a thorough understanding of our clients’ strategies and outsourcing roadmaps, as well as identifying and advocating new business solutions and opportunities. As a result of this strategy, we have built a strong track record of extending the scope of our client relationships over time.

For new clients, we seek to provide value-added solutions by leveraging our deep industry knowledge built on the back of process expertise, digital enablement, customer experience, data and analytics, and digital transformation solutions. As a result of our capabilities and industry vertical go-to-market approach, we have been able to compete effectively for new opportunities.

Reinforce leadership in existing industries

Through our industry-focused operating model, we have established leading business process management practices in various industry verticals and business sectors. To complement our industry-focused approach, we continue to invest in digital capabilities (including data and analytics, customer experience, AI, intelligent automation and other new technologies), agile execution and talent acquisition and training with the goal of expanding our business and acquiring industry-specific expertise to improve our service offerings across industries.

We intend to leverage our knowledge of the following industries to penetrate additional client opportunities: insurance; healthcare; diversified businesses (including manufacturing, retail, CPG, media and entertainment and telecom); travel and leisure; shipping and logistics; consulting and professional services; banking and financial services; and utilities.

 

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Provide higher value-added services

The BPM market is continuing to evolve and transform toward digital business models, user design and experience, innovation and transformation. Enterprises expect their BPM providers to be a strategic partner and key driver of business transformations involving digital solutions around new technologies, cognitive, intelligent automations, hyperautomation, and advanced data and analytics. We are further developing our client value proposition by combining our extensive domain and industry expertise with our capabilities in these areas to deliver transformations for our customers that are designed to take their business performance to new levels. As the BPM market further evolves and matures, the demand for industry-specific services and new pricing models will increase. We continue to make significant investments in these areas which we believe will give us a competitive advantage. We intend to broaden the scope of our higher-value service offerings to capture new market opportunities. By delivering a wider portfolio of higher-value services to our clients, and migrating them toward subscription, transaction, and outcome-based pricing models, we aim to move up the value chain with our clients and thereby enhance the size, strength and profitability of these relationships.

Our focus has been on building capabilities, new services and product offerings around digital business including cognitive technologies, hyperautomation, intelligent automation, data and analytics, and technologies that are targeted to the challenges and requirements of specific industry sectors. We are proactively addressing the shift to technology, analytics and automation through a combination of internal capability development, strategic collaborations and acquisitions.

Enhance awareness of the WNS brand name

Our reputation for operational excellence, domain expertise, and technology and analytics capabilities among our clients has been instrumental in attracting and retaining clients as well as talented and skilled employees. We believe that our guiding principles of co-creation and client centricity resonate favorably with clients as they are indicative of our intent to completely align with client needs and leverage synergistic collaboration (with clients and strategic partners) to drive outcomes.

We also believe that we have benefited from strong word-of-mouth references that have helped us to scale our business. We are actively increasing our efforts to enhance awareness of the WNS brand in our target client and employee markets. To accomplish this, we have a dedicated global marketing team comprising experienced industry talent. We are also focusing on developing channels to increase market awareness of the WNS brand, including participation in industry events and conferences, exposure in industry publications, publication of articles and white papers, webinars and podcasts, internet and digital media, social media, and other initiatives that create enhanced visibility of the WNS brand and establish WNS’ thought leadership capabilities in the BPM industry. Our proactive response to COVID-19 included actions taken quickly to initiate BCP, rapidly transitioning to “work-from-home” models and continuing to collaborate closely with our clients.

We are working to improve visibility and positioning with the BPM industry analysts, sourcing advisors, general management consulting firms, and boutique outsourcing firms, who are often retained by prospective clients to provide strategic advice, act as intermediaries in the sourcing processes, develop scope specifications, and aid in the partner selection and implementation process. We are also leveraging our global partner network for joint go-to-market strategies. Given COVID-19’s impact, we have augmented our digital engagement by leveraging various platforms to further enhance our brand presence.

Expand our delivery capabilities

We currently operate from 58 delivery centers located in 13 countries around the world. As at the end of fiscal 2021, we reduced our delivery capacity by 414 seats, or approximately 1.2%, as compared to the end of fiscal 2020, as a result of consolidation in some of our delivery locations. We intend to expand our global delivery capability, as necessary, through additional delivery centers in onshore, nearshore and offshore locations as well as through collaboration with other providers, based on client demand and market trends. Additionally, we will continue to expand and/or consolidate our capacity requirements across our existing locations, as necessary, in line with client demands and through the adoption of a hybrid operating model that consists of both work-from-home and work-from-office arrangements in the medium to long term. This approach will allow us to offer our clients maximum value and flexibility and gain access to potential clients and markets that may have specific delivery requirements or constraints.

We remain focused on creating a delivery model that can provide certainty in outcomes despite business variability. Our focus remains on enhancing both our in-office and remote cybersecurity protocols and fine-tuning a new longer-term future-state hybrid model solution that will allow us to seamlessly move delivery between office and home. We have also set our sights on, and introduced, a hybrid people model with full time, temporary contract and gig workers, such as independent contractors, online platform workers, contract firm workers and on-call workers.

Broaden industry expertise and enhance growth through selective acquisitions and partnerships

Our acquisition strategy is focused on adding new service offerings and digital capabilities (including analytics, technology-enabled automation tools and platforms, AI), strengthening industry expertise, bolstering our presence in key demand markets and broadening geographic delivery presence. Our acquisition track record demonstrates our ability to integrate, manage and develop the specific capabilities we acquire. One of our key objectives is to continue to pursue targeted acquisitions in the future and rely on our integration capabilities to expand the strategic positioning and growth of our business. We believe that a proactive yet well-calibrated approach on merger and acquisitions can be a tangible value driver for us in the medium to long term.

Business Process Management Service Offerings

We offer our services to clients through industry-focused business units. We are organized into the following vertical business units to provide more specialized focus on each of these industries and more effectively manage our sales, solutions, marketing and delivery processes:

 

  

Insurance;

 

  

Healthcare;

 

  

Diversified businesses (including manufacturing, retail, CPG, media and entertainment, and telecom);

 

  

Travel and Leisure;

 

  

Shipping and Logistics;

 

  

Consulting and Professional Services;

 

  

Banking and Financial Services; and

 

  

Utilities.

 

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In addition to industry-specific services, we offer a range of services that are common across multiple industries (which we refer to as our horizontal services), including customer experience services, finance and accounting (including procurement), research and analytics and technology services. In addition, our global transformation practice offers higher-value services such as transformation and consulting services, which are designed to help our clients modify their business processes to enhance productivity, manage changes in the business environment, and leverage business knowledge to increase market competitiveness. We help clients drive these initiatives with technology-enabled solutions, process re-design including initiatives such as Six Sigma or Lean, and business analytics.

To achieve an in-depth understanding of our clients’ industries and the geographies in which they operate, we manage and conduct our sales processes in our four key markets – Europe, North America, Asia-Pacific and Africa. Our sales teams are led by senior professionals who focus on target industries, processes and clients. Each business unit is staffed by a dedicated team of managers and employees engaged in providing business process management client solutions. In addition, each business unit draws upon common support services from our information technology, human resources, training, corporate communications, corporate finance, risk management and legal departments, which we refer to as our corporate-enabling units.

Vertical Business Units:

Insurance

Our insurance services are structured into multiple lines of business and cater to a diverse and sizeable number of clients globally. We offer industry-specific and cross-industry solutions combining our deep industry knowledge with technology, analytics and process expertise to co-create digitally enabled transformational solutions.

Our solutions target the various segments along the insurance value chain, including delegated underwriting, actuarial services, end-to-end claims management, financial planning and analysis, and London insurance market processes. Our service models provide go-to-market solutions for back-office support and capabilities for new product introductions, sales channels and geographies.

We have also increasingly invested in our digital infrastructure and solutions in order to create a seamless user experience for our clients and end customers. We have a comprehensive suite of digital BPM solutions to meet the evolving needs of insurance clients. These solutions leverage hyperautomation, robotics, cognitive automation, natural language processing, advanced analytics, AI, blockchain, IoT, BPaaS platforms and process re-engineering frameworks.

For instance, we offer the Insurance-in-a-Box (a target operating model that combines technology platforms and business process management-as-a-service) service model and offerings for startups, brokers and insurers; WNS EXPIRIUS, a digitally integrated customer-experience service model to simplify processes across channels; business transformation-as-a-service, a gain share / outcome-based business transformation model to enable rapid business improvement; and an RPA-as-a-service model powered by our insurance RPA CoE to co-create robotics solutions for clients.

As at March 31, 2021, we had 10,575 employees working in this business unit. In fiscal 2021 and 2020, this business unit accounted for 29.2% and 27.7% of our revenue, and 25.6% and 25.2% of our revenue less repair payments (non-GAAP), respectively.

Sub-verticals / Industry Sectors. The key insurance sub-verticals and industry sectors we serve include:

 

  

Life insurance and annuity providers;

 

  

Property and casualty insurance providers;

 

  

Reinsurers;

 

  

Insurance and reinsurance brokers and managing general agents;

 

  

Loss assessors;

 

  

Motor insurance companies;

 

  

Self-insured auto fleet owners; and

 

  

Lloyds of London Market.

Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Insurance — Service Offerings

Operations

  

Actuarial Services

  

Enterprise Shared Services

  

Research and Analytics

  

Customer Experience
Services

Underwriting and support, supply chain, claims management, policy administration, risk and compliance, premium / billing management, mailroom operations, contract issuance/ change management and channel management;  In-force model projections / reporting, financial modeling, product management and pricing, capital management, asset-liability management, reserving and claims analysis, solvency II (a regulatory framework applicable to insurance companies) and capital modeling, pricing and underwriting support, and catastrophe modeling;  

Finance and accounting, technology support, HR and payroll, and consulting services

 

Sourcing and procurement (strategic sourcing, category management, contract management, spending analytics and transactional procurement)

 

Platform consulting and implementation support, consulting and transformation services (automation, business process re-engineering and digital);

  Claims analytics, subrogation and recovery analytics, fraud analytics, customer analytics, broker analytics, underwriting analytics, reserve estimation, risk selection and analytics, speech analytics, pricing analytics, digital analytics, data mining and management services, reporting, dashboarding and visualization, data science and predictive modeling across claims, and claims liability decision tool; and  Sales and service, customer analytics, customer inquiry management and customer information administration.

 

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Technology Tools / Platforms. We utilize the following industry-specific technology tools and platforms in delivering services to our clients in this business unit:

 

  

A straight-through processing solution powered by digital liability tools, computer vision-led damage assessment solution, AI- and machine learning (“ML”)-enabled injury quantum valuation and dispute automated cognitive solutions. All this is supported via an omni-channel experience and can cater to unstructured formats of claims reporting;

 

  

Digital commercial property and casualty underwriting process via technology-led submission intake risk selection process integrated with various policy administration and servicing systems;

 

  

Simplified personal lines property and casualty underwriting models fueled by data and analytics to for purposes of streamlining minimal question sets. These models are designed to make the policy-purchasing experience seamless with minimal clicks;

 

  

An intelligent hyper-automation platform (low-code / no-code) to enable process automation;

 

  

A cloud-based document management and e-verification solution for seamless customer experience;

 

  

WinBot: A proprietary cloud-based solution to enable digital self-service and automated customer interactions;

 

  

Insure Connect: A proprietary self-service Alexa- and Google Assistant-based solution for customer connection and query resolution;

 

  

Broker Connect: An advanced mobility solution to meet the requirements of insurance brokers and financial advisors;

 

  

eAdjudicator: An end-to-end adjudication tool powered by RPA and analytics;

 

  

WNS’ iPAS: An insurance policy administration system integrator that provides a unified view of operations spread across multiple geographies with the real-time distribution of work to manage high-transaction volumes;

 

  

London Markets Underwriting Digital Assistance Solution: An end-to-end solution designed to facilitate efficiency and agility for underwriters. Its key functionalities include unstructured data handling, digital workflow and automated third-party validation checks;

 

  

IMAGN: An image analytics platform;

 

  

WNS Skense: A cognitive data extraction and contextualization platform;

 

  

WNS VeriChain: A blockchain solution for insurance risk syndication;

 

  

Kwilo: A ML-driven financial spreading solution;

 

  

Skan.AI: An AI-based tool to map processes at a keystroke level;

 

  

Intellibot: A text analytics and automation tool for automated claim lodgment from unstructured data;

 

  

Intellicollect: Analytics for collections; and

 

  

E-FNOL: A digital claims app.

Healthcare

We deliver end-to-end BPM solutions across the healthcare value chain.

We facilitate business transformation through the adoption of new-age digital solutions, data platforms and advanced analytics, and business process re-engineering and robotic process automation. Besides seeking to deliver significant cost reduction for our clients, we co-create innovative and high-impact solutions that focus on end customers with a view to enabling value creation. Our solutions seek to help clients enhance the quality of care by driving improved compliance with clinical pathways and derive deeper insights for better decision-making through advanced analytics.

We are well-positioned in the pharmaceutical and biopharmaceutical industry with research and analytics expertise to support the product life cycle and commercial operations. We enable our clients to engage in data-driven decision-making by leveraging our proprietary solutions such as Integrate Edge (a cloud-based, fully customizable competitive intelligence platform), WNS Agilius (a proprietary cloud-based business intelligence self-serve analytics platform), SocioSEERTM (a social media analytics platform), Therapy Area Analyzer (a proprietary therapy area knowledge repository, covering 12 disease areas and 120 indications and providing information on disease etiology, epidemiology and product analysis for 15 countries) and other technology or domain intellectual property (“IP”), which we have built with a view to delivering holistic value to our clients.

We specialize in enabling the end-to-end sales and marketing value chain with an industry-led talent pool supporting key functions like sales force sizing, sales force effectiveness, market mix modeling, multi-channel marketing and attribution, and next-best-action marketing. Our Analytics Knowledge Center comprises more than 800 analytics experts who leverage deep pharmaceutical domain knowledge, strong analytics capabilities and proprietary frameworks to deliver actionable business insights to leading pharmaceutical companies. Supporting our analytics team is a strong group of technical experts skilled across various data-related domains, including platform-agnostic data hosting, curation and governance, data ingestion, visualization and big data feed for advanced analytics.

We seek to generate value for clients across the healthcare payer services landscape, driving claims transformation with a focus on value-based care, clinical programs and claims decision support using technology and domain to optimize cost, improve quality and provide superior member and provider experience. For providers, we deliver clinically empowered revenue cycle management designed to improve financial performance and modernize customer experience. Our transformative solution modernizes workflow and leverages analytics, clinical knowledge and domain-backed technology to create an intelligent revenue cycle that seamlessly engages with providers, payers and patients with a view to delivering value-based care.

Further, we believe we are well-positioned to be a strategic provider, helping the healthcare industry deliver benefits management across several key specialty healthcare areas, including radiology, cardiology, oncology, sleep care, orthopedics and pain management. Our analytics-based and medical-content-rules-driven platforms, ConsultTM and Protus, seek to deliver the right care to patients and reduce cost of care for our clients in the process.

As at March 31, 2021, we had 5,167 employees in this business unit. In fiscal 2021 and 2020, this business unit accounted for 18.9% and 15.8% of our revenue and 19.9% and 16.4% of our revenue less repair payments (non-GAAP), respectively.

 

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Sub-verticals / Industry Sectors. The key healthcare sub-verticals and industry sectors we serve include:

 

  

Durable medical equipment manufacturers;

 

  

Health insurance companies;

 

  

Healthcare provider practices and hospitals;

 

  

Pharmaceutical, biotech and medical device companies; and

 

  

Third-party administrators.

Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Healthcare — Service Offerings

Providers

  

Payers

  

Durable Medical
Equipment Manufacturers

  

Enterprise Shared Services

  

Pharmaceutical and
Consumer Health

Revenue cycle management, medical coding, bill preparation, receivables management, payment posting, debt analysis;  Claims administration, member and provider services, clinical support, overpayment recovery, fraud detection and investigation, utilization management services (that is, optimizing payer healthcare spend on areas such as tests and procedures without compromising the patient care-quality-safety norms);  Billings and submissions, fulfillment support, collections, patient services, collection analytics, reporting and dashboarding, sales force effectiveness;  Finance and accounting, workflow / platforms, research and analytics (knowledge process outsourcing), technology solutions, front-end / mailroom, customer experience / helpdesk services; and  Competitive intelligence, pipeline analysis, product profiling, key performance indicators (“KPI”) reporting, epidemiology analysis, market opportunity assessment, social media analysis, key opinion leader (“KOL”) research, modeling and tool building support, pricing analytics, patient data analytics, market mix model, big data platform development, data governance.

Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this business unit:

 

  

Integrate Edge: A cloud-based, fully customizable competitive intelligence platform;

 

  

SocioSEER: A unique social media analytics platform;

 

  

WNS Agilius: A proprietary cloud-based business intelligence self-serve analytics platform;

 

  

WNS Forecasto: A cloud-based forecasting platform;

 

  

Therapy Area Analyzer: A proprietary therapy area knowledge repository; and

 

  

Consult: A clinical decision support technology platform.

Diversified Businesses (including Manufacturing, Retail, CPG, Media and Entertainment and Telecom)

We deliver comprehensive BPM solutions for diversified businesses, including manufacturing, retail, consumer packaged goods, media and entertainment, and telecom. Across these industries, we have developed a suite of transformative digital and analytics solutions that are designed to optimize business performance and enhance customer experience. Our offerings include a host of platform-based and intelligent automation-driven solutions such as digital finance office, WNS EXPIRIUS for customer experience, warranty management business process-as-a-service, supply chain planning suite and control tower, CPO TRAC (a procurement management solution to assist chief procurement officers (“CPOs”)) for digital-led procurement management, e-commerce digital merchandising and digital order management.

Our offerings also encompass advanced analytics solutions that help drive business performance, including working capital optimization, sourcing spend reduction, marketing spend optimization, supply chain risk reduction and increased customer lifetime value.

As at March 31, 2021, we had 4,462 employees in this business unit. In fiscal 2021 and 2020, this business unit accounted for 15.3% and 16.5% of our revenue and 16.1% and 17.1% of our revenue less repair payments (non-GAAP), respectively.

Manufacturing: Our manufacturing team has rich experience in delivering metrics-driven solutions and transformation programs for our manufacturing clients.

 

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Sub-verticals / Industry Sectors. The key manufacturing sub-verticals and industry sectors we serve include:

 

  

Electronics manufacturers;

 

  

Metal and mining companies;

 

  

Optical equipment and imaging product manufacturers;

 

  

Building and construction product manufacturers;

 

  

Aeronautical product manufacturers;

 

  

Precision engineering companies;

 

  

Industrial manufacturing companies;

 

  

Specialty chemicals companies;

 

  

High-tech products companies; and

 

  

Food processing companies.

Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Manufacturing – Service Offerings

Supply Chain Planning and Forecasting

  

Sourcing and Procurement

  

Fulfillment and Logistics

Sales and operations planning, demand forecasting, supply planning, inventory management, inventory analytics;  Strategic sourcing, category management, contract management, spend analytics, transactional procurement;  Order entry and processing, order tracking, billing / invoicing, transport management, logistics optimization;

 

Warranty and Returns Management

  

Sales, Marketing and Customer Services

  

Enterprise Shared Services

Warranty customer operations, warranty claims management, parts / repair management, warranty financial management, returns management, customer helpdesk;  Global market opportunities, brand building, go-to market strategy, customer experience services, order management, acquisition analytics, retention analytics; and  Finance and accounting services, statutory and compliance support, customer experience services, human resource services, IT service desk, application support.

Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this business unit:

 

  

WNS EXPIRIUS: A digital customer experience model that integrates human-assisted design and domain expertise with AI-driven conversational insights and consulting-led strategies;

 

  

CPO TRAC: A procurement management solution that leverages digital advancements coupled with predictive and functional analytics designed to transform procurement functions; and

 

  

Warranty Management Business Process-as-a-Service: A platform-led offering that is designed to enable automated claims processing, improve customer satisfaction and reduce cost of warranty operations.

Retail and Consumer Packaged Goods: Our retail and CPG solutions are designed to help our clients derive consumer behavioral insights, optimize marketing expenditures, plan their growth strategy, reduce operational costs and streamline processes through efficiency, quality and productivity improvements, and improve customer service.

Our services are supported by a research and analytics platform, WADESM, which was designed and developed to enable retail and CPG companies to access, organize and analyze data from various external sources and further use the insights gained to make informed decisions.

Sub-verticals / Industry Sectors. The key retail and CPG sub-verticals and industry sectors we serve include:

 

  

Beverage companies;

 

  

Fast food chains and restaurants;

 

  

Processed food suppliers;

 

  

Cosmetics and healthcare companies;

 

  

Apparel and footwear;

 

  

General merchandize retailers;

 

  

Specialty retailers; and

 

  

E-commerce retailers.

 

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Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Retail and Consumer Packaged Goods – Service Offerings

Strategy Solutions

  

Customer Experience Services

  

Supply Chain Solutions

Market entry strategy, balancing portfolio investments, consumer and market insights, innovation strategies, power brand strategy, marketing spending optimization;  Omni-channel (phone, e-mail, fax, website, live chat, social media) customer experience services;  Retailer-supplier collaboration for demand-driven supply chain and retail execution management, supply intelligence, supplier performance and risk monitoring, contract management, supply chain orchestration – global trade shared services, trading partner helpdesks, logistics;

 

Revenue Management Solutions

  

Content Services

  

Enterprise Shared Services

Planning and execution of transaction and interaction-based campaign strategies, loyalty management, credit control and collections;  Product catalogs, user-generated content moderation, digital content protection, web / print content, website analytics and optimization; and  Finance and accounting services, statutory and compliance support, sourcing and procurement services, human resource services, IT service desk and application support.

Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this business unit:

 

  

WADESM: A predictive analytics solution framework designed to enable businesses to scale the analytical maturity curve;

 

  

WNS EXPIRIUS: A digital customer experience model that integrates human-assisted design and domain expertise with AI-driven conversational insights and consulting-led strategies; and

 

  

WNS Brandttitude: A cloud-based business intelligence self-serve analytics platform.

Media and Entertainment: Our media and entertainment offerings are designed to help our clients create new revenue streams, capitalize on emerging digital opportunities, attract next-generation consumers and boost margins.

Working with some of the largest media and entertainment companies in the world gives us an undisputed advantage in understanding the nuances of the business. We leverage years of industry and process experience, and a large team of digital media experts to deliver next-generation cost-effective solutions to clients in this industry.

Sub-verticals / Industry Sectors. The key media and entertainment sub-verticals and industry sectors we serve include:

 

  

Music;

 

  

Publishing;

 

  

Television;

 

  

Radio;

 

  

Filmed entertainment;

 

  

Gaming and animation;

 

  

Sports entertainment; and

 

  

Internet and outdoor advertising firms.

Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Media and Entertainment—Service Offerings

Strategy Solutions

  

Digital Operations and Royalty Management

                                 Solutions                             

  

Sales, Marketing and Distribution Solutions

Market entry strategy, balancing portfolio investments, consumer and market insights, innovation strategies, brand power strategy, marketing expense optimization;  Digital operations solutions to help companies successfully expand into the digital business; royalty management solutions to help clients manage rights and royalties in both new media and traditional media; piracy protection services to help companies prevent media piracy issues;  Seamless integration of traditional and digital product sales, marketing and distribution to enable clients to roll out timely innovative pricing / packaging strategies;

Customer Experience Services

  

Content Services

  

Enterprise Shared Services

Omni-channel (phone, e-mail, fax, website, live chat, social media) customer experience services;  Product catalogs, user-generated content moderation, digital content protection, web / print content, website analytics, optimization; and  Finance and accounting services, statutory and compliance support, sourcing and procurement services, human resource services, IT service desk, application support.

Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this business unit:

 

  

SocioSEER: A social media analytics platform and

 

  

WNS EXPIRIUS: A digital customer experience model that integrates human-assisted design and domain expertise with AI-driven conversational insights and consulting-led strategies.

 

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Telecom: Our experience in consolidating and centralizing the functions of our telecommunications clients with built-in variable capacity to meet business requirements helps us deliver business value. WNS’ end-to-end BPM solutions are designed to enable telecom companies to transform their value chain while tackling myriad challenges.

Our solutions are underpinned by the right mix of digital, analytics, and domain and process expertise that enables our clients to achieve cost efficiencies and drive sustainable growth.

Service Offerings: We provide the following key areas of services to clients in this business unit:

 

Telecom—Service Offerings

Customer Acquisition

  

Order Provisioning and Order

                 Management                

  

Operations and Customer

      Experience Services       

  

Enterprise Shared Services

Contract administration, sales order processing, service administration and data control;  New products and services, service delivery process creation, order provisioning, technical validation and support, rejected order tracking, order tracking, proactive order management, billing, data management (for example, forms and administration);  Inbound customer experience services, logging and monitoring service requests, CRM analytics, collection analytics, web correspondence, IT customer experience services (global service desk); and  Finance and accounting services, statutory and compliance support, sourcing and procurement services, human resource services, IT service desk, application support.

Travel and Leisure

We deliver end-to-end services to clients across the travel and leisure industry value chain.

We collaborate with clients to provide a range of outcome-based solutions designed to improve customer experience, enhance operational efficiency, optimize revenues and maintain rigor in operations. We also collaborate with third-party global technology solution providers to drive innovation in our service offerings that seek to provide best-fit and best-of-breed digital-driven solutions to our clients.

As at March 31, 2021, we had 8,146 employees in this business unit, several hundred of whom have International Air Transport Association, Universal Federation of Travel Agents or other travel industry related certifications. In fiscal 2021 and 2020, this business unit accounted for 14.2% and 18.0% of our revenue and 14.9% and 18.6% of our revenue less repair payments (non-GAAP), respectively.

Sub-verticals / Industry Sectors. The key travel and leisure sub-vertical and industry sectors we serve include:

 

  

Suppliers: Airlines, cargo, hotels, cruise lines, coach companies;

 

  

Travel intermediaries: Online travel agencies, travel management companies, tour operators; and

 

  

Other travel segments: Airports, hospitality brands, global distribution systems (GDS), travel technology companies.

 

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Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Travel and Leisure—Service Offerings

Operations

  

Enterprise Shared Services

  

Research and Analytics

  

Customer Experience Services

Commercial / Marketing: Passenger name record fulfillment, fares and distribution, billing information data tapes audit, campaign management and eCommerce;

 

Crew scheduling and rostering, disruption management, during travel services, maintenance and engineering, port operations and baggage desk;

 

Digital Content Services: Content loading, content parity, rate loading and content writing;

 

Cargo: Commercial, revenue management, trucking, operations and BI, revenue accounting, rate / revenue audit and helpdesk;

  Finance and accounting, procurement, human resources;  Loyalty and customer analytics, guest experience and customer satisfaction score analytics, market and campaign analytics, strategic research and market intelligence, business intelligence and data management; and  

Bookings and reservations, cancellations and reschedules, rates enquiry, booking refunds, ancillary cross sell / up sell and corporate bookings;

 

Guest relations, general queries, website assistance, complaint management and surveys, VIP desk / concierge / after hours, guest special requests and social customer experience management; and

 

Member Services: Enrollment and administration, general program enquiries, redemption bookings, membership fulfillment, tier management and technical helpdesk.

Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this business unit:

 

  

WNS EXPIRIUS: A digital customer experience model that integrates WNS’ travel domain expertise with its modular technology stack to deliver industry-relevant customer experience;

 

  

SocioSEER: A social media analytics platform;

 

  

TruAgent: An intelligent analytics-powered solution that drives and manages the performance of contact centers;

 

  

Unison: An end-to-end omni-channel customer interaction journey platform powered by advanced analytics, natural language processing and proprietary machine-learning algorithms;

 

  

InTouchTM: A social media engagement platform;

 

  

Claim fraud analytics: An automated analytics solution to identify fraudulent passenger and baggage claims;

 

  

Travel recovery tracking solution: An analytical platform providing insights related to the demand recovery patterns for the travel industry;

 

  

QbaySM: A multi-GDS platform for queue management;

 

  

Refunds application control: Streamlined refunds processing;

 

  

SeatSure: Automated seating of minors;

 

  

WinBot: A chatbot solution;

 

  

QMail: An e-mail categorization solution based on AI and ML;

 

  

CFO TRAC: A unified and comprehensive suite of technology solutions designed to enable the futuristic agenda of of chief financial officers (“CFOs”);

 

  

Outperforming CFO Framework: A best-practice and digital-enablement toolkit designed to deliver finance and accounting process optimization;

 

  

E-Close: A financial close management tool;

 

  

Verifare Plus 3.0SM: A fare audit tool;

 

  

AnciFly: An ancillary revenue analytics engine;

 

  

Commercial Planning Suite: An integrated revenue analytics platform;

 

  

Data monetization platform: An engine to mine available data and create revenue generation opportunities;

 

  

Fintinel: Advanced financial analytics to identify audit targets by analyzing all the transactions;

 

  

WNS ACOSS: An end-to-end cargo solution powered by intelligent automation, advanced analytics and domain expertise;

 

  

WNS Skense: A cognitive data capture and processing platform to drive automation;

 

  

CFO digital cockpit: One-view analytical insights of the finance organization; and

 

  

Spend analytics: Automated spend classification and analysis.

 

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Shipping and Logistics

We are one of only a few providers of BPM solutions for the shipping and logistics market. Our strategic focus is demonstrated through our organizational structure, where we have a separate logistics vertical and approximately 4,000 dedicated logistics BPM professionals who cater to more than 21 leading logistics brands worldwide. Our client solutions span the entire shipment life cycle, such as booking, documentation, core operations support, customer experience services, finance and accounting, customer experience services, business technology and data analytics.

We have a long-term strategic focus on developing and deploying new-age technologies, tools and platforms designed to create sustainable cost and quality advantage for our clients. We also leverage our analytics expertise in combination with industry domain knowledge and custom-built proprietary frameworks to help clients make informed decisions at the right time. We provide an array of services to our clients, such as complex data integration, cutting-edge advanced analytics, personalization and big data.

As at March 31, 2021, we had 4,116 employees working in this business unit. In fiscal 2021 and 2020, this business unit accounted for 7.0% and 6.0% of our revenue, and 7.3% and 6.3% of our revenue less repair payments (non-GAAP), respectively.

Sub-verticals / Industry Sectors. The key shipping and logistics sub-verticals and industry sectors we serve include:

 

  

Global air express and courier companies;

 

  

Ocean shipping – Non-vessel operating common carrier, ocean liners, ports and terminals and shipping agencies;

 

  

Trucking – Less-than-truckload, full truckload, truck rental and leasing, compliance, safety and accountability; companies

 

  

3PL and 4PL Services;

 

  

Rail; and

 

  

Transportation safety and compliance.

Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Shipping and Logistics—Service Offerings

Sales and Marketing

  

Customer Experience Services

  

Document Processing

  

Operations Support

Tariff filing and maintenance, rate quotes, service contract / rate agreement creation and maintenance and actuarial services;  Customer file and debtor file administration, customer helpdesk, booking desk-phone / e-mail / electronic data interchange web, rating companies) and capital modeling, pricing and underwriting support, and catastrophe modeling;  Exports, bill of lading, processing, advance custom manifest submission, freight audit, billing and invoicing, vessel closures, imports, import data quality process / checks, arrival notifications, import general manifest filings with delivery order issuance, customers document processing, verified gross mass updating;  Vessel schedules – long-term support, vessel schedules – coastal, routing module maintenance, traffic control coordination, booking with carrier, hazardous cargo approvals, vendor management – vendor file administration, purchase order / job order creation, gate moves, ship husbanding, stowage planning, bay plan submission and distribution, inbound and outbound trans-shipment, maintenance and repairs, global stock reconciliation, container leasing validation, vessel performance reports, inventory management, chart corrections management, safety and environmental key performance indicator (“KPI”) monitoring onshore;

Transportation Safety and

Compliance, and Analytics

                 Services                

  

Enterprise Shared Services

  

HR and Payroll

  

Sourcing and Procurement

Driver logs, driver qualification, video log monitoring, and miles without hours exceptions handling;  Accounts payable, accounts receivables, disbursement accounting, credit and collections, agency reconciliations, general ledger / bank reconciliation, cash reporting and audit / vendor reconciliation, financial management reporting, vendor helpdesk, monthly closing / quarterly / yearly closing, treasury support, agency audits, claims management;    Strategic sourcing, category management, contract management, spending analytics, and transactional procurement;

Research and Analytics

  

Technology Services

      
Metrics realization and analysis, network design and optimization, transport management, shipping performance management, tonnage analytics, carrier sourcing analytics, fleet analysis and maintenance, reverse logistics analytics, revenue analytics, and distribution center analytics; and  Intranet support, claims management, data hubbing, e-commerce registration, e-learning module content management, e-learning module content creation and intelligent automation services across segments; platform consulting and implementation support, consulting and transformation services (automation, business process re-engineering, digital).    

 

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Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this business unit:

 

  

WNS Malkom: An AI- and ML-enabled optical character recognition billing platform designed to digitize and automate approximately 60-70 percent of a bill of lading with a front-end application;

 

  

WNS Fire: A desktop app designed to enable organizations to build a world-class dispute management process by reducing resolution cycle time and maximizing customer satisfaction with real-time data and insights;

 

  

WNS Bridge: A single enterprise-wide real-time visual dashboard to enable decision support;

 

  

WNS EXPIRIUS: A digital customer experience model that integrates human-assisted design and domain expertise with AI-driven conversational insights and consulting-led strategies;

 

  

Digital Freight Automation Services: Driving end-to-end transparency and intelligent process automation across the shipping management value chain of sales and marketing, customer service, operations, export and import documentation, finance and accounting, and human resources along with AI and ML-driven workflows and real-time data to drive intelligent operations;

 

  

ACE: Intelligent automation BOTs for portals to raise and rectify disputes;

 

  

iLearn: A digital learning platform;

 

  

Bolt: Custom learning experience to address training needs around logistics sectors from domain perspective; and

 

  

GLINT: A full-stack AI learning journey management platform.

Consulting and Professional Services

Our consulting and professional services (“CPS”) business unit’s objective is to help clients outperform in their industry by leveraging industry-specific knowledge and domain expertise. We currently cater to more than 25 clients from our key delivery centers in India, Romania, China, the Philippines and Sri Lanka.

Our CPS business unit offers an array of solutions to a range of sectors in consulting and professional services. Our solutions range from complex business and financial research and analytics to simple data management operations. Besides providing shared services support to our clients for functions such as finance and accounting, human resource management, customer support, procurement and IT and infrastructure management, we also provide domain-specific offerings.

As at March 31, 2021, we had 3,377 employees in the business unit. In fiscal 2021 and 2020, this business unit accounted for 6.2% and 5.4% of our revenue, and 6.5% and 5.5% revenue less repair payments (non-GAAP), respectively.

Sub-verticals / Industry Sectors. The key CPS sub-verticals and industry sectors we serve include:

 

  

Content and information publishers;

 

  

Background verification companies;

 

  

High technology (“Hi-tech”) firms;

 

  

Legal services firms;

 

  

Executive search firms;

 

  

Real estate service firms; and

 

  

Marketing service providers.

Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Consulting and Professional Services—Service Offerings

Background Verification Firms

  

Content and Information

             Publishers            

  

Legal Services Firms

  

Executive Search Firms

Background checks, education, employment, criminal background and social media checks, corporate investigative research, enhanced due diligence, content and data management, executive search support, client services and business development support;  Content sourcing, content creation, database creation, maintenance and update, aggregation, indexing and tagging, content copy editing and proofing, content enrichment, analysis and product creation, content review and quality assurance, design and production services for digital / print products, advertising operations and order fulfillment, analytics and CRM support;  Legal support, legal and business research, case management, document management, digital dictation transcription, pitch support, patent and trademark searches, contract management, title checking, lease management, company secretarial services, legal transcription, personal injury support;  Sourcing and pre-sourcing, pre-screening, name identification, interview and offer management, pitch book support, business intelligence, industry and company research, database clean-up, update and management, document management, business executive support;

Real Estate Services Firms

  

Marketing Service Providers

  

Hi-tech Firms

Real estate accounting, lease management, surveying and lettings support, business and financial research, real estate analytics, portfolio and fund accounting, sales and marketing support, end-to-end conveyancing process, contract management and secretarial services;  Industry, company and product research, market research operations, market research analytics, shopper and CRM analytics, web / digital analytics, campaign management and analytics, database management, digital content management and production support (designing and development); and  Customer experience services, consultative selling, sales CoE, content management, data engineering and governance, data advisory, CRM and web analytics, digital marketing, finance and accounting, human resources and procurement support.

 

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Banking and Financial Services

Our banking and financial services practice supports more than 25 leading clients, including large commercial and retail banks, wholesale and retail lenders, wealth advisors, asset managers, investment banks, private equity firms, hedge funds, financial technology (or commonly referred to as FinTech) organizations and mortgage servicing companies, with a comprehensive suite of business process management and transformation solutions.

We seek to add value to our clients’ businesses by improving customer experience, unlocking cost efficiencies and revenue opportunities, streamlining processes, and leveraging a wide range of process re-engineering, automation (robotic and non-robotic), and digital and advanced analytics (AI and ML) solutions.

As at March 31, 2021, we had 2,627 employees working in this business unit. In fiscal 2021 and 2020, this business unit accounted for 4.7% and 4.4% of our revenue, and 4.9% and 4.5% of our revenue less repair payments (non-GAAP), respectively.

Sub-verticals / Industry Sectors. The key banking and financial services sub-verticals and industry sectors we serve include:

 

  

Retail and commercial banking;

 

  

Mortgage and loans;

 

  

Wealth and investment banking;

 

  

Financial technology;

 

  

Capital markets and asset management;

 

  

Financial advisory firms;

 

  

Financial research and financial market intelligence companies;

 

  

Trade finance; and

 

  

Financial institutions.

Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Banking and Financial Services—Service Offerings

Retail Banking

  

Commercial Banking

  

Capital Markets

  

Mortgage

On-boarding: Application processing, document review and verification, know-your-customer (“KYC”) and customer due diligence, underwriting, spend limit;

 

Servicing: Maintenance, customer support, transaction processing, complaints and disputes handling, vulnerable customer management, fraud detection and management, chargebacks, anti-money laundering (“AML”) transaction monitoring;

  

On-boarding: Application processing, KYC / ultimate beneficial owner verification, document review and verification;

 

Credit Risk: Credit analysis, probability of default / loss given default, financial spreading, risk grading support;

 

Operations: Collateral management, covenant monitoring, renewals, annual reviews, billing;

 

Cash Management: Funds transfer, Nostro / Vostro (these terms are used with reference to one bank maintaining money at another bank), reconciliation, payment processing and investigation, AML transaction monitoring;

 

Trade Finance: Processing of import / export letters of credit, standby letters of credit, guarantees, receivables financing, trade-based money laundering support;

  

Front Office: Financial and business research, investment strategy and modeling, order entry, allocation / rebalancing; portfolio construction support, pitch book support; financial statement spreading

 

Middle Office: Reference data management, cash flow forecasting, risk management, amendments / maintenance of existing data, manual trade allocations, manual trade booking, trade exception / rejection management, trade amendment, trade confirmation, queries handling;

 

Back Office: Clearing and settlement, custody / record keeping, stock transfer, collateral management, expense and income processing, fund accounting / net asset value calculations, reconciliations, financial reporting, settlement;

  

Origination: Application processing, KYC, pre-underwriting and underwriting support, credit evaluation, title commitment, pre-funding audit, disbursal;

 

Servicing: Customer service, loan boarding and set-up, adjustable rate mortgage audit, payments processing, assignments and endorsements, lien release, escrow management / periodic analysis, final documents follow up and audit;

 

Default Management: Pre-loss mitigation, foreclosure support, borrower research, loan modification, forbearance support;

 

Secondary Market: Post close audit, due diligence of acquired packets, documentary fulfillment, trailing doc follow ups;

Fintech

  

Enterprise Shared Services

  

Research and Analytics

   
Application processing support / helpdesk, customer service, complaints handling, exception management, customer screening, transaction monitoring, operations advisory services;  

Finance and Accounting: Accounts payable, travel and expenses management, general ledger, budgeting and forecasting, financial planning and analysis, reporting, capital management support, asset liability management;

 

Sourcing and Procurement: Strategic sourcing, category management, contract management, spend analytics, transactional procurement; and

  Financial and business research, equity / fixed income / credit research, risk analytics, fraud analytics, model development and validation, loyalty analytics, customer interaction analytics.  

 

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Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this business unit:

 

  

RiskCheck: A negative news screening platform;

 

  

iDetect: A fraud detection engine leveraging advanced analytics;

 

  

CreditEvaluator: A credit evaluation / pre-underwriting tool for credit cards;

 

  

KYC Researcher: An RPA-based tool for politically exposed person and sanctions screening;

 

  

iDebt: An intelligent debt management solution designed to improve collections efficiency and effectiveness;

 

  

Kwilo: An AI-based financial statement spreading tool;

 

  

WNS Skense: A cognitive data capture and contextualization platform underpinned by AI and ML;

 

  

Tookitaki: An analytics-led transaction monitoring platform; and

 

  

Mozaiq: An intelligent automation-based mortgage origination process.

Utilities

We are a leading utilities BPM solutions provider with domain expertise across the utilities value chain – generation, transmission and distribution. Our solutions portfolio supports utility companies catering to the residential, industrial, and small and medium enterprise (“SME”) segments.

We are a strategic transformation provider to clients from the US, the UK, and Asia-Pacific and African regions. We offer digital-driven, technology-enabled, analytics-led and automation-infused services. We support business-to-consumer and business-to-business processes for our clients through our solutions spanning meter-to-cash (including customer acquisition and management, billing and metering, payment processing, credit and collections) and other areas within the utilities value chain, including distribution and field services. Our long-standing relationships with leading global companies have helped us develop geography- and industry-specific domain expertise and capabilities in key segments. We enable business transformation by leveraging analytics, digital platforms, tools and solutions, and automation through AI and cognitive intelligence solutions.

Our capabilities to support clients across processes in oil and gas, electricity and water suppliers include end-customer support, back-office processes, new product offerings (including prepay meters), carbon emission management, asset management, FAO services (including procurement services), debt management and other enabling services, such as meter reading, bill printing and digital support services (including smart metering). We offer platform integration, application integration, data integration, process integration, component integration and system integration capabilities.

Using social media analytics and big data analytics across multiple channels, we help provide clients with a single view of the customer. Our analytics offerings include mining of structured and unstructured data, speech and text analytics, and revenue assurance analytics with a view to enabling clients to acquire more customers, and improve cross-sell, up-sell and collection rates. Our offerings in RPA, AI and ML include feasibility studies to identify processes, design and build solutions, and develop codes to automate processes for deployment in live environments.

As at March 31, 2021, we had 2,955 employees working in this business unit. In fiscal 2021 and 2020, this business unit accounted for 4.6% and 6.3% of our revenue, and 4.8% and 6.5% of our revenue less repair payments (non-GAAP), respectively.

Sub-verticals / Industry Sectors. The key utilities sub-verticals and industry sectors we serve include:

 

  

Oil and gas;

 

  

Electricity;

 

  

Water; and

 

  

Renewable energy.

Service Offerings. We provide the following key areas of services to clients in this business unit:

 

Utilities — Service Offerings

Digital Meter-to-Cash

Revenue Cycle Operations

  

Customer Experience
Services

  

RPA, AI and ML

  

Research and Analytics

  

Enterprise Shared Services

Managing the customer life cycle, which covers acquisition, billing, payment and withdrawal along with dispute resolution, exception handling, customer debt management, payment management for electricity, gas and water utilities across residential and business customers, all-encompassing smart and analog meters, reduction in voids and gap properties, energy efficiency and zero carbon emission;  Sales CoE encompassing customer acquisitions, retention, enhancement, cross-selling / up-selling, customer experience services — queries, correspondence, and asset management; prepay to help our clients set up a completely new offering for the customers;  Feasibility studies to identify processes, build solution design, develop codes to automate processes for deployment in live environments;  Data mining, decision-support services, revenue assurance covering smart collections, fraud analytics, bankruptcy forecasting, fraud reduction, cash flow improvement and engagement with vulnerable customers; this also has customer analytics – segmentation, lifetime value analysis, net promoter score analysis, speech analytics and text analytics;  

Finance and accounting, supply chain management and procurement: E-sourcing, vendor rationalization, supplier management, procurement optimization, sourcing, procure-to-pay transactions, supply chain analytics, order-to-cash transactions and record-to-report; and

Human resource management: Administration support and payroll services.

Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this business unit:

 

  

Utility-in-a-Box: Document control and digitization, master data management, enterprise resource planning implementation and support, digital meter-to-cash – BPaaS, workflow, support for SAP implementations and web chat CoE

 

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Horizontal Units

Finance and Accounting

Our finance and accounting services encompass an array of end-to-end industry-specific and cross-industry solutions. Combining deep industry knowledge with technology, analytics and process expertise, we co-create with our clients digitally enabled transformational solutions and capabilities covering intelligent automation, AI, cognitive computing, natural language processing, machine learning, blockchain, IoT, BPaaS platforms, embedded analytics and process re-engineering frameworks which cut across multiple verticals.

By adopting four key philosophies – embark, equip, govern and sustain – we have developed virtual transition models designed to enable fast, seamless and cost-effective transitions. We have implemented shared service centers and rationalized financial systems to optimize and consolidate our clients’ information technology platforms. We also offer multi-location and multi-system global finance and accounting consolidation.

As at March 31, 2021, we had 7,021 employees in this horizontal unit. In fiscal 2021 and 2020, this horizontal unit accounted for 23.3% and 22.7% of our revenue, and 24.5% and 23.6% of our revenue less repair payments (non-GAAP), respectively.

Sub-vertical / Industry Sectors. The key industry sectors we serve include:

 

  

Retail and CPG;

 

  

Insurers;

 

  

Energy and utilities;

 

  

Healthcare;

 

  

Media and entertainment;

 

  

Banking and financial services;

 

  

Telecom;

 

  

Manufacturing;

 

  

Shipping and logistics;

 

  

Travel and leisure; and

 

  

Other emerging industries.

Service Offerings. We provide the following key areas of services to clients in this horizontal unit:

 

Finance and Accounting—Service Offerings

Source-to-Pay (Procurement)

  

Quote-to-Sustain

  

Record-to-Report

  

Decision Support

Sourcing to Contract: Sourcing and supplier relationship management;

 

Procurement: Procurement operations;

 

Invoice to Pay: Document management, invoice processing and reporting, purchasing card and travel expense claims processing, payment remittances and accounts payable enquiries;

 

Other Misc. / MEC: Miscellaneous activities, month-end close;

  

Quote-to-Order: Customer master data, credit management, customer contract management;

 

Order-to-Bill: Customer order management and customer billing management;

 

Bill-to-Cash: Collections and dispute management, manager cash application and customer deduction management;

 

Report-to-Sustain: Customer request and inquiries, reports and analytics dashboards, and perform revenue assurance;

  

Record: Master data management, book keeping, fixed assets, intercompany and general accounting;

 

Report: Financial reporting, statutory reporting and taxation;

  Budgeting, forecasting, variance analysis and management reporting;

Corporate Functions

  

Supply Chain Finance

  

Governance, Risk, Compliance and
Audit Services

  

Industry-specific Accounting

Treasury, cash management, financial planning and analysis, tax and compliance, decision support and management accounting;  Product costing, inventory accounting, manufacturing accounting, supply chain analytics and supply chain fulfillment support;  Governance consulting, risk analytics services, compliance services and audit services; and  Passenger revenue accounting, revenue audit and recovery, claims management, loan account maintenance, royalty accounting, fiduciary accounting, trip records, freight and fuel charges accounting, cost accounting, franchise accounting, meter reading, pre-payment billing and disbursement accounting.

 

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Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in the horizontal unit:

 

  

Outperforming CFO Framework: A framework of best practices and digital enablement toolkits designed to enhance finance and accounting process optimization;

 

  

Financial Intelligence-in-a-Box: A suite of advanced analytics solutions for insights on financial controls designed to prevent vulnerable transactions;

 

  

WNS eClose: An activity tracking and reconciliation workflow solution;

 

  

WNS JE Rec TRACTM: A workflow solution for automatic reconciliation tracking, processing, validation and checklist;

 

  

AP TRAC Lite: An end-to-end invoice processing workflow solution;

 

  

CashWiz: A cloud-based cash application platform leveraging fuzzy logic;

 

  

WNS Trackpoint Pro: A web-based case management tool;

 

  

Quote-to-Sustain: An integrated end-to-end solution powered by data, analytics and intelligent automation for managing order fulfillment, billing and receivables;

 

  

Journal Entry Analytics Application: An advanced statistical model designed to enhance process efficiencies and controllership;

 

  

Cash Flow Forecasting Application: A tool to unfold substantial incremental free cash flow and improve days payable outstanding and vendor performance satisfaction score scores; and

 

  

Working Capital Optimization through Accounts Payable Analytics Application: A solution to identify opportunities to enhance liquidity and bottom-line impact.

Customer Experience Services

Our Customer Experience (“CX”) services leverage a human-centered design that seeks to ensure domain, digital and innovation are at the core to deliver superior business outcomes and build customer trust. We focus on co-creating business outcomes with our clients by combining our domain-focused digital solutions and CoEs.

WNS CX services are enabled by our proprietary solution WNS EXPIRIUS and powered by our following CoEs: Sales (sales, up-sell or cross-sell), Fulfillment (transaction processing, customer retention), Assisted Digital Channels and Smart Collections (debt). The end-to-end services span the customer life cycle, namely customer acquisition, relationship management, customer retention and collections.

As at March 31, 2021, we had 10,877 employees in this horizontal unit. In fiscal 2021 and 2020, this horizontal unit accounted for 16.9% and 20.7% of our revenue, and 17.8% and 21.5% of our revenue less repair payments (non-GAAP), respectively.

Sub-verticals / Sectors. The key industry sectors we serve include:

 

  

Healthcare;

 

  

Manufacturing;

 

  

Retail and CPG;

 

  

Shipping and logistics;

 

  

Banking and financial services;

 

  

Travel and leisure;

 

  

Media and entertainment;

 

  

Telecom; and

 

  

Utilities.

Service Offerings. We provide the following key areas of services to clients in this horizontal unit:

 

Customer Experience Services – Service Offerings

Domain-led Consulting

  

Experience Design and Engineering

  

Assisted Digital Channels

Best-of-breed CX strategies  Digital engagement strategy, journey orchestration, integrated analytics and digital experience platforms;  Chat, social media (traditional sites such as Facebook, Twitter, forums, blogs and review sites), digital engagement (mobile, web) and asynchronous messaging;

Self-serve Automation

  

Traditional Channels

  

Language Support

Voice bots, chat bots, virtual assistants;  Interactive voice response, voice, e-mail and short messaging service; and  Support in English, French, Italian, Spanish, German, Arabic, Afrikaans and more than 20 key regional languages across the globe.

Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this horizontal unit:

 

  

WNS EXPIRIUS Toolkit – A digitally integrated CX model with the following microservices;

 

  

EXPIRIUS ConverseEX (Conversational Cognitive Self-service);

 

  

EXPIRIUS CloudServEX (Omni-channel Cloud Contact Center-as-a-Service);

 

  

EXPIRIUS AssistEX (Proactive Agent Assistance and Automation);

 

  

EXPIRIUS TranslateEX (Real-time Language Translation);

 

  

EXPIRIUS EngageEX (Workforce Engagement Suite);

 

  

EXPIRIUS RemoteEX (User Monitoring for Security and Compliance);

 

  

EXPIRIUS ElevateEX (360° Customer Insights and Integrated Analytics-as-a-Service); and

 

  

EXPIRIUS JourneyEX (Customer Journey Discovery and Orchestration).

 

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Research and Analytics

With more than 2,500 employees, our research and analytics practice helps more than 100 global clients across multiple verticals make critical business decisions with data-driven insights. We provide end-to-end unified analytics offerings to harness actionable insights from data, including data engineering, visualization and cloud-based services. We enable process-embedded analytics solutions to drive digital transformation goals for our clients. We also leverage our scalable AI / ML-based cognitive products and platforms designed to deliver non-linear benefits.

We rely on our deep domain expertise, integrated platform and service offerings, flexible commercial models including FTE, project, transaction and outcome-based models, and strategic technology partnerships to help clients meet their business needs.

As at March 31, 2021, we had 2,626 employees in this horizontal unit. In fiscal 2021 and 2020, this horizontal unit accounted for 10.4% and 10.4% of our revenue, and 10.9% and 10.7% of our revenue less repair payments (non-GAAP), respectively.

Sub-vertical / Industry Sectors. The key research and analytics sub-verticals we serve include:

 

  

Retail and CPG;

 

  

Banking and financial services;

 

  

Insurance;

 

  

Utilities;

 

  

Travel and leisure;

 

  

Healthcare; and

 

  

Other emerging industries.

Service Offerings. We provide the following key areas of services to clients in this horizontal unit:

 

Research and Analytics – Service Offerings

Analytics Consulting

  

Unified Analytics

  

Embedded Analytics

Strategy ideation and roadmap, diagnostic and solution design, and analytics from data to insights (project initiation, setup and run);  Data management and integration, data engineering, data governance, data visualization and data accelerators;  Customer experience analytics, CFO analytics, CPO analytics, cognitive data extraction and contextualization, and operational analytics;

AI and ML

  

Research

   
Modeling and algorithm design, cognitive and predictive analytics on structured and unstructured data (image, speech, text, video), and natural language processing and generation; and  Competitive research, financial research, executive research, business research, survey programming, and business intelligence dashboards and reporting.  

Industry and Domain-specific Service Offerings. We provide the following industry and domain-specific services to clients in this horizontal unit:

 

Research and Analytics – Industry-specific Service Offerings

Retail and CPG

  

Insurance

  

Banking and Financial Services

Revenue growth management (pricing, promotions and portfolio analytics), channel management, customer 360 analytics, supply chain analytics, and ecommerce and digital analytics;  Claims analytics, underwriting analytics, customer analytics, pricing analytics and fraud analytics;  Risk and compliance analytics, customer analytics and investment research;

Energy and Utilities

  

Travel and Leisure

  

Healthcare

Revenue assurance analytics, customer experience analytics and collections analytics;  Customer and loyalty analytics, cargo analytics, pricing and revenue management analytics, ancillary revenue enhancement analytics, campaign analytics and hyper-personalization, and claim fraud analytics; and  Competitive intelligence and market opportunity assessment, pipeline analysis, product profiling, KPI reporting, social media analysis, pricing analytics and patient data analytics.

Technology Tools / Platforms. We utilize the following technology tools and platforms in delivering services to our clients in this horizontal unit:

 

  

WNS Skense: A cognitive data capture and contextualization platform underpinned by AI and ML;

 

  

WNS Agilius: A proprietary cloud-based business intelligence self-serve analytics platform; and

 

  

SocioSEER: A social media analytics platform.

 

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Technology Services

Our technology strategy for clients has been to leverage established and emerging technologies to expedite the shift to the ‘Work from Anywhere’ model, while simultaneously re-defining existing business models, embedding process intelligence and automation into business operations, and driving organizational agility.

At the core of our technology strategy is “WNS TRAC ®,” which is a consolidated suite of comprehensive digital BPM solutions. It combines the strengths of deep domain and technology expertise, a global partner ecosystem and end-to-end service provisioning (from consulting / advisory to implementation, support and managed services).

WNS TRAC ® solutions are pre-configured with best practices and industrialized accelerators designed to drive development and adoption of cloud-native applications, intelligent automation, AI, advanced analytics, blockchain and IoT – with a host of deployment options and commercial models to choose from. Available as all-inclusive BPaaS or plug-and-play solutions that are designed to seamlessly integrate with clients’ existing technology environment, our digital solutions seek to drive transformation for today’s anytime-anywhere consumers.

As at March 31, 2021, we had 329 employees in this horizontal unit. In fiscal 2021 and 2020, this horizontal unit accounted for 2.2% and 1.4% of our revenue, and 2.3% and 1.5% of our revenue less repair payments (non-GAAP), respectively.

Sub-verticals / Industry Sectors. The key industry sectors we serve include:

 

  

Travel and leisure;

 

  

Insurance;

 

  

Shipping and logistics;

 

  

Utilities; and

 

  

Retail and CPG.

Industry-specific Technology Tools / Platforms. We utilize the following industry-specific technology tools and platforms in delivering services to our clients in this horizontal unit:

 

  

Travel TRAC

 

  

WNS Intelligent Automation: A comprehensive suite of intelligent automation solutions underpinned by cognitive technologies, AI and ML;

 

  

Verifare Plus 3.0SM: A fully automated, analytics-enabled and web-based fare audit solution designed to enable airlines to maximize revenue recovery and minimize revenue leakage;

 

  

RePAXSM: A fully automated and on-demand solution designed to help airlines manage flight disruptions;

 

  

QbaySM: A fully automated and cloud-hosted workflow management platform designed to manage back-office operations across centers and geographies, minimize costs and enhance customer service;

 

  

SmartPro® Interline Audit Tool: A fully automated, analytics-led and web-enabled proration engine designed to help airlines make better revenue management decisions, arrest revenue leakage, prorate accurately, comply with industry regulations and reduce total cost of operations;

 

  

AnciFly: An analytics engine underpinned by intelligent technologies and designed to help airlines enhance ancillary revenues;

 

  

WNS ACOSS: A suite of agile solutions designed to enhance efficiencies across revenue and cost-critical cargo processes; and

 

  

Commercial Planning Suite: A cloud-based and unified decision support / analytics platform designed to drive actionable insights from disparate sources for functions such as revenue management, sales, pricing, network planning, code share and alliances.

 

  

Insurance TRAC

 

  

WNS Insurance BPaaS / Insurance-in-a-Box: A target operating model designed to provide insurers with the combined advantage of technology platforms and business process management-as-a-service;

 

  

VeriChain: A blockchain-based risk syndication solution designed to enable specialty insurers execute secure transactions in a multi-party ecosystem;

 

  

Mobile-enabled First Notice of Loss: A smartphone self-serve application designed for claims lodgment;

 

  

eAdjudicator: An RPA- and analytics-led solution designed to automate the end-to-end adjudication process for various types of claims; and

 

  

Fraud Detection: A blockchain-led solution designed to validate the authenticity of customers, policies and claims by providing complete historical records to help identify fraudulent claims or duplicate transactions.

 

  

Shipping and Logistics TRAC

 

  

WNS Malkom: A digital billing platform, underpinned by AI and ML, designed to automate the end-to-end bill of lading process.

 

  

CPG and Retail TRAC

 

  

Digital Order Management: A touchless order management solution designed to enhance customer experience, reduce billing disputes and revenue leakages, and optimize on time in full metrics; and

 

  

Warranty BPaaS: A platform-led offering designed to automate claims processing, improve customer satisfaction and reduce cost of warranty operations.

 

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Cross-industry Technology Tools / Platforms. We utilize the following cross-industry technology tools and platforms in delivering services to our clients in this horizontal unit:

 

  

CFO TRAC

 

  

Procure-to-Pay: A technology solution designed to facilitate multi-channel introduction of invoices, data extraction and processing, followed by seamless transfer to native enterprise resource planning systems for further action;

 

  

Order-to-Cash: A software-as-a-service solution designed to standardize the order-to-cash process in line with industry-leading practices;

 

  

Record-to-Report: A solutions suite designed to automate complex and high-volume transactional reconciliations for banks and large organizations; and

 

  

Payment Reconciliation: A blockchain-led solution designed to enable payment reconciliation among multiple entities within or outside an organization.

 

  

CPO TRAC

 

  

WNS Procurement Card: A fully integrated, compliant and automated solution designed to manage the reconciliation and settlement process in the client’s existing enterprise resource planning system;

 

  

WNS Supplier Portal: A supplier self-service portal designed to enable efficient online exchange and flow of supplier communications; and

 

  

WNS Spend Analytics: A solution designed to centralize, classify, search and improve data quality to derive meaningful and actionable business insights in real-time.

 

  

Analytics

 

  

SocioSEERTM: A social media analytics platform;

 

  

WNS BrandttitudeTM: A cloud-based business intelligence self-serve analytics platform;

 

  

WNS Agilius: A proprietary cloud-based business intelligence self-serve analytics platform;

 

  

WNS Sentinel: An AI-led tracking tool for early identification of trends for new product development; and

 

  

WNS Skense: A cognitive data extraction and contextualization platform underpinned by AI and ML; and

 

  

Data Management Suite: A comprehensive suite designed to enable enterprises to scale the data maturity curve faster.

 

  

Customer Experience

 

  

WNS EXPIRIUS: A digital customer experience model that integrates human-assisted design and domain expertise with AI-driven conversational insights and consulting-led strategies.

 

  

RPA and Intelligent Automation TRACTM: A comprehensive suite of automation solutions including RPA bots and bespoke intelligent automation solutions.

Sales and Marketing

The sales cycle for business process management services is time-consuming and complex in nature. The extended sales cycle generally includes initiating client contact, submitting requests for information and requests for proposals for client business, hosting client visits to our delivery centers (in person or virtually), and performing analysis (including diagnostic studies, proofs-of-concept, and pilot implementations) to demonstrate our delivery capabilities, finally culminating into a contract with the client. Due to the complex nature of the sales cycle, we have aligned our sales teams to our vertical business units and staffed them with “hunting” or new relationship sales professionals (which we refer to as “hunters”), as well as “farming” or existing client relationship professionals (which we refer to as “farmers”). Our hunters and farmers have specialized industry knowledge and experience, which enable them to better understand prospective and existing clients’ business needs and to offer appropriate domain-specific solutions.

Our sales and sales support professionals are based in Australia, the UAE, Eastern Europe, India, Singapore, South Africa, the UK and the US. Our sales teams work closely with our global sales support team, which provides critical analytical support throughout the sales cycle. Other key capabilities offered by our sales support team include transformation, consulting, generating leads for potential business opportunities and research support.

Our sales teams are comprised of highly experienced professionals, with an average tenure at WNS exceeding five years. They bring a wealth of industry expertise and leverage their knowledge to orchestrate transformative deals with new and existing clients. As at March 31, 2021, our front-line sales teams consisted of 112 members including hunters and farmers. Our teams of farmers are responsible for identifying and initiating discussions with and selling services in new areas to existing clients, while our hunters are responsible for identifying opportunities with new clients who seek to outpace and outperform their peers by transforming their operational and digital service models. Both farmers and hunters work with clients to co-create cutting-edge, ML-enabled solutions that help our clients embrace change and deliver value to their end customers. By leveraging their detailed understanding of the clients’ business objectives gained through close interactions, our sales teams actively identify and target processes that can be better digitized and delivered by us with a view to improving self-service and cost efficiency, service accuracy and effectiveness, and financial control and systematized performance consistency. Through this forward-looking design philosophy, we have developed a strong track record of increasing our sales year-on-year as well as expanding our relationships with existing clients.

A key aspect of our sales growth has been the ability of our sales leaders, in collaboration with their expert solutions and operations team, to both foresee and adapt to market changes that impact clients’ respective industries, operating and revenue models. The pervasiveness of AI and ML, and the integration of data into the human-centric and automated decision making process has changed WNS’ approach to BPM. Our team’s focus has evolved into developing service models that utilize digital offerings and services by means of our proprietary and our collaborators’ solutions. This helps us to address and often go beyond clients’ needs. We are an evolved digital solutions provider in key business verticals such as manufacturing, healthcare, travel, retail and insurance. Our proprietary solutions such as the pharmaceutical-specific Integrate Edge (a cloud-based, fully customizable AI- and ML-led competitive intelligence platform) or the cross-industry SocioSEER (a social media analytics platform powered by AI and ML) digitally scrape, aggregate and learn, while being overlaid with a human to cull dashboards into bespoke reports for leaders. We offer intelligent automation solutions to drive smart outcomes. For example, we recently collaborated with a leading airline to leverage intelligent automation to work through high claim volumes and digitally transform customer experience.

We take a long-term, holistic approach toward building client relationships - from initial contact to business as usual, underpinned by a multi-layered governance methodology to ensure collaboration, co-creation and service evolution. We believe it is the commitment of our sales, service and leadership teams that is the core reason behind clients collaborating with and continuing with WNS through opportune and turbulent times.

 

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Clients

As at March 31, 2021, we had a diverse client base of 384 clients (with each client generating more than $0.01 million in revenue in fiscal 2021) across a variety of industries and service types, including companies that we believe are among the leading players in their respective industries.

We believe the diversity in our client profile differentiates us from our competitors. See “Part I – Item 5. Operating and Financial Review and Prospects – Revenue” for additional information on our client base.

The table below sets forth the number of our clients by revenue for the periods indicated. We believe that the large number of clients who generate more than $1 million of annual revenue indicates our ability to extend the depth of our relationships with existing clients over time.

 

   Year ended March 31, 
   2021   2020 

Below $1.0 million

   250    261 

$1.0 million to $5.0 million

   101    107 

$5.0 million to $10.0 million

   14    14 

More than $10.0 million

   19    19 

Competition

Competition in the BPM services industry is intense and growing steadily. See “Part I – Item 3. Key Information – D. Risk Factors – Risks Related to Our Business – We face competition from onshore and offshore business process management companies and from information technology companies that also offer business process management services. Our clients may also choose to run their business processes themselves, either in their home countries or through captive units located offshore.”

We compete primarily with:

 

  

Focused BPM service companies with presence in offshore locations (primarily India), such as EXL Service Holdings, Inc., Firstsource Solutions Limited and Genpact Limited

 

  

BPM divisions of numerous information technology service companies operating out of India, such as Cognizant Technology Solutions, Infosys Technologies Limited, Tata Consultancy Services Limited and Wipro Technologies Limited

 

  

Global companies such as Accenture Limited, Capgemini, Electronic Data Systems Corporation, a division of Hewlett-Packard, and International Business Machines Corporation, which provide an array of products and services, including broad-based information technology, software, consulting and business process outsourcing services

 

  

Global financial services and consulting firms such as Deloitte Private Limited, industry-focused niche technology players such as InterGlobe Enterprises Limited and Accelya Holding World SL, and specialty analytics service providers such as Mu Sigma Inc.

In addition, departments of certain companies may choose to perform their business processes in-house, and in some cases via an owned and operated facility in an offshore location such as India. Their employees provide these services as part of their regular business operations.

Intellectual Property

We use a combination of our own proprietary software platforms and systems, together with our clients’ software systems and third party software platforms and systems, to deliver our BPM and technology services. Our proprietary solutions combined with licensed software (including on-premise or Cloud hosted services like software-as-a-service/ platform-as-a-service) allows us to position and market our services as integrated solutions under our WNS TRAC TM suite. In most of the cases, these technology solutions are combined with our core BPM service offerings. Our principal proprietary software solutions include:     

 

 (1)

WNS TRAC® industry-specific solutions, including the following:

 

 a)

Insurance TRACTM solutions including digital claims platform, an “insurance-in-a-box” solution called “WNS InVog” (a platform and business process management as-a-service target operating model) and other proprietary solutions, which we use in our insurance business unit;

 

 b)

Travel TRACTM solutions, including revenue accounting platform, fare audit platform (“Verifare Plus”), fare pro-ration solution (SmartPro), revenue integrity solution (“BIDT”) and other solutions which we use in our travel and leisure business unit;

 

 c)

Shipping & Logistics TRACTM solutions including WNS MalkomTM platform which is used for processing bills of lading and other shipping documents; and

 

 d)

Industry-specific point solutions, which we use in other business units.

 

 (2)

WNS auto claims software platform for insurers and fleet services, which we use in our WNS Assistance business;

 

 (3)

WNS TRAC ® cross-industry solutions, including the following:

 

 a)

CFO TRACTM solutions for our finance and accounting services, which combines our proprietary software as well as solutions developed on third party software;

 

 b)

Digital CIS TRACTM solutions for our customer experience services, or CXS, practice, combining multiple solutions across the customer interaction life cycle; and

 

 c)

Other proprietary software, point solutions and platform solutions developed on third party software used for cross-industry services including our research and analytics business unit.

 

 (4)

WNS RPA and Intelligent Automation TRACTM, including our proprietary automation solutions and solutions developed on third party collaborators’ platforms for RPA, cognitive technologies, ML and AI systems for delivering automation and transformation services to our clients.

 

 (5)

WNS TRAC ® VeriChain platform for blockchain-based solutions in our insurance, shipping and logistics, finance and accounting and other business units.

 

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We customarily enter into licensing and non-disclosure agreements with our clients with respect to the use of their software platforms and systems. We maintain intellectual property rights in our proprietary software platforms and systems, and license the use of third party software platforms and systems from their respective owners. Under our contracts with third-party software platform providers, any solutions developed by us on top of such third party software platforms, using our domain knowledge, are our intellectual property (unless qualified otherwise). Our client contracts usually provide that all customized intellectual property created specifically for the use of our clients will be assigned to them, unless it is clearly identified as our intellectual property.

Our employees are also required to sign confidentiality agreements as a condition to their employment. These agreements include confidentiality undertakings regarding our company’s and clients’ intellectual property that bind our employees even after they cease to work with us. These agreements also ensure that all intellectual property created or developed by our employees in the course of their employment is assigned to us.

We have registered the trademarks “WNS,” “WNS-Extending Your Enterprise” and “WNS TRAC” in most of the countries where we have global presence.

Technology

We have a dedicated team of technology experts who support clients at every stage of their engagement with us. The team designs, implements and supports technology solutions to enable delivery of business processes for our clients.

Wide-area-network – We have designed and built a highly redundant and resilient global multi-protocol label switching (“MPLS”) network, connecting all of our delivery centers and client datacenters. We run data, voice and video services on this global MPLS network to serve our clients.

Customer experience services technology infrastructure – We have deployed omni-channel contact center platforms with voice, web chat, e-mail, social media, and interactive voice response channels across all our delivery centers, designed to improve customer experience. These customized platforms orchestrate omni-channel customer journeys across digital channels including self-service and payment card industry data security standard compliance.

Data centers – We have built highly secure, redundant data centers for hosting our omni-channel contact center platforms, automation tools, corporate infrastructure and application services.

Cloud computing – We have adopted cloud computing services such as office productivity tools, virtual servers, virtual storage, and web and e-mail security, for some of our clients and our corporate use.

Work from Anywhere: We have designed a highly secure and resilient work-from-anywhere solution leveraging multi-cloud technology.

Technology service management methodology – Our technology service delivery management is based on an information technology infrastructure library framework. We assist over 200 clients with technology implementation, service delivery and support for end user computing, wide area network, local area network telecommunications, customer interaction management platform, IT security, datacenter systems and cloud computing technology platforms.

Process and Quality Assurance and Risk Management

Our process and quality assurance compliance programs are critical for the success of our operations. We have an independent quality team to monitor, analyze, provide feedback and report process performance and compliance. Our company-wide quality management system focuses on effectively managing our client processes on an ongoing basis. Our process delivery is managed by independent empowered teams and is measured regularly against pre-defined operational metrics. We have over 1,386 employees that help us meet quality assurance and ISO 9001 standards for Quality Management Systems and ensure continued compliance. We apply Lean Six Sigma methodologies, which are statistical and process-focused methodologies to improve and deliver consistent quality to customers. We apply well-defined quality management principles to improve and provide consistent levels of service quality to our clients. In fiscal 2021, more than 347 different projects were completed using Lean Six Sigma methodologies and over 456 additional projects are in progress. We have also trained over 22,564 employees in ISO 9001 and Lean Six Sigma principles in fiscal 2021.

 

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We have been honored with the following awards for our achievements in quality assurance in fiscal 2021:

 

  

Golden Peacock Business Excellence Award 2020

 

  

Golden Peacock National Quality Award 2020

Our Board of Directors is primarily responsible for overseeing our risk management processes. The Board of Directors receives and reviews reports from the Chief Risk Officer as considered appropriate regarding our company’s assessment of risks. The Board of Directors focuses on the most significant risks facing our company and our company’s general risk management strategy, and also ensures that risks taken by our company are consistent with the Board’s appetite for risk.

Our risk management framework also focuses on three important elements: business continuity planning, information security and operations risk management.

Our approach to business continuity planning involves implementation of an organization-wide business continuity management framework which includes continual self-assessment, strategy formulation, execution and review. Our business continuity strategy leverages our expanding network of delivery centers for operational and technological risk mitigation in the event of a disaster. To manage our business continuity planning program, we employ a dedicated team of experienced professionals. A customized business continuity strategy is developed for key clients, depending on their specific requirements. For mission-critical processes, operations are typically split across multiple delivery centers in accordance with client-approved customized business continuity plans.

We have further enhanced our business continuity strategy, in view of the ongoing COVID-19 pandemic, through the implementation of a secure hybrid “Work-from-Home and Work-from-Office” model.

 

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“Our approach to information security involves implementation of an organization-wide information security management system, which complies with the ISO 27001:2013 to manage organizational information security risks. These measures seek to ensure that sensitive information pertaining to our company or our clients remains secure. Currently, information security systems at 55 delivery centers are ISO 27001:2013 certified, and we expect to seek similar certifications for our newer delivery centers. We also comply with the Payment Card Industry Data Security Standard (“PCI DSS”) which is a security standard aimed at helping companies proactively protect cardholder data and sensitive authentication data. In addition, on an annual basis, we undergo “Service Organization Controls (“SOC”) 1 Type 2” audits, pursuant to Statements on Standards for Attestation Engagement No. 18 and International Standards for Assurance Engagements No. 3402, with respect to our general control environment supporting operational delivery, and “SOC 2 Type 2” audits, with respect to the trust service categories of security, availability and confidentiality.

Our approach to operations risk management involves the implementation of a “three lines of defense” framework for our clients’ offshored business processes. Under this framework, the quality assurance teams embedded within the business units act as the first line of defense, an independent and centralized risk management team acts as the second line of defense and an independent centralized audit team acts as the third line of defense. Our lines of defense are designed to identify potential risks, evaluate design efficiency and operating effectiveness of controls embedded within the outsourced business processes that we manage for our clients, and propose additional controls as appropriate for mitigation of the identified risks.

In addition, our clients may be governed by regulations specific to their industries or in the jurisdictions where they operate or where their customers are domiciled which may require them to comply with certain process-specific requirements. As we serve a large number of clients globally and across various industries, we rely on our clients to identify the process-specific compliance requirements and the measures that must be implemented in order to comply with their regulatory obligations. We assist our clients to maintain and enforce compliance in their business processes by implementing control and monitoring procedures and providing training to our employees serving specific client programs. These control and monitoring procedures are separate from and in addition to our periodic internal audits.

Human Capital

As at March 31, 2021, we had 43,997 employees, of whom 28,545 are based in India, 8,374 are based in the Philippines, 3,586 are based in South Africa, 993 are based in the US, 872 are based in Sri Lanka, 438 are based in China, 393 are based in the UK, 341 are based in Romania, 140 are based in Spain, 128 are based in Poland, 95 are based in Costa Rica, 31 are based in Australia, 22 are based in Turkey, 14 are based in Germany, 14 are based in France, six are based in Singapore, two are based in Switzerland, and three are based in the United Arab Emirates. Most of our associates hold university degrees. As at March 31, 2020, we had 44,292 employees. Our employees are not unionized. We believe that our employee relations are good. We focus heavily on recruiting, training and retaining our employees.

Recruiting and Retention

We believe that talent acquisition is an integral part our overall organizational strategy. We have developed effective human resource strategies and demonstrated a strong track record in recruitment specific to the needs of our business units to optimize the training and development of our employees. As we continue to grow, we look to improve and enhance our candidate pool, which is sourced from recruitment agencies, job portals, advertisements, college campuses (where we focus on recruiting talented individuals) and walk-in applications. In addition, a significant number of our applicants are referred to us by existing employees. We recruit an average of 1,159 employees per month.

During fiscal 2021, 2020 and 2019, the attrition rate for our employees who had completed six months of employment with us was 22%, 30% and 31% respectively.

 

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Training and Development

In the past three years, we have been growing at an accelerated pace with a diversified client base. Our talent strategy complements our business strategy to access, mobilize and optimize talents for the organization’s aspiration to impact clients and stakeholders. In the age of “new normal” and rapid digital transformation, we are poised to build a digital-capable and resilient workforce that is ready for the future.

We have created a learning strategy based on a combination of organizational, business-unit and horizontal strategies, employee input and leadership conversations. Our talent development team carries out an intensive analysis of our training needs at the organization, business unit and location levels each year. Final training plans are approved by the leaders of our business units in alignment with their respective strategies.

Our talent strategy consists of four main components: (i) future ready workforce, (ii) robust leadership bench, (iii) inclusive culture, and (iv) talent fungibility.

Future-ready Workforce. Digital technology is fast-evolving and is becoming increasingly more pervasive in our lives. We recognize the importance of a workforce that is ready for a digital future. We aim to prepare our workforce to become digital natives. Below are some of the programs that we have implemented to create a future-ready workforce.

 

  

Digital Future (DiFU): DiFu is a program through which we identify, assess and develop capabilities across the organization in order to be digitally ready for the future. We collaborated with Deloitte Consulting and MIT Sloan to establish a digital competency framework that has been tailored for employees at all levels. We assessed employees on their digital readiness last year and we have now moved to the second phase of the program, which focuses on building a “digital mindset” through a series of workshops with industry experts.

 

  

WNS Education Program: This is a curriculum-based certification program for developing technologically savvy domain specialists with the right temperament to thrive in a digital world. We aim to enroll 30% of our workforce in this program over the next three years. The idea is to develop domain experts with required knowledge of each emerging digital technology so as to spot application opportunity in current processes as well as cater to future work requirements.

 

  

FutureSkills: FutureSkills is a new age learning experience platform established by NASSCOM. The FutureSkills platform aims to help IT professionals develop capabilities in digital technologies. The platform enables continuous learning and deep skills development in nine emerging technologies – RPA, big data, AI, cybersecurity, IoT, virtual reality, 3D printing, social and mobile and cloud computing. In addition to technical skills, FutureSkills users have the opportunity to develop professional skills such as digitalization, problem solving, design thinking, communication and story-telling, project management, negotiation and influencing, collaboration, product management, program management and continuous learning. WNS has made available access to this platform via license for each and every employee across the globe.

 

  

GLINT: GLINT is an AI-led digital learning and knowledge platform designed to enable us to democratize learning, keep pace with digitization, create future-ready workforce and foster a culture of excellence. GLINT offers an immersive learning experience through modules that are tailored to our specific business needs. The platform also facilitates an environment of knowledge sharing and peer to peer learning to foster collaboration. This provides an excellent solution for us as an organization as we evolve to keep pace with digitization, creating a future-ready workforce and driving collaborative innovation. As digitization touches all aspects of our lives, virtual workplaces and learning environments are increasingly becoming the new normal.

Robust Leadership Bench. We have also established a number of programs that focus on nurturing and developing future leaders of the organization.

 

  

Signature Leadership Development Program: The Signature Leadership Development Program (the “SLDP”) is a unique engagement designed and created for our top leaders, created in collaboration with Korn Ferry and Harvard Business Publishing. The key focus areas include driving strategic agility, driving BHAGs, client-wins, and collaboration and building a renewed digital perspective. The SLDP is a 12-month program that includes face-to-face sessions, virtual sessions, one-on-one and group coaching, along with corporate immersions. The program aims to help participants with their continued career success and growth as enterprise leaders, which in turn will help support us in our digital transformation, thereby helping us achieve our overall strategic goals.

 

  

The Aspire Programs: Launched in 2016, the “Aspire” initiative mapped critical roles and future talent needs with competencies and identified and nurtured high-potential employees in the organization to succeed. In 2017, we launched “Aspire+,” a platform where “Aspire” participants were provided an opportunity to apply their knowledge, skills and business acumen in practical business situations. Through the Aspire+ program, we endeavor to create a consulting task force that will be responsible for strategic account management of small/mid-sized accounts with envisaged growth potential. In 2019, we launched “Aspire 2.0,” a holistic global program that focuses on developing leaders on client-centric competencies. We have also collaborated with Cornell University for academic curriculum delivered through coaching conversations and collaborative learning tools. The curriculum focuses on client advisory, executive presence, presentation and value articulation and consultative skills.

The Aspire 2.0 program had 34 participants from India and other sites and caters to talents from our solutions, operations, client partner and technology services departments, particularly employees in roles that require extensive front-end client conversation and deliverables and who have been identified as potential talents for front-end client conversations and engagements.

In addition, under the Aspire programs, we have established a leadership conversation series, which is planned with our “C-suite” level officers and senior leaders on select themes and subjects that are critical to our businesses and that align with the interests and needs of the participants. These sessions provide opportunities for Aspire participants to understand business imperatives, gain insights, seek information and expand their understanding of business-critical strategies and initiatives.

 

  

CEOs Millennial Council: Approximately 70% of our workforce are millennials. The CEO’s Millennial Council is an initiative where young minds at WNS get the opportunity to work closely with senior leaders in the company. Council members are tasked with helping the WNS brand stay in alignment with changing trends. They also develop action plans for the organization in their chosen fields, including employee engagement, corporate social responsibility, technology and enhancement of the company’s brand presence.

In addition to the programs described above, we have other initiatives, many of which in partnership with external organizations such as Aslan Training, Wilson Learning, Richardson, Cornell University etc. that focus on grooming future leaders within our organization. These initiatives mainly relate to succession planning, senior management development, transitions into new managerial roles, client management and leadership assessments.

 

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Inclusive Culture. We are committed to creating an inclusive culture within the organization. To this end, some of the programs we have implemented include:

 

  

Women Talent Program: This is a marquee program developed in collaboration with Cornell University specifically to develop women leadership in the organization globally. We aim to enable 100 female leaders to take up key positions over the next four years.

 

  

Emerging Leaders Program: This is a program that specifically caters to emerging leaders in the tier II locations in India within the organization.

Talent Fungibility. The BPM industry has been revolutionized by AI, robotics and other digital disruptions. As such, there is an increasing need for a pool of fungible talents to meet changing business requirements. We have implemented a number of initiatives designed to keep our employees’ skills to be relevant in the competitive market. For example, our “Winning DNA Leadership Competency” framework aims to develop future leaders and serves as the backbone for customized leadership and talent initiatives within our organization. Our “Compass” initiative for example focuses on enabling employees to manage role transitions. As part of the first phase of this initiative, specific content has been made available to the newly promoted employees. Additionally, they also have access to a wide range of resources including articles and videos.

Regulations

Due to the industry and geographic diversity of our operations and services, our operations are subject to a variety of rules and regulations, and several federal and state agencies in Australia, China, Costa Rica, Canada, France, Germany, India, Ireland, Mauritius, the Netherlands, New Zealand, the Philippines, Poland, Romania, Singapore, South Africa, Spain, Sri Lanka, Switzerland, Turkey, United Arab Emirates, the UK and the US that regulate various aspects of our business. See “Part I — Item 3. Key Information — D. Risk Factors — Risks Related to our Business — Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements. Failure to adhere to the laws and regulations that govern our business or our clients’ businesses that we are required to comply with in performing our services could harm our business.” We have benefitted from, and continue to benefit from, certain tax holidays and exemptions in various jurisdictions in which we have operations.

In fiscal 2021, 2020 and 2019, our tax rate in India, the Philippines and Sri Lanka impacted our effective tax rate. We would have incurred approximately $11.1 million, $17.7 million and $15.7 million in additional income tax expense on our combined operations in our SEZ operations in India, the Philippines and Sri Lanka in fiscal 2021, 2020 and 2019, respectively, if the tax holidays and exemptions described below had not been available for the respective periods.

We expect our tax rate in India, the Philippines and Sri Lanka to continue to impact our effective tax rate. Our tax rate in India has been impacted by the reduction in the tax exemption enjoyed by our delivery center operating under the SEZ scheme. Our effective tax rate in Sri Lanka had been impacted by the withdrawal of tax exemption on export income in Sri Lanka with effect from April 1, 2018 until December 31, 2019, following which the income from export of service had been subject to tax at 14% on net basis. From January 1, 2020, our operations in Sri Lanka are eligible to claim income tax exemption with respect to the profits earned from export revenue, as more fully described below. From fiscal 2016 until fiscal 2021, we started operations in various delivery centers in the Philippines that are eligible for tax exemption benefits expiring between fiscal 2020 and fiscal 2024. Following the expiry of the tax benefits, income generated by the Philippines subsidiary will be taxed at the prevailing special tax rate, which currently is 5.0% on gross profit. As per The Corporate Recovery and Tax Incentives for Enterprises Act (“CREATE”) which is effective from April, 2021, enterprises will be taxed at 5% on gross profit for a fixed period of 10 years.

 

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India

In the past, the majority of our Indian operations were eligible to claim income tax exemption with respect to profits earned from export revenue from operating units registered under the STPI. The benefit was available for a period of 10 years from the date of commencement of operations, but not beyond March 31, 2011. Effective April 1, 2011, upon the expiration of this tax exemption, income derived from our operations in India became subject to the prevailing annual tax rate of 34.95%.

In 2005, the Government of India implemented the SEZ legislation, with the effect that taxable income of new operations established in designated SEZs may be eligible for a 15-year tax holiday scheme consisting of a complete tax holiday for the initial five years and a partial tax holiday for the subsequent ten years, subject to the satisfaction of certain capital investment conditions in the last five years. From fiscal 2012 until fiscal 2021, the Company started operations in various delivery centers in Mumbai, Pune, Chennai, Gurgaon and Noida, India that were registered under the SEZ scheme. Some of these operations are eligible for a 100.0% income tax exemption for a period of five years from the date of commencement of operations, which are set to expire between fiscal 2022 and fiscal 2024. Following the expiry of the 100.0% income tax exemption, these operations are eligible for a 50.0% income tax exemption, which are set to expire between fiscal 2026 and fiscal 2034. Such income tax exemptions are only eligible for business units and operations set up under the SEZ legislation on or before March 31, 2020.

In addition to these tax holidays, our Indian subsidiaries are also entitled to certain benefits under relevant state legislation and regulations. These benefits include rebates and waivers in relation to payment for transfer of property and registration (including for purchase or lease of premises) and commercial usage of electricity.

The Government of India may enact new tax legislation that could impact the way we are taxed in the future. For example, the change in the law in fiscal 2017 has resulted in any new business units or operations set up under the SEZ legislation after March 31, 2020 not being eligible for the same income tax holidays that our existing SEZ operations currently enjoy. See “Part I — Item 3. Key Information — D. Risk Factors — Risks Related to Key Delivery Locations — Tax legislation and the results of actions by taxing authorities may have an adverse effect on our operations and our overall tax rate.”

Philippines

From fiscal 2016 until fiscal 2021, our company started operations in various delivery centers in the Philippines which are eligible for tax exemption benefits expiring between 2020 and 2024. Following the expiry of the tax benefits, income generated by the Philippines subsidiary will be taxed at the prevailing special tax rate, which currently is 5.0% on gross profit. As per The Corporate Recovery and Tax Incentives for Enterprises Act (“CREATE”) which is effective from April, 2021, enterprises will be taxed at 5% on gross profit for a fixed period of 10 years. The CREATE will not have any impact with respect to units claiming existing tax benefits. The company will continue to enjoy tax benefits till fiscal 2024 and following the expiry of tax benefits, the income would be taxed at the special rate of 5% on gross profits.

Sri Lanka

Our operations in Sri Lanka were eligible to claim income tax exemption with respect to the profits earned from export revenue until fiscal 2018 and have since been taxed at 14% on net basis with effect from April 1, 2018 until December 31, 2019. From January 1, 2020, our operations in Sri Lanka are eligible to claim income tax exemption with respect to the profits earned from export revenue till such exemptions are revoked due to change in legislation.

Costa Rica

Our subsidiary in Costa Rica is eligible for a 50.0% income tax exemption from fiscal 2018 to fiscal 2021. Thereafter, unless the exemption is extended, company would be liable to pay tax at the rate of 30%.

 

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See “Part I — Item 5. Operating and Financial Review and Prospects — Critical Accounting Policies — Income Taxes.”

Enforcement of Civil Liabilities

We are incorporated in Jersey, Channel Islands. Most of our directors and executive officers reside outside of the US. Substantially all of the assets of these persons and substantially all of our assets are located outside the US. As a result, it may not be possible for investors to effect service of process on these persons or us within the US, or to enforce against these persons or us, either inside or outside the US, a judgment obtained in a US court predicated upon the civil liability provisions of the federal securities or other laws of the US or any state thereof. A judgment of a US court is not directly enforceable in Jersey, but constitutes a cause of action which will be enforced by Jersey courts provided that:

 

  

the court which pronounced the judgment has jurisdiction to entertain the case according to the principles recognized by Jersey law with reference to the jurisdiction of the US courts;

 

  

the judgment is given on the merits and is final and conclusive — it cannot be altered by the courts which pronounced it;

 

  

there is payable pursuant to the judgment a sum of money, not being a sum payable in respect of tax or other charges of a like nature or in respect of a fine or other penalty;

 

  

the courts of the US have jurisdiction in the circumstances of the case;

 

  

the judgment can be enforced by execution in the jurisdiction in which the judgment is given;

 

  

the person against whom the judgment is given does not benefit from immunity under the principles of public international law;

 

  

there is no earlier judgment in another court between the same parties on the same issues as are dealt with in the judgment to be enforced;

 

  

the judgment was not obtained by fraud, duress and was not based on a clear mistake of fact; and

 

  

the recognition and enforcement of the judgment is not contrary to public policy in Jersey, including observance of the principles of natural justice which require that documents in the US proceeding were properly served on the defendant and that the defendant was given the right to be heard and represented by counsel in a free and fair trial before an impartial tribunal.

It is the policy of Jersey courts to award compensation for the loss or damage actually sustained by the person to whom the compensation is awarded. Although the award of punitive damages is generally unknown to the Jersey legal system, there is no prohibition on them either by statute or by customary law. Whether a judgment is contrary to public policy depends on the facts of each case. Exorbitant, unconscionable, or excessive awards will generally be contrary to public policy. Moreover, if a US court gives a judgment for multiple damages against a qualifying defendant, the Protection of Trading Interests Act 1980, an Act of the UK extended to Jersey by the Protection of Trading Interests Act 1980 (Jersey) Order 1983 (“the Order”), provides that such judgment would not be enforceable in Jersey and the amount which may be payable by such defendant may be limited. The Order provides, among others, that such qualifying defendant may be able to recover such amount paid by it as represents the excess of such multiple damages over the sum assessed as compensation by the court that gave the judgment. A “qualifying defendant” for these purposes is a citizen of the UK and Colonies, a body corporate incorporated in the UK, Jersey or other territory for whose international relations the UK is responsible or a person carrying on business in Jersey.

 

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Jersey courts cannot enter into the merits of the foreign judgment and cannot act as a court of appeal or review over the foreign courts. It is doubtful whether an original action based on US federal securities laws can be brought before Jersey courts. A plaintiff who is not resident in Jersey may be required to provide security for costs in the event of proceedings being initiated in Jersey. There is uncertainty as to whether the courts of Jersey would:

 

  

recognize or enforce judgments of US courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the US or any state in the US; or

 

  

entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the federal securities laws of the US or any state in the US.

In India, recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the Code of Civil Procedure, 1908 (India) (the “Civil Code”), as amended. Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court in any country or territory outside India which the Indian government has by notification declared to be a reciprocating territory, such foreign judgment may be enforced in India by proceedings in execution as if the judgment had been rendered by a competent court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being in the nature of amounts payable in respect of taxes or other charges of a similar nature or in respect of fines or other penalties and does not include arbitration awards. The US has not been declared by the Indian government to be a reciprocating territory for the purposes of Section 44A of the Civil Code. Accordingly, a judgment of a foreign court, which is not a court in a reciprocating territory, may be enforced in India only by a fresh suit instituted in a court of India and not by proceedings in execution. Furthermore, the execution of the foreign decree under Section 44A of the Civil Code is also subject to the exception under Section 13 of the Civil Code, as discussed below.

Section 13 of the Civil Code, states that a foreign judgment is conclusive as to any matter directly adjudicated upon except:

 

  

where the judgment has not been pronounced by a court of competent jurisdiction;

 

  

where the judgment has not been given on the merits of the case;

 

  

where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases where such law is applicable;

 

  

where the proceedings in which the judgment was obtained were opposed to natural justice;

 

  

where the judgment has been obtained by fraud; or

 

  

where the judgment sustains a claim founded on a breach of any law in force in India.

The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with public policy in India. A party seeking to enforce a foreign judgment in India is required to obtain prior approval from the Reserve Bank of India under the Indian Foreign Exchange Management Act, 1999, to repatriate any amount recovered pursuant to such execution and such amount may be subject to tax in accordance with applicable laws. Any judgment in a foreign currency would be converted into Indian rupees on the date of judgment and not on the date of payment. We cannot predict whether a suit brought in a court in India will be disposed of in a timely manner.

 

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C. Organizational Structure

The following diagram illustrates our company’s organizational structure and the place of organization of each of our subsidiaries as at the date hereof. Unless otherwise indicated, each of our subsidiaries is wholly owned, directly or indirectly, by WNS (Holdings) Limited. Directly owned subsidiaries of WNS are represented by shaded boxes.

WNS Group Corporate Structure

 

LOGO

Notes:

 

(1) 

All the shares except one share of WNS Business Consulting Services Private Limited are held by WNS North America Inc. The remaining one share is held by a nominee shareholder on behalf of WNS North America Inc. to satisfy the regulatory requirement to have a minimum of two shareholders.

(2) 

WNS Cares Foundation is a “not for profit organization” registered under Section 8 of the Indian Companies Act, 2013, formed for the purpose of promoting corporate social responsibilities. As a result, it is not considered for the purpose of preparing our consolidated financial statements.

(3) 

On July 3, 2020, our WNS Global Services Netherlands Cooperatief U.A. Merkezi Hollanda Istanbul Merkez (Turkey Branch) was renamed WNS Global Services Netherlands B.V Merkezi Hollanda Istanbul Merkez Subesi.

 

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D. Property, Plants and Equipment

As at March 31, 2021, we have an installed capacity of 34,365 production workstations, or seats, that can operate on an uninterrupted 24/7 basis and can be staffed on a three-shift per day basis.

The majority of our properties are leased by us, as described in the table below, and most of our leases are renewable at our option, as described below. The following table describes each of our delivery centers and sales offices, including centers under construction, and sets forth our lease expiration dates.

 

Location

  

Total Space

(square feet)

  

Total number of

work stations

  

Lease Expiration Date

  

Extendable Until ( 1)

India:

        

Mumbai

  421,387  3,078    

Godrej Plant 10

      February 15, 2026  N/A

Godrej Plant 11

      February 15, 2026  N/A

Godrej Plant 5

      February 15, 2026  N/A

Raheja (SEZ), Airoli

      May 31, 2029  N/A

Interface building, Malad -4th floor

      March 31, 2025  N/A

Gurgaon

  299,171  3,958    

World Tech park Block – B2 9th floor

      May 25, 2022  May 25, 2027

World Tech park Block – B3 9th floor

      June 14, 2022  June 14, 2027

World Tech Park – 8th, 9th, 10th & part 11th floor

      April 27, 2024  N/A

World Tech Park – Remaining part of 11th floor

      April 27, 2024  N/A

World Tech Park – Block A3, 11th floor

      April 28, 2024  N/A

World Tech Park – Block B3 10th floor

      January 19, 2024  January 19, 2029

World Tech Park – Block B2 10th floor

      November 28, 2024  November 28, 2029

Pune

  722,505  8,695    

Magarpatta

      N/A  N/A

Weikfield – Phase I

      February 14, 2023  N/A

Weikfield – Phase II

      April 30, 2023  N/A

Weikfield – Phase III

      June 14, 2023  N/A

Magarpatta (SEZ) – Level 5

      February 14, 2026  N/A

Magarpatta (SEZ) – Level 6

      October 26, 2021  October 26, 2026

Magarpatta (SEZ) – Level 7

      February 28, 2022  February 28, 2027

Magarpatta – Tower 9

      February 28, 2029  N/A

Pune Info city – 5th floor

      June 14, 2022  June 14, 2027

Pune Info city – 4th floor

      June 14, 2023  June 14, 2028

Pune Info city – 3rd floor

      September 30, 2023  September 30, 2033

AWFIS Solutions

      June 30, 2021  N/A

Nashik

  98,173�� 1,544    

Shreeniketan

      June 30, 2023  N/A

Vascon

      October 13, 2023  N/A

Ashoka Business Conclave – 6th floor

      November 19, 2024  N/A

Bangalore

  191,890  1,986    

RMZ Centennial – Ground floor and Level 1

      June 14, 2025  June 14, 2028

RMZ Centennial – Level 2 and 3

      October 31, 2025  October 31, 2028

RMZ Centennial – Terrace

      July 31, 2025  July 31, 2028

Chennai

  125,644  945    

RMZ Millenia Ground and 1st floor

      March 31, 2024  March 31, 2045

DLF (SEZ) - Phase 1

      March 15, 2026  March 31, 2031

DLF (SEZ) - Phase 2

      March 15, 2026  March 31, 2031

DLF IT SEZ - 9th floor

      March 15, 2026  March 15, 2031

Vishakhapatnam

  71,633  1,071    

MPS Plaza

      March 4, 2022  March 4, 2027

Apeita Tech-hub

      March 31, 2026  March 31, 2029

Noida

  22,111  265    

Brookfield

      January 22, 2023  January 22, 2033

Sri Lanka:

  54,675  814    

Colombo (HNB) - Level 12 and 13

      July 31, 2028  N/A

Colombo (Orion City)

      August 24, 2023  August 24, 2028

UK:

  14,810  176    

Ipswich (Museum Street)

      May 23, 2028  N/A

Piccadilly (Malta House)

      February 10, 2027  N/A

Sackville House,39-40 Piccadilly

      January 9, 2025  January 9, 2030

Regus Manchester Didsbury

      September 30, 2021  N/A

US:

  130,376  625    

7909 Parklane Road, Columbia SC-3rd floor

      June 30, 2021  N/A

7909 Parklane Road, Columbia SC-1st floor

      May 31, 2026  May 31, 2029

Bellevue (Sterling Plaza) - 5th and 6th floors

      May 31, 2024  N/A

NY (East Greenbush) (2)

      April 30, 2021  N/A

Pittsburg (One Waterfront Place)

      July 31, 2022  July 31, 2027

Houston (Corporate Drive)

      June 30, 2022  June 30, 2027

Houston (Northchase Drive)

      March 31, 2026  March 31, 2036

Jay Madison Avenue

      June 30, 2024  N/A

Turkey:

  N/A  10    

Istanbul (MeydanK Plaza)

      April 30, 2022  N/A

Switzerland:

  2,077  —      

Zurich (Bahnhofstrasse) (3)

      Not specified  N/A

Romania:

  42,194  524    

Bucharest (West Gate) - 2nd and 3rd floors

      January 19, 2023  January 19, 2026

 

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Location

  

Total Space

(square feet)

  

Total number of

work stations

  

Lease Expiration Date

  

Extendable Until ( 1)

Philippines:

        

Manila

  529,593  6,021    

Eastwood - 10th floor

      June 30, 2023  June 30, 2026

Eastwood - 9th floor

      June 30, 2023  June 30, 2026

Techno Plaza II

      April 30, 2026  N/A

Zeta Tower - 10th floor

      May 14, 2024  May 14, 2029

Exxa tower - 15th floor

      March 19, 2023  March 19, 2028

Exxa Tower - 16th floor

      June 14, 2023  June 14, 2028

Exxa Tower - 17th floor

      November 30, 2023  November 30, 2028

Giga Tower - 8th floor

      October 15, 2024  October 15, 2029

Giga Tower - 9th floor

      April 30, 2025  April 30, 2030

Ilo Ilo

        

One Global Centre

      January 15, 2026  N/A

Three Techno Place - 4th floor

      March 15, 2022  N/A

Two Techno Place

      April 30, 2024  April 30, 2029

Acclaim CPU-Ground and 2nd level

      June 30 ,2021  N/A

Acclaim West

      May 31, 2021  N/A

Alabang

        

Vector 2 - 9th and 10th floors (4)

      September 30, 2021  N/A

Capella - 15th and 16th floors

      June 30, 2022  June 30, 2027

FiliInvest Axis - 21st floor

      August 14, 2023  August 14, 2028

FiliInvest Axis - 22nd floor

      November 30, 2023  November 30, 2028

Tera Towers

      September 30, 2025  N/A

Costa Rica:

  12,592  200    

San Jose (Forum H)

      April 30, 2025  NA

United Arab Emirates:

  510  N/A    

Dubai Airport Free Trade Zone

      November 22, 2023  N/A

South Africa:

  285,833  3,732    

Cape Town

        

Knowledge Park

      March 31, 2025  March 31, 2030

Claremont - Level 4

      June 30, 2022  June 30, 2027

Claremont - Level 5

      June 30, 2022  June 30, 2027

Bellavile

        

Ambition House - 4th floor

      October 31, 2022  N/A

Johannesburg

        

DownSouth Ridge Park

      August 31, 2021  August 31, 2026

Port Elizabeth (CoEGA)

      August 31, 2023  August 31, 2025

Durban

        

Hippopark Avenue - Sections 1 and 2 (5)

      October 31, 2021  N/A

Grid Eye

      June 30, 2021  June 30, 2026

Poland:

  17,401  217    

Gdynia (Luzycka Office Park)- Buildings C and D

      August 31, 2022  August 31, 2027

Gdynia (Luzycka Office Park)- Buildings B

      August 31, 2022  N/A

China:

  41,904  434    

Guangzhou (Zhongshan Street) – 22nd and 30th floor

      April 30, 2024  N/A

Dalian (Dalian Software Park) - Building 22

      May 15, 2023  N/A

Beijing (YongAnDongLi) - 5th floor

      September 30, 2021  N/A

Shanghai (Huangu PL)

      January 31, 2022  N/A

Germany:

  NA  1    

Friedrich-Ebert-Anlage 36

      October 31,2022  N/A

Australia:

  4,377  17    

Sydney (Berry Street)

      March 27, 2023  N/A

Sydney (Chandos Street)

      September 30, 2021  N/A

Spain:

  3,806  52    

4A, Mira II, Balear - 1st floor

      July 17, 2023  N/A

5A, Mira II, Balear - 1st floor

      September 6, 2023  N/A

Notes:

N/A means not applicable.

 

(1) 

Reflects the expiration date if the applicable extension option is exercised.

(2) 

As at date, the lease stands expired and we have not renewed the same.

(3) 

The lease may be terminated with a three-month’s notice.

(4) 

We have served a notice of termination of the lease to the lessor and the lease will be terminated on September 30, 2021.

(5) 

We have served a notice of termination of the lease to the lessor and the lease will be terminated on October 31, 2021.

Our delivery centers are equipped with fiber optic connectivity and have backups to their power supply designed to achieve uninterrupted operations. In fiscal 2022, we intend to continue to streamline our operations by further consolidating production capacities in our delivery centers.

 

ITEM 4A.

 UNRESOLVED STAFF COMMENTS

None.

 

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ITEM 5.

 OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion on the financial condition and results of operations of our company should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. Some of the statements in the following discussion contain forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including, but not limited to, those described below and elsewhere in this annual report, particularly in the risk factors described in “Part I — Item 3 Key Information — D. Risk Factors.”

For a discussion of our results in fiscal 2020 compared to fiscal 2019 and certain comparative numbers in fiscal 2019, please refer to “Part I — Item 5. Operating and Financial Review and Prospects” contained in our Annual Report on Form 20-F for fiscal 2020 filed with the SEC on May 1, 2020.

Overview

We are a leading global provider of BPM services, offering comprehensive data, voice, analytical and business transformation services with a blended onshore, near shore and offshore delivery model. We transfer the business processes of our clients to our delivery centers, located in Australia, China, Costa Rica, India, the Philippines, Poland, Romania, South Africa, Spain, Sri Lanka, Turkey, the UK, and the US, with a view to offer cost savings, operational flexibility, improved quality and actionable insights to our clients. We seek to help our clients “transform” their businesses by identifying business and process optimization opportunities through technology-enabled solutions, improvements to their processes, global delivery capabilities, analytics and an understanding of their business.

We win outsourcing engagements from our clients based on our domain knowledge of their business, our experience in managing the specific processes they seek to outsource and our customer-centric approach. Our company is organized into vertical business units in order to provide more specialized focus on each of the industries that we target, to more effectively manage our sales and marketing process and to develop in-depth domain knowledge. The major industry verticals we currently target are the insurance; healthcare; diversified businesses (including manufacturing, retail and CPG, media and entertainment, and telecom); travel and leisure; shipping and logistics; consulting and professional services; banking and financial services; and utilities industries.

Our portfolio of services includes vertical-specific processes that are tailored to address our clients’ specific business and industry practices. In addition, we offer a set of shared services that are common across multiple industries, including finance and accounting, customer experience services, research and analytics, technology services, legal services, and human resources outsourcing.

Although we typically enter into long-term contractual arrangements with our clients, these contracts can usually be terminated with or without cause by our clients and often with short notice periods. Nevertheless, our client relationships tend to be long-term in nature given the scale and complexity of the services we provide coupled with risks and costs associated with switching processes in-house or to other service providers. We structure each contract to meet our clients’ specific business requirements and our target rate of return over the life of the contract. In addition, since the sales cycle for offshore business process management is long and complex, it is often difficult to predict the timing of new client engagements. As a result, we may experience fluctuations in growth rates and profitability from quarter to quarter, depending on the timing and nature of new contracts. Our operating results may also differ significantly from quarter to quarter due to seasonal changes in the operations of our clients. For example, our clients in the travel and leisure industry typically experience seasonal changes in their operations in connection with the US summer holiday season, as well as episodic factors such as adverse weather conditions. Our focus, however, is on deepening our client relationships and maximizing shareholder value over the life of a client’s relationship with us.

The following table represents our revenue (a GAAP financial measure) for the periods indicated:

 

   Year ended March 31, 
   2021   2020 
   (US dollars in millions) 

Revenue

  $912.6   $928.3 

Our revenue is generated primarily from providing business process management services. We have two reportable segments for financial statement reporting purposes — WNS Global BPM and WNS Auto Claims BPM. In our WNS Auto Claims BPM segment, we provide both “fault” and “non-fault” repairs. For “fault” repairs, we provide claims handling and repair management services, where we arrange for automobile repairs through a network of third party repair centers. In our repair management services, where we act as the principal in our dealings with the third party repair centers and our clients, the amounts which we invoice to our clients for payments made by us to third party repair centers are reported as revenue. Where we are not the principal in providing the services, we record revenue from repair services net of repair cost. See Note 2(s) to our consolidated financial statements included elsewhere in this annual report. Since we wholly subcontract the repairs to the repair centers, we evaluate the financial performance of our “fault” repair business based on revenue less repair payments to third party repair centers, which is a non-GAAP financial measure. We believe that revenue less repair payments (a non-GAAP financial measure) for “fault” repairs reflects more accurately the value addition of the business process management services that we directly provide to our clients. Management believes that revenue less repair payments (non-GAAP) may be useful to investors as a more accurate reflection of our performance and operational results.

 

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For our “non-fault” repairs business, we generally provide a consolidated suite of accident management services including credit hire and credit repair, and we believe that measurement of such business on a basis that includes repair payments in revenue is appropriate. Revenue including repair payments is therefore used as a primary measure to allocate resources and measure operating performance for accident management services provided in our “non-fault” repairs business. Our “non-fault” repairs business where we provide accident management services accounts for a relatively small portion of our revenue for our WNS Auto Claims BPM segment.

Revenue less repair payments is a non-GAAP financial measure which is calculated as (a) revenue less (b) in our auto claims business, payments to repair centers for “fault” repair cases where we act as the principal in our dealings with the third party repair centers and our clients. This non-GAAP financial information is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Our revenue less repair payments (non-GAAP) may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation.

The following table reconciles our revenue (a GAAP financial measure) to revenue less repair payments (a non-GAAP financial measure) for the periods indicated:

 

   Year ended March 31, 
   2021   2020 
   (US dollars in millions) 

Revenue

  $912.6   $928.3 

Less: Payments to repair centers(1)

   43.9    32.0 
  

 

 

   

 

 

 

Revenue less repair payments (non-GAAP)

  $868.7   $896.2 
  

 

 

   

 

 

 

Note:

 

(1) 

Consists of payments to repair centers in our auto claims business for “fault” repair cases where we act as the principal in our dealings with the third party repair centers and our clients.

The following table sets forth our constant currency revenue less repair payments (a non-GAAP financial measure) for the periods indicated. Constant currency revenue less repair payments is a non-GAAP financial measure. We present constant currency revenue less repair payments (non-GAAP) so that revenue less repair payments (non-GAAP) may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of business performance. Constant currency revenue less repair payments (non-GAAP) is presented by recalculating prior period’s revenue less repair payments (non-GAAP) denominated in currencies other than in US dollars using the foreign exchange rate used for the latest period, without taking into account the impact of hedging gains/losses. Our non-US dollar denominated revenue includes, but is not limited to, revenue denominated in pound sterling, the Australian dollar, the Euro and the South African rand. Management believes constant currency revenue less repair payments (non-GAAP) may be useful to investors in evaluating the underlying operating performance of our company. This non-GAAP financial information is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Our constant currency revenue less repair payments (non-GAAP) may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation.

 

   Year ended March 31, 
   2021   2020 
   (US dollars in millions) 

Revenue less repair payments (non-GAAP)

  $868.7   $896.2 

Exchange rate impact

   (4.2   (1.9
  

 

 

   

 

 

 

Constant currency revenue less repair payments (non-GAAP)

  $864.5   $894.3 
  

 

 

   

 

 

 

 

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Global Economic Conditions

Global economic conditions continue to show signs of turbulence. The COVID-19 pandemic has had, and is likely to continue to have, a significant impact on the global economy, our clients’ businesses, and on our operations, financial performance and visibility, as described in further detail below, see “—Impact of COVID-19.”

The recent global outbreak and spread of the COVID-19 disease caused by the severe acute respiratory syndrome coronavirus 2, which was reported to have surfaced in December 2019, has caused, and is likely to continue to cause, an additional slowdown in the global economy, as is evidenced by the recent declines in investments, exports and industrial production. In March 2020, the International Monetary Fund officially declared that the global economy has entered into a recession, as a result of the spread of COVID-19. The global spread of COVID-19 has created, and is likely to continue to create, significant volatility and uncertainty and economic disruption. In addition, volatility in the domestic politics of major markets may lead to changes in the institutional framework of the international economy.

The withdrawal of the UK from the EU in January 2020, commonly referred to as “Brexit,” has also created significant political and economic uncertainty regarding the future trading relationship between the UK and the EU. In particular, the UK has ratified a trade and cooperation agreement governing its future relationship with the EU. The agreement, which is being applied provisionally from January 1, 2021 until it is ratified by the European Parliament and the Council of the European Union, addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework including procedures for dispute resolution, among other things. Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the UK and the EU as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before withdrawal. These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and financial markets, and may significantly reduce global market liquidity, restrict the ability of key market participants to operate in certain financial markets or restrict our access to capital. Any of these factors could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In the US, the National Bureau of Economic Research declared in June 2020 that the US economy officially entered a recession in February 2020, and there are concerns over the possibility of its economy entering into a deep recession, including on account of the COVID-19 pandemic. There continue to be similar signs of continued economic slowdown and weakness in parts of Europe and India. Globally, countries may require additional financial support, sovereign credit ratings may continue to decline, and there may be default on sovereign debt obligations of certain countries. Any of these global economic conditions may increase the cost of borrowing and cause credit to become more limited, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. For further information, see “Part I — Item 3. Key Information — D. Risk Factors — The global economic and geo-political conditions have been and continue to be challenging and have had, and may continue to have, an adverse effect on the financial markets and the economy in general, which has had, and may continue to have, a material adverse effect on our business, financial performance, results of operations and cash flows and the prices of our equity shares and ADSs.”

These economic and geo-political conditions may affect our business in a number of ways, as we have operations in 13 countries and we service clients across multiple geographic regions. The general level of economic activity, such as decreases in business and consumer spending, could result in a decrease in demand for our services, thus reducing our revenue. The cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. The current global economic slowdown and the possibility of continued turbulence or uncertainty in the European, US, Asian and international financial markets and economies, and the political climate in the US and the UK, may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our clients. If these market conditions continue or worsen, they may limit our ability to access financing or increase our cost of financing to meet liquidity needs, and affect the ability of our clients to use credit to purchase our services or to make timely payments to us, resulting in adverse effects on our financial condition and results of operations. In the US, there is concern over slowing economic growth and continuing trade tensions.

Furthermore, a weakening of the rate of exchange for the pound sterling, the US dollar or, to a lesser extent, the Australian dollar or the Euro (in which our revenue is principally denominated) against the Indian rupee, or to a lesser extent, the Philippine Peso or the South African rand (in which a significant portion of our costs are denominated) would also adversely affect our results. Fluctuations between the pound sterling, the Indian rupee, the Philippine Peso, the South African rand, the Euro, or the Australian dollar, on the one hand, and the US dollar, on the other hand, also expose us to translation risk when transactions denominated in these currencies are translated into US dollars, our reporting currency. The exchange rates between each of the Indian rupee, the Philippine Peso, the pound sterling, the South African rand, the Euro, and the Australian dollar, on the one hand, and the US dollar, on the other hand, have changed substantially in recent years and may fluctuate substantially in the future.

For example, the Indian rupee depreciated against the US dollar by an average of 4.7%, the Philippine Peso appreciated against the US dollar by an average of 4.7%, the pound sterling appreciated against the US dollar by an average of 2.7%, the South African rand depreciated against the US dollar by an average of 10.9%, the Euro appreciated against the US dollar by an average of 5.0%, and the Australian dollar appreciated against the US dollar by an average of 5.3%, in fiscal 2021. The depreciation of the Indian Rupee and the South African rand, and the appreciation of the pound sterling, the Euro and the Australian dollar, in each case against the US dollar in fiscal 2021 positively impacted our results of operations, whereas the appreciation of the Philippine Peso against the US dollar negatively impacted our results of operations in fiscal 2021.

 

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The current global economic slowdown and uncertainty about the future global economic conditions could also continue to increase the volatility of our ADS price. We cannot predict the timing or duration of an economic slowdown or the timing or strength of a subsequent economic recovery generally or in our targeted industries, including the insurance and travel and leisure industries. If macroeconomic conditions worsen or the current global economic conditions continue for a prolonged period of time, we are not able to predict the impact that such conditions will have on our targeted industries, in general, and our results of operations specifically.

Impact of COVID-19

The COVID-19 pandemic has had and is likely to continue to have a significant impact on the global economy, our clients’ businesses, and on our operations, financial performance and visibility of business outlook. It has required organizations around the world, including WNS, to re-think their business strategies around service delivery, workforce management, information technology, cyber security and data privacy. The impact of the COVID-19 pandemic has affected, and we expect it to continue to affect, the demand for our services across industries, depending on the ability of each client, and the nature of their industries, products and services, in coping with the crisis. Our business has been, and we expect will be, impacted across industry verticals as the COVID-19 pandemic continues to affect the global economy across industries.

We have seen, and we continue to see, deterioration in many of our clients’ businesses, and the outlook going forward remains uncertain and volatile. Our revenue has faced, and continues to face, pressure from declining clients’ demand volumes (as their businesses continue to be negatively impacted), delays in new business ramp-ups, and lockdowns and other measures imposed by governments around the world, which has resulted and continues to result in our temporary inability to meet the service level and performance requirements of our clients. We have also received, and continue to receive, client requests for lower volumes, price reductions, discounts and extended payment terms.

We have a business continuity planning mechanism in place and are actively working to understand our clients’ changing requirements, adapt delivery to a “work from home” model, ensure data security, prioritize critical processes, adjust service levels and manage discretionary costs (such as travel costs) and fixed costs (such as personnel costs). While travel restrictions have had a short-term impact on our ability to deliver our services, we have been working to reduce our reliance on travel by changing our business model to be able to conduct meetings using virtual conferencing and collaboration tools. Our “work from home” delivery capability steadily improved throughout the first and second quarters and remained stable during the third and fourth quarter of fiscal 2021, from delivering over 80% of our clients’ requirements in April 2020 to an average of 98% of our clients’ requirements in the second and third quarters and over 99% of our client’s requirements in fourth quarter of fiscal 2021, which represents our current maximum delivery capability in a “work from home” model given the current lockdown restrictions in the locations in which we operate and certain clients not authorizing us to perform the remaining process work remotely due to its sensitive nature. In addition, we have also worked, and will continue to work with national, state, and local authorities, so as to comply with applicable rules and regulations related to the COVID-19 pandemic.

Due to the need to ensure the continuity of our operations, the COVID-19 pandemic has required us to increase our expenses to ensure an adequate transition. For example, we have incurred costs as we significantly shifted towards a “work from home” model, where we purchased additional equipment (such as desktops and laptops) for our employees’ home use, software and internet connectivity devices, productivity enhancement technology tools, provided accommodation, meal and transportation allowances and overtime compensation to our employees and organized sanitization and cleaning of our offices and facilities. As a result of these early investments, we are now able to execute a “work from home” model for both existing and new clients. We expect that we will continue to require additional expenditures to meet evolving client requirements for flexible work arrangements and expanded services to support areas outside of their traditional business focus. We also expect that we will continue to incur additional costs to monitor and improve operational efficiency of our “work from home” model, invest in information technology solutions and security measures to safeguard against information security risks and incrementally transition to a hybrid “work from home” and office model on a limited basis as local restrictions ease and circumstances permit, including costs to implement safeguards to protect the health and safety of our employees as they gradually return to the office. We believe that these short-to-medium term costs incurred might benefit us in the long term, as these steps have broadened our “remote working” capabilities, which we expect to become an opportunity and a permanent feature in our future delivery strategy, as well as our business continuity plans, given that the COVID-19 pandemic has caused our clients to critically evaluate their business models and potentially adopt a shift towards BPM and a greater willingness to embrace digital transformation services and technology-enabled, automated process solutions. For more details, see “Part I — Item 4. Information on the Company — Recent Developments”

The negative impact of the COVID-19 pandemic on our fiscal 2021 operations and financials is significantly greater than in fiscal 2020, as the impact in fiscal 2020 was limited to the last two weeks of the fourth quarter while we incurred a full year of the negative impact of the COVID-19 pandemic in fiscal 2021.

 

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In the short to medium term, we expect volatility to continue in the foreseeable future. We have observed demand reductions in a range of verticals, particularly travel and leisure, insurance, diversified businesses (especially manufacturing and retail) and utilities during fiscal 2021. Although we have not had any significant project cancelations to date, we have agreed to limited volume commitment and payment term concessions with certain clients that have been significantly affected by the COVID-19 pandemic. Beginning in June and July of fiscal 2021, we have observed a gradual resurgence of client engagement, particularly in the areas of competitive positioning and cost reduction, accelerating digital transformation and improving operational flexibility. Further, we believe that there are industry verticals, such as healthcare and telecom, where we might see a medium- to long-term increase in the business.

In the longer term, while we remain confident in our business and the quality of our services, the magnitude of the impact to our business and financial performance in fiscal 2022 and beyond will be a function of several factors, including, but not limited to, the following:

 

  

the level of demand for services from clients across the industries, including the demand within their own customer base that we serve;

 

  

the extent of governmental restrictions, such as lockdowns and travel restrictions, which will affect our ability to sustain the delivery of services to clients and to gain new business in a “remote working” environment;

 

  

our ability to implement policies and measures to ensure the health and safety of our employees, such as conducting temperature screening for all personnel and visitors, ensuring adequate cleaning of our offices and facilities and having adequately aware and trained medical staff;

 

  

the impact and challenge of implementing “remote working” arrangements on the effectiveness of our productivity or operating capability, especially for our employees working in India, the Philippines, South Africa and Sri Lanka, due to varying local governmental regulations, client requirements, size and scale of operations and technology or infrastructure issues, such as hardware access, software compatibility and internet connectivity;

 

  

the volatility in exchange rate movements; and

 

  

the duration of the COVID-19 pandemic globally and the duration that it will takes for our clients’ businesses to stabilize and recover.

 

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We are continually evaluating the impact of the COVID-19 pandemic on our liquidity and financial position. As at March 31, 2021, we have cash and investments of $395.2 million, unutilized lines of credit amounting to $99.4 million and debt amounting $16.7 million. Based on our current level of operations, we expect that our anticipated cash generated from operating activities, cash and cash equivalents on hand, and use of existing credit facilities will be sufficient to fund our debt repayment obligations, estimated capital expenditures and working capital needs for the next 12 months, and we do not expect any material changes at this point in time in our ability to source for additional lines of credit, if required, or in the cost to access capital and funding sources. However, under the current challenging economic and business conditions as discussed under “— Global Economic Conditions,” there can be no assurance that our business activity would be maintained at the expected level to generate the anticipated cash flows from operations. Also, see “Part I — Item 5. Operating and Financial Review and Prospects — Liquidity and Capital Resources” for more information.

Further, in evaluating the recoverability of our trade receivables, including unbilled revenue, contract assets, goodwill, long lived assets and investments, we have considered the available internal and external information in the preparation of our consolidated financial statements. Having performed a sensitivity analysis based on the current assumptions and indicators of future economic conditions, we expect to recover the carrying amount of these assets; however, the impact of the COVID-19 pandemic may be different from the assumptions and estimates which we used and the scale and duration of COVID-19 related developments are unknown and could have macro and micro negative effects on the financial markets and global economy, which could in turn have a material adverse effect on our operations and financial results, earnings, cash flow and financial condition.

Following the COVID-19 pandemic, there is a possibility that more businesses globally will adopt delivery models with improved technology infrastructure, and incorporate elements of the “work from home” model. Countries may enact more flexible labor laws, which may potentially expand a company’s employee base to include a higher number of part-time and gig workers, such as independent contractors, online platform workers, contract firm workers and on-call workers. This may allow businesses such as ours to expand delivery models beyond the larger cities and into the smaller ones, for example, Tier 2 and Tier 3 cities in India.

For further information, see “Part I — Item 3. Key Information — D. Risk Factors — Our business operations and future growth may be negatively impacted on account of the COVID-19 pandemic.”

Our History and Milestones

We began operations as an in-house unit of British Airways in 1996 and started focusing on providing business process management services to third parties in fiscal 2003. The following are the key milestones in our operating history since Warburg Pincus acquired a controlling stake in our company from British Airways in May 2002 and inducted a new senior management team:

Fiscal 2003 – Fiscal 2008

 

  

We made a number of acquisitions that helped expand our service offerings. These acquisitions included:

 

  

Town and Country Assistance Limited (which we subsequently rebranded as WNS Assistance and which is part of WNS Auto Claims BPM), a UK-based automobile claims handling company, in fiscal 2003;

 

  

the health claims management business of Greensnow Inc., in fiscal 2004;

 

  

Trinity Partners Inc. (which we subsequently merged into our subsidiary, WNS North America Inc.), a provider of BPM services to financial institutions, focusing on mortgage banking, in fiscal 2006;

 

  

The fare audit services business of PRG Airlines and the financial accounting business of GHS, in fiscal 2007;

 

  

Marketics, a provider of offshore analytics services; and Flovate (which we subsequently renamed as WNS Workflow Technologies Limited), a company engaged in the development and maintenance of software products and solutions, in fiscal 2008.

 

  

We completed our initial public offering, whereupon our ADSs became listed on the NYSE under the symbol “WNS” in fiscal 2007.

 

  

We invested in our infrastructure to expand our service portfolio from data-oriented processing to include complex voice and blended data/voice service capabilities, and commenced offering comprehensive processes in the travel and leisure, banking and financial services and insurance industries.

 

  

We opened facilities in a number of locations, including Gurgaon, India; Colombo, Sri Lanka; and Bucharest, Romania, thereby expanding our operating footprint across India, Sri Lanka and Romania. We also expanded our facilities in Gurgaon, Mumbai and Pune, India. In fiscal 2008, we transferred our delivery center in Sri Lanka to Aviva Global pursuant to “build-operate-transfer” contractual arrangement we had with Aviva.

 

  

We entered into a joint venture with ACS, a provider in BPM services and customer experience services in the Philippines, to form WNS Philippines Inc. (which became our wholly owned subsidiary following our acquisition of ACS’s shareholding in WNS Philippines Inc, in fiscal 2012).

Fiscal 2009 – Fiscal 2013

 

  

We acquired a number of companies, including:

 

  

Chang Limited, an auto insurance claims processing services provider in the UK, in fiscal 2009;

 

  

BizAps, a provider of SAP® solutions, in fiscal 2008 to optimize the enterprise resource planning functionality for our finance and accounting processes;

 

  

Aviva Global (which we renamed to WNS Global Singapore) from Aviva in fiscal 2009, and resumed ownership of the delivery center in Sri Lanka that was transferred to Aviva Global in fiscal 2008, as mentioned above. In connection with this acquisition, we also expanded the provision of our BPM services to Aviva’s UK, Irish and Canadian businesses; and

 

  

Fusion (which we subsequently renamed as WNS Global Services SA (Pty) Ltd), a provider of a range of management services, including contact center, customer care and business continuity services, to both South African and international clients, in fiscal 2013.

 

  

We opened facilities in Manila, the Philippines; San Jose, Costa Rica; Vizag, India; and Gydnia, Poland; and also expanded various facilities in India, the Philippines, Costa Rica and Romania, as well as our sales office in the UK.

 

  

We completed a follow-on public offering of ADSs in fiscal 2012, which raised approximately $50.0 million to fund our growth initiatives and enhance delivery capability.

 

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Fiscal 2014 – 2018

 

  

We acquired the following companies in fiscal 2017:

 

  

Value Edge Research Services Private Limited (“Value Edge”), a leading provider of commercial research and analytics services to clients in the pharmaceutical and biopharmaceutical industries;

 

  

Denali Sourcing Services Inc. (“Denali”), a leading provider of strategic procurement BPM services; and

 

  

MTS HealthHelp Inc. and its subsidiaries (“HealthHelp”), an industry leader in care management.

 

  

We opened new facilities in Guangzhou, Dalian and Shanghai, China; Colombo, Sri Lanka; Mumbai, Pune, Noida and Vishakhapatnam, India; Cape Town, Durban, Port Elizabeth and Centurion, South Africa; Iloilo, Manila and Alabang, the Philippines; Pennsylvania, Bellevue, Pittsburgh, New York City and Houston, US; Istanbul, Turkey; and Constanta, Romania. We also expanded our facilities in Gurgaon, Nashik and Pune, India; and Guangzhou, China.

Fiscal 2019 – present

We added new facilities in Manila and Iloilo, the Philippines; Madrid, Spain; Vizag and Pune, India; and New South Wales, Australia. We also expanded our facilities in Bangalore, Gurgaon, Nashik and Pune, India;

Revenue

We generate revenue by providing business process management services to our clients. The following table shows our revenue (a GAAP financial measure) and revenue less repair payments (a non-GAAP financial measure) for the periods indicated:

 

   Year ended March 31,   Change 
   2021   2020   $  % 
   (US dollars in millions)    

Revenue

  $912.6   $928.3    (15.6  (1.7)% 

Revenue less repair payments (non-GAAP)

  $868.7   $896.2    (27.5  (3.1)% 

We have a large client base diversified across industries and geographies. As at March 31, 2021, we had a diverse client base of 384 clients (with each client generating more than $0.01 million in revenue in fiscal 2021).

Our revenue is characterized by client, industry, service type, geographic and contract type diversity, as the analysis below indicates.

Revenue by Top Clients

In fiscal 2021 and 2020, the percentage of revenue and revenue less repair payments (non-GAAP) that we derived from our largest clients were in the proportions set forth in the following table:

 

   As a percentage of revenue  As a percentage of revenue less
repair payments (non-GAAP)
 
   Year ended March 31,  Year ended March 31, 
   2021  2020  2021  2020 

Top client

   8.1  6.9  8.5  7.1

Top five clients

   26.8  25.1  27.6  26.0

Top ten clients

   42.3  41.2  43.4  42.6

Top twenty clients

   58.8  57.1  58.5  58.3

Revenue by Industry

For financial statement reporting purposes, we aggregate our operating segments, except for the WNS Auto Claims BPM (which we market under the WNS Assistance brand) as it does not meet the aggregation criteria under IFRS. See “— Results by Reportable Segment.”

We organize our company into the following industry-focused business units to provide more specialized focus on each of these industries: insurance; healthcare; diversified businesses (including manufacturing, retail, CPG, media and entertainment, and telecom); travel and leisure; shipping and logistics; consulting and professional services; banking and financial services; and utilities .

In fiscal 2021 and 2020, our revenue and revenue less repair payments (non-GAAP) were diversified across our industry-focused business units in the proportions set forth in the following table:

 

   As a percentage of revenue  As a percentage of revenue less
repair payments (non-GAAP)
 
   Year ended March 31,  Year ended March 31, 

Service Type

  2021  2020  2021  2020 

Insurance

   29.2  27.7  25.6  25.2

Healthcare

   18.9  15.8  19.9  16.4

Diversified businesses including manufacturing, retail, CPG, media and entertainment, and telecom

   15.3  16.5  16.1  17.1

Travel and leisure

   14.2  18.0  14.9  18.6

Shipping and logistics

   7.0  6.0  7.3  6.3

Consulting and professional services

   6.2  5.4  6.5  5.5

Banking and financial services

   4.7  4.3  4.9  4.4

Utilities

   4.5  6.3  4.8  6.5
  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   100.0  100.0  100.0  100.0
  

 

 

  

 

 

  

 

 

  

 

 

 

 

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Certain services that we provide to our clients are subject to the seasonality of our clients’ business. Accordingly, we typically see an increase in transaction related services within the travel and leisure industry during holiday seasons, such as during the US summer holidays (our fiscal second quarter); an increase in business in the insurance industry during the beginning and end of the fiscal year (our fiscal first and last quarters) and during the US peak winter season (our fiscal third quarter); and an increase in business in the consumer product industry during the US festive season towards the end of the calendar year when new product launches and campaigns typically happen (our fiscal third quarter).

The impact of the COVID-19 pandemic has affected, and we expect it to continue to affect, the demand for our services across industries, depending on the ability of each client, and the nature of their industries, products and services, in coping with the crisis. Our business has been, and we expect will be, impacted across industry verticals as the COVID-19 pandemic continues to affect the global economy across industries. We have observed demand reductions in a range of verticals, particularly travel and leisure, insurance, diversified businesses (especially manufacturing and retail) and utilities during fiscal 2021. For further information, see “— Global Economic Conditions — Impact of COVID-19.”

Revenue by Service Type

In fiscal 2021 and 2020, our revenue and revenue less repair payments (non-GAAP) were diversified across service types in the proportions set forth in the following table:

 

   As a percentage of revenue  As a percentage of revenue less
repair payments (non-GAAP)
 
   Year ended March 31,  Year ended March 31, 

Service Type

  2021  2020  2021  2020 

Industry-specific

   40.8  39.2  42.9  40.6

Finance and accounting

   23.3  22.7  24.5  23.6

Customer experience services

   16.9  20.7  17.8  21.5

Research and analytics

   10.4  10.4  10.9  10.7

Auto claims

   6.0  5.0  1.2  1.6

Others(1)

   2.6  2.0  2.7  2.0
  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   100.0  100.0  100.0  100.0
  

 

 

  

 

 

  

 

 

  

 

 

 

Note:

 

(1)

Others includes revenue from technology services, legal services and human resources outsourcing services.

 

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Revenue by Geography

In fiscal 2021 and 2020, our revenue and revenue less repair payments (non-GAAP) were derived from the following geographies (based on the location of our clients) in the proportions set forth below in the following table:

 

   As a percentage of revenue  As a percentage of revenue less
repair payments (non-GAAP)
 
   Year ended March 31,  Year ended March 31, 

Geography

  2021  2020  2021  2020 

North America (primarily the US)

   44.2  42.3  46.5  43.8

UK

   31.4  31.4  27.9  28.9

Australia

   7.7  8.6  8.1  8.9

Europe (excluding the UK)

   6.7  8.0  7.1  8.3

South Africa

   2.9  3.8  3.0  4.0

Rest of world

   7.1  5.9  7.4  6.1
  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   100.0  100.0  100.0  100.0
  

 

 

  

 

 

  

 

 

  

 

 

 

Our business in South Africa is evaluated for compliance with the South African government’s BBBEE legislation against a BBBEE scorecard, which has different levels based on various criteria. South African government grants are available to businesses that meet specified conditions, including achieving a specified minimum BBBEE rating. A level one BBBEE rating has the most rigorous criteria. Additionally, many South African companies require their service providers to maintain a minimum BBBEE rating, and many of our South African client contracts contain clauses that allow our clients to terminate their contracts with us or impose specified penalties on us if we do not maintain a minimum BBBEE rating.

We conduct our domestic business in South Africa (serving clients based in South Africa) through our South Africa subsidiary, WNS South Africa (Pty) Ltd, and our international business in South Africa (serving clients based outside South Africa) through our South Africa subsidiary, WNS Global Services SA (Pty) Limited. During fiscal 2020, pursuant to the requirements of the South African government’s BBBEE Codes of Good Practice, the WNS B-BBEE Staff Share Trust subscribed to one participating preference share issued by WNS Global Services SA (Pty) Ltd, which entitles it to 45.56% of voting rights in WNS South Africa (Pty) Ltd. We achieved a level two rating in respect of WNS South Africa (Pty) Ltd in December 2020, which is valid until December 2021. Our program developed for the purpose of meeting the criteria to achieve the requisite BBBEE rating in respect of WNS Global Services SA (Pty) Limited includes, among other measures, divesting some of our interests in such subsidiary to address the criterion relating to the percentage of ownership of an entity by “black people” (as defined under the applicable legislation). We achieved a level six rating in respect of WNS Global Services SA (Pty) Limited in our BBBEE verification audit in February 2021, which is valid until February 2022. With the achievement of a level two rating in respect of WNS South Africa (Pty) Ltd and a level six rating in respect of WNS Global Services SA (Pty) Limited, we currently continue to meet the minimum BBBEE rating required under our South African client contracts and be eligible for government grants associated with our domestic and international business. However, there is no assurance that we will maintain our existing BBBEE rating with respect to WNS South Africa (Pty) Ltd or WNS Global Services SA (Pty) Limited in our next annual BBBEE verification audits or thereafter. If we fail to maintain or achieve the required minimum BBBEE ratings, we will cease to be eligible for government grants, will be disqualified from bidding for certain business, and certain of our clients may terminate their contracts with us or impose penalties on us. These outcomes would have an adverse effect on our business, results of operations, financial condition and cash flows.

 

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Revenue by Location of Delivery Centers

For fiscal 2021 and 2020, our revenue and revenue less repair payments (non-GAAP) were derived from the following geographies (based on the location of our delivery centers) in the proportions set forth in the following table:

 

   As a percentage of revenue  As a percentage of revenue less
repair payments (non-GAAP)
 
   Year ended March 31,  Year ended March 31, 

Location of Delivery Center

  2021  2020  2021  2020 

India

   50.8  51.3  53.4  53.1

United States

   16.5  14.4  17.3  15.0

Philippines

   13.1  14.0  13.8  14.5

UK(1)

   7.9  6.5  3.3  3.1

South Africa

   5.7  7.3  5.9  7.6

Sri Lanka

   1.7  1.5  1.8  1.5

Romania

   1.4  1.9  1.5  1.9

China

   1.4  1.3  1.5  1.4

Spain

   0.6  1.0  0.6  1.0

Poland

   0.5  0.4  0.6  0.5

Costa Rica

   0.4  0.4  0.3  0.4
  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   100.0  100.0  100.0  100.0
  

 

 

  

 

 

  

 

 

  

 

 

 

Note:

 

(1)

Includes revenue and revenue less repair payments (non-GAAP) derived from Turkey, which was not significant.

Our Contracts

We provide our services under contracts with our clients, which typically range from three to five years, with some being rolling contracts with no end dates. Typically, these contracts can be terminated by our clients with or without cause and with short notice periods. However, we tend to have long-term relationships with our clients given the complex and comprehensive nature of the business processes executed by us, coupled with the switching costs and risks associated with relocating these processes in-house or to other service providers.

Each client contract has different terms and conditions based on the scope of services to be delivered and the requirements of that client. Occasionally, we may incur significant costs on certain contracts in the early stages of implementation, with the expectation that these costs will be recouped over the life of the contract to achieve our targeted returns. Each client contract has corresponding service level agreements that define certain operational metrics based on which our performance is measured. Some of our contracts specify penalties or damages payable by us in the event of failure to meet certain key service level standards within an agreed upon time frame.

When we are engaged by a client, we typically transfer that client’s processes to our delivery centers over a six-month period. This transfer process is subject to a number of potential delays. Therefore, we may not recognize significant revenue until several months after commencing a client engagement.

In the WNS Global BPM segment, we charge for our services based on the following pricing models:

 

 1)

per full-time-equivalent arrangements, which typically involve billings based on the number of full-time employees (or equivalent) deployed on the execution of the business process outsourced;

 

 2)

per transaction arrangements, which typically involve billings based on the number of transactions processed (such as the number of e-mail responses, or airline coupons or insurance claims processed);

 

 3)

subscription arrangements, which typically involve billings based on per member per month, based on contractually agreed rates;

 

 4)

fixed-price arrangements, which typically involve billings based on achievements of pre-defined deliverables or milestones;

 

 5)

outcome-based arrangements, which typically involve billings based on the business result achieved by our clients through our service efforts (such as measured based on a reduction in days sales outstanding, an improvement in working capital, an increase in collections or a reduction in operating expenses); or

 

 6)

other pricing arrangements, including cost-plus arrangements, which typically involve billing the contractually agreed direct and indirect costs and a fee based on the number of employees deployed under the arrangement.

Apart from the above-mentioned pricing methods, a small portion of our revenue is comprised of reimbursements of out-of-pocket expenses incurred by us in providing services to our clients.

Outcome-based arrangements are examples of non-linear pricing models where revenues from platforms and solutions and the services we provide are linked to usage or savings by clients rather than the efforts deployed to provide these services. We intend to focus on increasing our service offerings that are based on non-linear pricing models that allow us to price our services based on the value we deliver to our clients rather than the headcount deployed to deliver the services to them. We believe that non-linear pricing models help us to grow our revenue without increasing our headcount. Accordingly, we expect increased use of non-linear pricing models to result in higher revenue per employee and improved margins. Non-linear revenues may be subject to short-term pressure on margins, however, as initiatives in developing the products and services take time to deliver. Moreover, in outcome-based arrangements, we bear the risk of failure to achieve clients’ business objectives in connection with these projects. For more information, see “Part I — Item 3. Key Information — D. Risk Factors — If our pricing structures do not accurately anticipate the cost and complexity of performing our work, our profitability may be negatively affected.”

In our WNS Auto Claims BPM segment, we earn revenue from claims handling, repair management services and legal services relating to personal injury claims. For claims handling, we charge on a per claim basis or a fixed fee per vehicle over a contract period. For automobile repair management services, where we arrange for the repairs through a network of repair centers that we have established, we invoice the client for the amount of the repair. When we direct a vehicle to a specific repair center, we receive a referral fee from that repair center. We also provide a consolidated suite of services towards accident management including credit hire and credit repair for “non-fault” repairs business.

 

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Revenue by Contract Type

For fiscal 2021 and 2020, our revenue and revenue less repair payments (non-GAAP) were diversified by contract type in the proportions set forth in the following table:

 

   As a percentage of revenue  As a percentage of revenue less
repair payments (non-GAAP)
 
   Year ended March 31,  Year ended March 31, 

Revenue by Contract type

  2021  2020  2021  2020 

Full-time-equivalent

   65.0  66.3  68.2  68.7

Transaction

   14.6  15.6  10.3  12.6

Subscription

   10.8  9.0  11.3  9.3

Fixed price

   4.6  4.7  4.9  4.9

Others (1)

   5.0  4.4  5.3  4.5
  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   100.0  100.0  100.0  100.0
  

 

 

  

 

 

  

 

 

  

 

 

 

Note:

 

(1)

Others includes revenue from “outcome-based arrangements”, which typically involve billings based on the business result achieved by our clients through our service efforts (such as measured based on a reduction in days sales outstanding, an improvement in working capital, an increase in collections or a reduction in operating expenses);

 

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Expenses

The majority of our expenses consist of cost of revenue and operating expenses. The key components of our cost of revenue are employee costs, facilities costs, depreciation, payments to repair centers, legal and professional costs, and travel expenses. Our operating expenses include selling and marketing expenses, general and administrative expenses, foreign exchange gains and losses and amortization of intangible assets. Our non-operating expenses include finance expenses as well as other expenses recorded under “other income, net.”

Cost of Revenue

Employee costs represent the largest component of cost of revenue. In addition to employee salaries, employee costs include costs related to recruitment, training and retention, and share-based compensation expense. Historically, our employee costs have increased primarily due to increases in the number of employees to support our growth and, to a lesser extent, to recruit, train and retain employees. Salary levels in India and our ability to efficiently manage and retain our employees significantly influence our cost of revenue. See “Part I — Item 4. Information on the Company — B. Business Overview — Human Capital.” Regulatory developments may, however, result in wage increases in India and increase our cost of revenue.

For example, the Code on Wages 2019, Industrial Relations Code 2020, Social Security Code 2020 and Occupational Safety, Health & Working Condition Code 2020 received assent from the President of India on September 28, 2020. However, the rules implementing these Acts have not yet been published and the effective date from which these changes are applicable has yet to be announced. Accordingly, while we are unable to ascertain with certainty the financial impact due to these changes, it is possible that our wage costs in India may increase as a result of these changes when they become effective. See “Part I — Item. 3. Key Information. — D. Risk Factors — Risks Related to Our Business — Wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin.” We seek to mitigate these cost increases through improvements in employee productivity, employee retention and asset utilization.

Our WNS Auto Claims BPM segment includes repair management services, where we arrange for automobile repairs through a network of third party repair centers. This cost is primarily driven by the volume of accidents and the amount of the repair costs related to such accidents. It also includes incremental and direct costs incurred to contract with claimants by WNS Legal Assistance LLP.

Our facilities costs comprise depreciation on ROU assets, utilities cost, facilities management and telecommunication network cost. Most of our leases for our facilities are long-term agreements and have escalation clauses which provide for increases in rent at periodic intervals. Most of these agreements have clauses that have fixed escalation of lease rentals.

We create capacity in our operational infrastructure ahead of anticipated demand as it takes six to nine months to build up a new site. Hence, our cost of revenue as a percentage of revenue may be higher during periods in which we carry such additional capacity.

Once we are engaged by a client in a new contract, we normally have a transition period to transfer the client’s processes to our delivery centers and accordingly incur costs related to such transfer.

Selling and Marketing Expenses

Our selling and marketing expenses comprise primarily employee costs for sales and marketing personnel, share-based compensation expense, brand building expenses, legal and professional fees, travel expenses, and other general expenses relating to selling and marketing.

Selling and marketing expenses as a proportion of revenue was 5.4% in fiscal 2021 as compared with 5.7% for fiscal 2020. Selling and marketing expenses as a proportion of revenue less repair payments (non-GAAP) was 5.7% in fiscal 2021 as compared with 5.9% for fiscal 2020. Due to the uncertainty of the COVID-19 pandemic, we have limited visibility at this time on its impact on our sales team and selling and marketing expenses, if any, and are unable to forecast whether or to what extent selling and marketing expenses as a proportion of revenue or revenue less repair payments will continue to increase in fiscal 2022.

 

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General and Administrative Expenses

Our general and administrative expenses comprise primarily employee costs for senior management and other support personnel, share-based compensation expense, legal and professional fees, travel expenses, and other general expenses not related to cost of revenue and selling and marketing.

General and administrative expenses as a proportion of revenue was 13.8% in fiscal 2021 as compared with 13.9% in fiscal 2020. General and administrative expenses as a proportion of revenue less repair payments (non-GAAP) was 14.5% in fiscal 2021 as compared with 14.3% in fiscal 2020. Due to the uncertainty of the COVID-19 pandemic, we have limited visibility at this time on its impact on our general and administrative expenses, if any, and are unable to forecast whether or to what extent general and administrative expenses in absolute terms will continue to increase in fiscal 2022.

Foreign Exchange Loss / (Gain), Net

Foreign exchange loss / (gain), net include:

 

  

marked to market gains or losses on derivative instruments that do not qualify for “hedge” accounting and are deemed ineffective;

 

  

realized foreign currency exchange gains or losses on settlement of transactions in foreign currency and derivative instruments; and

 

  

unrealized foreign currency exchange gains or losses on revaluation of other assets and liabilities.

We had a foreign exchange loss of $0.8 million in fiscal 2021 as compared to a gain of $3.4 million in fiscal 2020.

Impairment of Goodwill

During the fourth quarter of fiscal 2020, Brexit had a negative impact on the insurance industry and applied downward pressure on the expected future performance of the WNS Auto Claims reportable segment, due to contract renegotiations and loss of certain clients. These factors, together with the highly uncertain operating environment in the UK, have negatively impacted and caused us to significantly reduce our financial projections and estimates of the WNS Auto Claims BPM reportable segment from our previous estimate. Accordingly, we performed an impairment review of the goodwill associated with the companies we had acquired for our auto claims business, and recorded an impairment charge of $4.1 million to our results of operations in fiscal 2020 for the remaining goodwill balance of our auto claims business. No impairment charge was recognized in fiscal 2021.

Amortization of Intangible Assets

Amortization of intangible assets is primarily associated with our acquisitions of Fusion Outsourcing Services (Proprietary) Limited in June 2012, Value Edge in June 2016, Denali in January 2017, and HealthHelp in March 2017, and the acquisition of a customer contract from Telkom SA SOC Limited (“Telkom”) in May 2015.

Other Income, Net

Other income, net comprises interest income, income from investments, gain or loss on sale of assets and other miscellaneous income and expenses.

Finance Expense

Finance expense primarily relates to interest charges payable on our term loans and short-term borrowings, transaction costs and the gains/losses on settlement of related derivative instruments. On adoption of IFRS 16, with effect from April 1, 2019, interest expense on lease liabilities is also reflected in this line item. We expect our interest payable on our term loans to be lower in fiscal 2022 as compared to fiscal 2021, on account of repayment of loans that were obtained to fund our acquisitions of Denali and HealthHelp, as the loan obtained to fund our acquisition of Denali was fully repaid in fiscal 2020.

 

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Operating Data

Our profit margin is largely a function of our asset utilization and the rates we are able to recover for our services. One of the most significant components of our asset utilization is our seat utilization rate which is the average number of work shifts per day, out of a maximum of three, for which we are able to utilize our seats. Generally, an improvement in seat utilization rate will improve our profitability unless there are other factors which increase our costs such as an increase in lease rentals, large ramp-ups to build new seats, and increases in costs related to repairs and renovations to our existing or used seats. In addition, an increase in seat utilization rate as a result of an increase in the volume of work will generally result in a lower cost per seat and a higher profit margin as the total fixed costs of our built up seats remain the same while each seat is generating more revenue.

The following table presents certain operating data as at the dates indicated:

 

   As at March 31, 
   2021   2020 

Total headcount

   43,997    44,292 

Built up seats(1)

   34,365    34,779 

Used seats(1)

   —      28,074 

Seat utilization rate(2)

   —      1.28 

Notes:

 

(1)

“Built up seats” refers to the total number of production seats (excluding support functions like finance, human resources, administration and seats dedicated for business continuity planning) that are set up in any premises. “Used seats” refers to the number of built up seats that are being used by employees. The remainder would be termed “vacant seats.” The vacant seats would get converted into used seats when we increase headcount.

Due to the temporary lockdown of our facilities and other restrictive measures imposed by governmental regulations resulting from the COVID-19 outbreak, we shifted to a “work from home” model progressively starting from March 15, 2020. Accordingly, for fiscal 2020 year end, we have presented in the table above the number of used seats as at March 15, 2020, prior to the commencement of our “work from home” arrangements. The service delivery capacities of our remote-working employees may not be equivalent to their normal capacities when working in our delivery centers. See “Global Economic Conditions — Impact of COVID-19” for more details regarding the impact of the COVID-19 outbreak on our operations and our financial results.

The “work from home” model continued to be used in fiscal 2021. Accordingly, the used seats details and seat utilization rate details are not relevant for fiscal 2021.

 

(2)

The seat utilization rate is calculated by dividing the average total headcount by the average number of built up seats to show the rate at which we are able to utilize our built up seats. Average total headcount and average number of built up seats are calculated by dividing the aggregate of the total headcount or number of built up seats, as the case may be, as at the beginning and end of the fiscal year by two.

Due to the uncertainty of the COVID-19 pandemic, we have limited visibility at this time on its impact on our headcount numbers and hiring requirement, if any, and are unable to forecast whether or to what extent headcount numbers and hiring requirement will change in fiscal 2022.

Foreign Exchange

Exchange Rates

We report our financial results in US dollars and our results of operations would be adversely affected if the pound sterling or, to a lesser extent, the Euro or the Australian dollar depreciates against the US dollar, or if the Indian rupee or, to a lesser extent, the South African rand or the Philippine peso appreciates against the US dollar. Although a substantial portion of our revenue and revenue less repair payments (non-GAAP) is denominated in US dollars (54.0% and 56.7%, respectively, in fiscal 2021 and 49.3% and 51.1%, respectively, in fiscal 2020), pound sterling (28.0% and 24.4%, respectively, in fiscal 2021 and 28.5% and 26.0%, respectively, in fiscal 2020), and, to a lesser extent, Australian dollars (7.3% and 7.7%, respectively, in fiscal 2021 and 8.4% and 8.7%, in fiscal 2020), the Euro (6.3% and 6.6%, respectively, in fiscal 2021 and 8.4% and 8.7%, respectively, in fiscal 2020), and the South African rand (2.9% and 3.1%, respectively, in fiscal 2021 and 3.8% and 4.0%, respectively, in fiscal 2020), most of our expenses (net of payments to repair centers) are incurred and paid in Indian rupees (43.5% in fiscal 2021 and 46.3% in fiscal 2020) and, to a lesser extent, in the Philippine peso (13.3% in fiscal 2021 and 12.6% in fiscal 2020) and the South African rand (6.2% in fiscal 2021 and 7.8% in fiscal 2020). The exchange rates between these currencies and the US dollar have changed substantially in recent years and may fluctuate substantially in the future.

 

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The average Indian rupee to US dollar exchange rate was approximately 74.25 per $1.00 in fiscal 2021, which represented a depreciation of the Indian rupee of 4.7% as compared with the average exchange rate of 70.91 per $1.00 in fiscal 2020, which in turn represented a depreciation of the Indian rupee of 1.4% as compared with the average exchange rate of approximately 69.92 per $1.00 in fiscal 2019.

The average pound sterling to US dollar exchange rate was approximately £0.77 per $1.00 in fiscal 2021, which represented an appreciation of the pound sterling of 2.7% as compared with the average exchange rate of approximately £0.79 per $1.00 in fiscal 2020, which in turn represented a depreciation of the pound sterling of 3.2% as compared with the average exchange rate of approximately £0.76 per $1.00 in fiscal 2019.

The average Australian dollar to US dollar exchange rate was approximately A$1.39 per $1.00 in fiscal 2021, which represented an appreciation of the Australian dollar of 5.3% as compared with the average exchange rate of approximately A$1.47 per $1.00 in fiscal 2020, which in turn represented a depreciation of the Australian dollar of 6.5% as compared with the average exchange rate of approximately A$1.37 per $1.00 in fiscal 2019.

The average Euro to US dollar exchange rate was approximately €0.86 per $1.00 in fiscal 2021, which represented an appreciation of the Euro of 5.0% as compared with the average exchange rate of approximately €0.90 per $1.00 in fiscal 2020, which in turn represented a depreciation of the Euro of 4.1% as compared with the average exchange rate of approximately €0.86 per $1.00 in fiscal 2019.

The average South African rand to US dollar exchange rate was approximately R16.37 per $1.00 in fiscal 2021, which represented a depreciation of the South African rand of 10.9% as compared with the average exchange rate of approximately R14.76 per $1.00 in fiscal 2020, which in turn represented a depreciation of the South African rand of 7.3% as compared with the average exchange rate of approximately R13.76 per $1.00 in fiscal 2019.

The average Philippine peso to US dollar exchange rate was approximately PHP49.00 per $1.00 in fiscal 2021, which represented an appreciation of the Philippine peso of 4.7% as compared with the average exchange rate of approximately PHP51.43 per $1.00 in fiscal 2020, which in turn represented an appreciation of the Phlippines peso of 2.8% as compared with the average exchange rate of approximately PHP52.91 per $1.00 in fiscal 2019.

The depreciation of the Indian rupee against the US dollar by 4.7% and 1.4% in fiscal 2021 and 2020, as compared with the average exchange rate in fiscal 2020 and 2019, respectively had a positive impact on our expenses in those years. As a result, increases in our cost of revenue, and to a lesser extent, our general and administrative expenses were partially offset by the positive impact of the depreciation of Indian rupee in fiscal 2021 and 2020. The depreciation of the South African rand in fiscal 2021 and 2020 against the US dollar and the appreciation of the Australian dollar, the Euro and pound sterling in fiscal 2021 against the US dollar positively impacted our results of operations in those years. The appreciation of Philippine peso against the US dollar in fiscal 2021 and 2020, and the depreciation of the Australian dollar, the Euro and pound sterling in fiscal 2020 against the US dollar negatively impacted our results of operations in those years. Such foreign exchange movement has significantly reduced our expenses in fiscal 2021. See “Part I — Item 11. Quantitative and Qualitative Disclosures About Market Risk — B. Risk Management Procedures — Components of Market Risk — Exchange Rate Risk.”

We have subsidiaries in several countries and hence, the functional currencies of these entities differ from our reporting currency, the US dollar. The financial statements of these entities are translated to the reporting currency as at the balance sheet date. Adjustments resulting from the translation of these financial statements from functional currency to reporting currency are accumulated and reported as other comprehensive income/(loss), which is a separate component of equity and such exchange differences are recognized in our consolidated statement of income in the period in which such subsidiaries are disposed. Foreign currency transaction gains and losses are recorded as other income or expense.

 

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Currency Regulation

Our Indian subsidiaries are registered as exporters of business process management services with STPI or Special Economic Zone (“SEZ”). According to the prevailing foreign exchange regulations in India, an exporter of business process management services registered with STPI or SEZ is required to receive its export proceeds in India within a period of nine months from the date of such exports in order to avail itself of the tax and other benefits. In the event that such a registered exporter has received any advance against exports in foreign exchange from its overseas customers, it is required to render the requisite services so that such advances are earned within a period of 12 months from the date of such receipt. If such a registered exporter does not meet these conditions, it will be required to obtain permission from the Reserve Bank of India to receive and realize such foreign currency earnings.

A majority of the payments we receive from our clients are denominated in pound sterling and US dollars. For most of our clients, our subsidiaries in Mauritius, the Netherlands, Australia, the UK and the US enter into contractual agreements directly with our clients for the provision of business process management services by our Indian subsidiaries, which hold the foreign currency receipts in an export earners’ foreign currency account. All foreign exchange requirements, such as for the import of capital goods, expenses incurred during overseas travel by employees and discharge of foreign exchange expenses or liabilities, can be met using the foreign currency in the export earners’ foreign currency account in India. As and when funds are required by us, the funds in the export earners’ foreign currency account may be transferred to an ordinary rupee-denominated account in India.

There are currently no Jersey, UK or US foreign exchange control restrictions on the payment of dividends on our ordinary shares or on the conduct of our operations.

Income Taxes

We operate in multiple tax jurisdictions including Australia, China, Costa Rica, Canada, France, Germany, India, Ireland, Mauritius, the Netherlands, New Zealand, the Philippines, Poland, Romania, Singapore, South Africa, Spain, Sri Lanka, Switzerland, Turkey, United Arab Emirates, the UK and the US. As a result, our effective tax rate changes from year to year based on recurring factors such as the geographical mix of income before taxes, state and local taxes, the ratio of permanent items to pre-tax book income and the implementation of various global tax strategies, as well as non-recurring events.

In fiscal 2021, 2020 and 2019, our tax rate in India, the Philippines and Sri Lanka impacted our effective tax rate. We would have incurred approximately $11.1 million, $17.7 million and $15.7 million in additional income tax expense on our combined operations in our SEZ operations in India, the Philippines and Sri Lanka in fiscal 2021, 2020 and 2019, respectively, if the tax holidays and exemptions described below had not been available for the respective periods.

We expect our tax rate in India, the Philippines and Sri Lanka to continue to impact our effective tax rate. Our tax rate in India has been impacted by the reduction in the tax exemption enjoyed by our delivery center operating under the SEZ scheme as discussed below. Our effective tax rate in Sri Lanka had been impacted by the withdrawal of tax exemption on export income in Sri Lanka with effect from April 1, 2018 until December 31, 2019, following which the income from export of service had been subject to tax at 14% on net basis. From January 1, 2020, our operations in Sri Lanka are eligible to claim income tax exemption with respect to the profits earned from export revenue, as more fully described below. From fiscal 2016 until fiscal 2021, we started operations in various delivery centers in the Philippines that are eligible for tax exemption benefits expiring between fiscal 2020 and fiscal 2024. Following the expiry of the tax benefits, income generated by the Philippines subsidiary will be taxed at the prevailing special tax rate, which currently is 5.0% on gross profit. As per The Corporate Recovery and Tax Incentives for Enterprises Act (“CREATE”) which is effective from April, 2021, enterprises will be taxed at 5% on gross profit for a fixed period of 10 years.

India

In the past, the majority of our Indian operations were eligible to claim income tax exemption with respect to profits earned from export revenue from operating units registered under the STPI. The benefit was available for a period of 10 years from the date of commencement of operations, but not beyond March 31, 2011. Effective April 1, 2011, upon the expiration of this tax exemption, income derived from our operations in India became subject to the prevailing annual tax rate, which was 34.95% in fiscal 2021, 2020 and 2019.

In 2005, the Government of India implemented the SEZ legislation, with the effect that taxable income of new operations established in designated SEZs may be eligible for a 15-year tax holiday scheme consisting of a complete tax holiday for the initial five years and a partial tax holiday for the subsequent ten years, subject to the satisfaction of certain capital investment conditions in the last five years. From fiscal 2012 until fiscal 2021, the Company started operations in various delivery centers in Mumbai, Pune, Chennai, Gurgaon and Noida, India that were registered under the SEZ scheme. Some of these operations are eligible for a 100% income tax exemption for a period of five years from the date of commencement of operations, which are set to expire between fiscal 2022 and fiscal 2024. Following the expiry of the 100% income tax exemption, these operations are eligible for a 50% income tax exemption which are set to expire between fiscal 2026 and fiscal 2034. Such income tax exemption are only eligible for business units and operations set up under the SEZ legislation on or before March 31, 2020.

 

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In addition to these tax holidays, our Indian subsidiaries are also entitled to certain benefits under relevant state legislation and regulations. These benefits include rebates and waivers in relation to payment for transfer of property and registration (including for purchase or lease of premises) and commercial usage of electricity.

The Government of India may enact new tax legislation that could impact the way we are taxed in the future. For example, the change in the law in fiscal 2017 has resulted in any new business units or operation units set up under the SEZ legislation after March 31, 2020 not being eligible for the same income tax holidays that our existing SEZ operations currently enjoy. See “Part I — Item 3. Key Information — D. Risk Factors — Risks Related to Key Delivery Locations — Tax legislation and the results of actions by taxing authorities may have an adverse effect on our operations and our overall tax rate.

Philippines

From fiscal 2016 until fiscal 2021, our company started operations in various delivery centers in the Philippines which are eligible for tax exemption benefits expiring between 2020 and 2024. Following the expiry of the tax benefits, income generated by the Philippines subsidiary will be taxed at the prevailing special tax rate, which currently is 5.0% on gross profit. As per The Corporate Recovery and Tax Incentives for Enterprises Act (“CREATE”) which is effective from April, 2021, enterprises will be taxed at 5% on gross profit for a fixed period of 10 years. The CREATE will not have any impact with respect to units claiming existing tax benefits. The company will continue to enjoy tax benefits till fiscal 2024 and following the expiry of tax benefits, the income would be taxed at the special rate of 5% on gross profits.

Sri Lanka

Our operations in Sri Lanka were eligible to claim income tax exemption with respect to the profits earned from export revenue until fiscal 2018 and have since been taxed at 14% on net basis with effect from April 1, 2018 until December 31, 2019. From January 1, 2020, our operations in Sri Lanka are eligible to claim income tax exemption with respect to the profits earned from export revenue till such exemptions are revoked due to change in legislation.

Costa Rica

Our subsidiary in Costa Rica is eligible for a 50.0% income tax exemption from fiscal 2018 to fiscal 2021. Thereafter, unless the exemption is extended, company would be liable to pay tax at the rate of 30%.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements included elsewhere in this annual report which have been prepared in accordance with IFRS, as issued by the IASB. Note 2 to our consolidated financial statements included elsewhere in this annual report describes our significant accounting policies and is an essential part of our consolidated financial statements.

We believe the following to be critical accounting policies. By “critical accounting policies,” we mean policies that are both important to the portrayal of our financial condition and financial results and require critical management judgments and estimates. Although we believe that our judgments and estimates are appropriate, actual future results may differ from our estimates.

 

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Revenue Recognition

We derive revenue from BPM services, comprising back office administration, data management, customer experience services management, and auto claims handling services.

Revenue from rendering services is recognized on an accrual basis when the promised services are performed for an amount that reflects the consideration to which we expect to be entitled in exchange for those services. Revenue from the end of last billing to the reporting date is recognized as unbilled revenue. Unbilled revenue for certain contracts is classified as contract assets, as the right to consideration is conditional on factors other than the passage of time. Revenue is net of value-added taxes and includes reimbursements of out-of-pocket expenses.

Back office administration, data management and customer experience services contracts are based on the following pricing models:

 

a)

per full-time-equivalent arrangements, which typically involve billings based on the number of full-time employees (or equivalent) deployed on the execution of the business process outsourced;

 

b)

per transaction arrangements, which typically involve billings based on the number of transactions processed (such as the number of e-mail responses, or airline coupons or insurance claims processed);

 

c)

subscription arrangements, which typically involve billings based on per member per month, based on contractually agreed rates;

 

d)

fixed-price arrangements, which typically involve billings based on achievements of pre-defined deliverables or milestones;

 

e)

outcome-based arrangements, which typically involve billings based on the business result achieved by our clients through our service efforts (such as measured based on a reduction in days sales outstanding, improvement in working capital, increase in collections or a reduction in operating expenses); or

 

f)

other pricing arrangements, including cost-plus arrangements, which typically involve billing the contractually agreed direct and indirect costs and a fee based on the number of employees deployed under the arrangement.

Revenues under time-and-material contracts and subscription arrangements are recognized as the related services are provided in accordance with the client contract. Revenues are recognized on cost-plus contracts on the basis of contractually agreed direct and indirect costs incurred on a client contract plus an agreed upon profit mark-up. Revenues are recognized on unit-price based contracts based on the number of specified units of work delivered to a client.

Revenue for performance obligations that are satisfied over time is recognized in accordance with the methods prescribed for measuring the progress. The input method (cost or efforts expended) has been used to measure progress towards completion as there is a direct relationship between inputs and productivity.

In respect of arrangements involving sub-contracting, in part or whole of the assigned work, we evaluate revenues to be recognized under criteria established by IFRS 15 “Revenue from Contract with Customers (“IFRS 15”), application guidance in paragraphs B34 to B38 “Principal versus agent considerations.”

Contracts with customers include variability in transaction price primarily due to service level agreements, gain share, minimum commitment and volume discounts. 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.

Amounts billed or payments received, where revenue recognition criteria have not been met, are recorded as deferred revenue and classified as contract liabilities. These are recognized as revenue when all the recognition criteria have been met. The costs related to the performance of BPM services unrelated to transition services (discussed below) are fulfilment costs classified as contract assets and recognized in our consolidated statement of income when the conditions for revenue recognition have been met. Any upfront payment received towards future services is classified as a contract liability and is recognized in our consolidated statement of income over the period when such services are provided.

All incremental and direct costs incurred for acquiring contracts, such as certain sales commission, are classified as contract assets. Such costs are amortized over the expected life of the contract.

Other upfront fees paid to customers are classified as contract assets. Such costs are amortized over the life of the contract and recorded as an adjustment to the transaction price and reduced from revenue.

For certain BPM customers, we perform transition activities at the outset of entering into a new contract. We have determined these transition activities do not meet the criteria of IFRS 15 to be accounted for as a separate performance obligation and has deferred revenue attributable to these activities. Accordingly, transition revenues are classified as contract liabilities and are subsequently recognized ratably over the period in which the BPM services are performed. Costs related to such transition services are fulfillment costs which are directly related to the contract and result in generation or enhancement of resources and are expected to be recoverable under the contract and thereby classified as contract assets and are recognized ratably over the estimated life of the contract.

 

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All contracts entered into by us specify the payment terms. Usual payment terms range between 30 to 60 days.

Auto claims handling services include claims handling and administration (“Claims Handling”), car hire and arranging for repairs with repair centers across the UK and the related payment processing for such repairs (“Accident Management”). With respect to Claims Handling, we receive either a per-claim fee or a fixed fee. Revenue for per claim fee is recognized over the estimated processing period of the claim, which currently ranges from one to two months and revenue for fixed fee is recognized on a straight line basis over the period of the contract. In certain cases, the fee is contingent upon the successful recovery of a claim on behalf of the customer. In these circumstances, the revenue is deferred until the contingency is resolved. Revenue in respect of car hire is recognized over the car hire term.

In order to provide Accident Management services, we arrange for the repair through a network of repair centers. The repair costs are invoiced to customers. In determining whether the receipt from the customers related to payments to repair centers should be recognized as revenue, we consider the criteria established by IFRS 15 under the application guidance in paragraphs B34 to B38 “Principal versus agent considerations.” When we determine that it is the principal in providing Accident Management services, amounts received from customers are recognized and presented as third-party revenue and the payments to repair centers are recognized as cost of revenue in our consolidated statement of income. Factors considered in determining whether we are the principal in the transaction include whether:

 

a)

we have the prime responsibility for providing the services,

 

b)

we negotiate labor rates with repair centers, and

 

c)

we are responsible for timely and satisfactory completion of repairs.

If there are circumstances where the above criteria are not met and therefore we are not the principal in providing accident management services, amounts received from customers are recognized and presented net of payments to repair centers in our consolidated statement of income. Revenue from Accident Management services is recorded net of the repairer referral fees passed on to customers.

Revenue from legal services in the Auto Claims BPM segment is recognized on the admission of liability by the third party to the extent of fixed fees earned at each stage and any further income on the successful settlement of the claim.

Incremental and direct costs incurred to contract with a claimant are classified as contract assets and amortized over the expected period of benefit, not exceeding 15 months. All other costs to us are expensed as incurred.

 

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Leases

We lease most of our delivery centers and office facilities under operating lease agreements that are renewable on a periodic basis at the option of the lessor and the lessee. The lease agreements contain rent free periods and rent escalation clauses.

We assess whether a contract contains a lease at the inception of the contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, we assess whether: (i) the contract involves the use of an identified asset, (ii) we have substantially all of the economic benefits from the use of the asset through the period of the lease, and (iii) we have the right to direct the use of the asset.

At the date of commencement of the lease, we recognize a right of use (“ROU”) asset and a corresponding lease liability for all lease arrangements under which we are a lessee, except for short-term leases and low value leases. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. For short-term leases and low value leases, we recognize the lease payments as an expense on a straight-line basis over the term of the lease. The lease arrangements include options to extend or terminate the lease before the end of the lease term.

ROU assets and lease liabilities include these options when it is reasonably certain that they will be exercised. The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses. ROU assets are depreciated from the date of commencement of the lease on a straight-line basis over the shorter of the lease term and the useful life of the underlying asset.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. For leases under which the rate implicit in the lease is not readily determinable, we use its incremental borrowing rate based on the information available at the date of commencement of the lease in determining the present value of lease payments. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if we change our assessment as to whether we will exercise an extension or a termination option.

We account for a modification of the lease contract as a separate contract for an additional right of use not included in the original lease and the increase in lease payment is commensurate with the standalone price for the additional right of use, adjusted for the circumstances of the particular contract. Modifications which are not accounted for as a separate contract are reassessed as at the effective date of the modifications based on the modified terms and conditions and the facts and circumstances as at that date. Upon modification, we remeasure the lease liability to reflect changes to the remaining lease payments and discount rates and recognize the amount of the remeasurement of the lease liability as an adjustment to the ROU assets. However, if the carrying amount of the ROU assets is reduced to zero as a result of modification, any remaining amount of the remeasurement is recognized as an expense in the consolidated statement of income.

We have applied practical expedient under an amendment to IFRS 16 for COVID-19 related rent concessions to determine whether the concession provided by lessor occurring as a direct consequence of the COVID-19 pandemic meets the conditions mentioned in paragraph 46B of the amendment and accounted the eligible concessions in the consolidated statement of income.

In the case of sub-leases, where we are an intermediate lessor, the lease is classified as a finance lease or operating lease. A sub-lease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease. In the case of a finance lease, we have accounted for its interest in the head-lease and the sub-lease separately and recognized a net investment in the sub-lease accordingly. Rental income received from the sub-lease is treated as finance income in the consolidated statement of income. In the case of an operating lease, rental income is recognized in the consolidated statement of income over the term of the sub-lease.

Share-based Compensation

We provide share-based awards such as share options and RSUs to our employees, directors and executive officers through various equity compensation plans. We account for share-based compensation expense relating to share-based payments using a fair-value method in accordance with IFRS 2 “Share-based Payments” (“IFRS 2”) addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments.

Equity instruments granted is measured by reference to the fair value of the instrument at the date of grant. The grants vest in a graded manner. Under the fair value method, the estimated fair value of awards is charged to income over the requisite service period, which is generally the vesting period of the award, for each separately vesting portion of the award as if the award was, in substance, multiple awards. We include a forfeiture estimate in the amount of compensation expense being recognized based on our estimate of equity instrument that will eventually vest.

IFRS 2 requires the use of a valuation model to calculate the fair value of share-based awards. Based on our judgment, we have elected to use the Black-Scholes-Merton pricing model to determine the fair value of share-based awards on the date of grant. RSUs are measured based on the fair market value of the underlying shares on the date of grant. Further, each of the 2006 Incentive Award Plan and the 2016 Incentive Award Plan also allows for the grant of RSUs based on the market price of our shares achieving a specified target over a period of time. The fair value of market-based share awards is determined using Monte-Carlo simulation. Any additional cost as a result of modification in respect of modified share awards is amortized over the period from the modification date until the vesting date of the modified award, which differs from the vesting date of the original award.

 

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We believe the Black-Scholes-Merton model to be the most appropriate model for determination of fair value of the share-based awards. In determining the fair value of share-based awards using the Black-Scholes-Merton option pricing model, we are required to make certain estimates of the key assumptions that include expected term, expected volatility of our shares, dividend yield and risk free interest rate. Estimating these key assumptions involves judgment regarding subjective future expectations of market prices and trends. The assumptions for expected term and expected volatility have the most significant effect on calculating the fair value of our share options. We use the historical volatility of our ADSs in order to estimate future share price trends. In order to determine the estimated period of time that we expect employees to hold their share-based options, we have used historical exercise pattern of employees. The aforementioned inputs entered into the option valuation model that we use to determine the fair value of our share awards are subjective estimates and changes to these estimates will cause the fair value of our share-based awards and related share-based compensation expense we record to vary.

Our South African subsidiary has issued share appreciation rights to certain employees to be settled with our shares. As part of the settlement, we granted certain RSUs during fiscal 2021, a portion of which will vest on the nine months anniversary from the grant date and the remainder of which will vest on the third anniversary, from the grant date and we granted certain RSUs during fiscal 2020, 2019 and 2018, which will vest on the fourth, third and fourth anniversaries, respectively, from the grant date, subject to such grantee’s continued employment with us through the applicable vesting date. The grant date fair value of these RSUs was estimated using a binomial lattice model.

We are required to estimate the share-based awards that we expect to vest and to reduce share-based compensation expense for the effects of estimated forfeitures of awards over the expense recognition period. Although we estimate forfeitures based on historical experience and other factors, actual forfeitures in the future may differ. To the extent our actual forfeitures are different than our estimates, we record a true-up for the difference in the period in which the awards vest, and such true-ups could materially affect our operating results.

We record deferred tax assets for share-based awards based on the future tax deduction which will be based on our ADS price at the reporting date. If the amount of the future tax deduction exceeds the cumulative amount of share-based compensation expense, the excess deferred tax is directly recognized in equity.

Business Combinations, Goodwill and Intangible Assets

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred at the date of acquisition. The cost of the acquisition also includes the fair value of any contingent consideration. As a part of acquisition accounting, we allocate the purchase price of acquired companies to the identified tangible and intangible assets based on the estimated fair values on the date of the acquisition. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets, income taxes, contingent consideration and estimated restructuring liabilities. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to the appropriate method of valuation, future cash flow projections, weighted average cost of capital, discount rates, risk-free rates, market rate of return and risk premiums.

Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

Goodwill is initially measured at cost, being the excess of the cost of the acquisition of the acquiree over our share of the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities on the date of the acquisition. If the cost of acquisition is less than the fair value of the net assets of the business acquired, the difference is recognized immediately in the income statement. Goodwill is tested for impairment at least annually and when events occur or changes in circumstances indicate that the recoverable amount of the cash generating unit is less than its carrying value. The goodwill impairment test is performed at the level of cash-generating unit or groups of cash-generating units which represent the lowest level at which goodwill is monitored for internal management purposes.

We use market related information and estimates (generally risk adjusted discounted cash flows) to determine the fair values. Cash flow projections take into account past experience and represents management’s best estimate about future developments. Key assumptions on which management has based its determination of fair value less costs of disposal and value in use include estimated growth rates, weighted average cost of capital and tax rates. These estimates, including the methodology used, can have a material impact on the respective values and ultimately the amount of any goodwill impairment. See also the discussion on impairment testing under “—Impairment of Goodwill and Intangible Assets” below.

Intangible assets are recognized only when it is probable that the expected future economic benefits attributable to the assets will accrue to us and the cost can be reliably measured. Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition determined using generally accepted valuation methods appropriate for the type of intangible asset. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Intangible assets with finite lives are amortized over the estimated useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization of an intangible asset with a finite useful life reflects the manner in which the economic benefit is expected to be generated and consumed. These estimates are reviewed at least at each fiscal year end. Intangible assets with indefinite lives are not amortized, but instead are tested for impairment at least annually and written down to the fair value as required. See also the discussion on impairment testing under “— Impairment of Goodwill and Intangible Assets” below.

Software Development Costs

Costs incurred for developing software or enhancements to the existing software products to be sold and/or used for internal use are capitalized once the research phase is complete, technological feasibility and commercial feasibility have been established, future economic benefits are probable, we have an intention and ability to complete and use or sell the software and the costs can be measured reliably. Technological feasibility is established upon completion of a detailed design program or, in its absence, completion of a working model. Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established, as well as in the ongoing assessment of the recoverability of capitalized costs. Costs that qualify as software development costs include external direct costs of materials and services utilized in developing or obtaining software and compensation and related benefits for employees who are directly associated with the software project. The capitalized costs are amortized on a straight-line basis over the estimated useful life. Costs associated with research phase activities, training, maintenance and all post-implementation stage activities are expensed as incurred.

 

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Impairment of Goodwill and Intangible Assets

Goodwill is not subject to amortization and is instead tested annually for impairment and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the cash generating unit level, which is the lowest level for which there are separately identifiable cash flows. Impairment losses recognized in respect of cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash generating units (or group of cash generating units) and then to reduce the carrying amount of the other assets in the cash generating unit (or group of cash generating units) on a pro rata basis. Intangible assets except goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

An impairment loss is recognized for the amount by which an asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. To determine the value in use, management estimates expected future cash flows from each asset or cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. In arriving at our forecasts, we consider past experience, economic trends including underlying current dynamics of the business and inflation as well as industry and market trends. The projections also take into account factors such as the expected impact from new client contracts and expansion of business from existing clients, efficiency initiatives, and the maturity of the markets in which each business operates. To determine the fair value less costs of disposal the management uses Level 3 inputs under the “Income Approach — Discounted Cash Flow Analysis” method. See Note 9 to our consolidated financial statements included elsewhere in this annual report. The actual results of recoverable amount may vary, and may cause significant adjustments to our assets within the next fiscal year. The calculation of impairment loss involves significant estimates and assumptions which include revenue and earnings multiples, inputs used by market participants, growth rates and net margins used to calculate projected future cash flows, risk-adjusted discount rate, and future economic and market conditions.

In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.

We cannot predict the occurrence of future events that might adversely affect the reported value of goodwill and/or intangible assets. Such events include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the environment on our customer base, and material negative changes in relationships with significant customers.

Income Taxes

Income tax comprises current and deferred tax. Income tax expense is recognized in our consolidated statement of income except to the extent it relates to items directly recognized in equity, in which case it is recognized in equity.

Current Income Tax

As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. We are subject to tax assessments in each of these jurisdictions. Current income taxes for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable profit for the period. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date and applicable for the period. We offset current tax assets and current tax liabilities, where we have a legally enforceable right to set off the recognized amounts and where we intend either to settle on a net basis, or to realize the asset and liability simultaneously.

Significant judgments are involved in determining the provision for income taxes including judgment on whether tax positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods. The recognition of taxes that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances. Though we have considered all these issues in estimating our income taxes, there could be an unfavorable resolution of such issues that may affect results of our operations.

 

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Deferred Income Tax

We recognize deferred income tax using the balance sheet approach. Deferred income tax assets and liabilities are recognized for all deductible and taxable temporary differences arising between the tax bases of assets and liabilities and their carrying amount in financial statements, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profits or loss at the time of transaction.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred income tax assets in respect of carry forward of unused tax credits and unused tax losses are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

The measurement of deferred tax assets involves judgment regarding the deductibility of costs not yet subject to taxation and estimates regarding sufficient future taxable income to enable utilization of unused tax losses in different tax jurisdictions. We consider the expected reversal of deferred tax assets and projected future taxable income in making this assessment. All deferred tax assets are subject to review of probable utilization. The assessment of the probability of future taxable profit in various years in which deferred tax assets can be utilized is based on the latest approved budget forecast, which is adjusted for significant non-taxable profit and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the various jurisdictions in which we operate are also carefully taken into consideration. If a positive forecast of taxable profit indicates the probable use of a deferred tax asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances.

We recognize deferred tax liabilities for all taxable temporary differences, except those associated with investments in subsidiaries and associates where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

As part of our accounting for business combinations, some of the purchase price is allocated to goodwill and intangible assets. Impairment charges associated with goodwill are generally not tax deductible and will result in an increased effective income tax rate in the quarter any impairment is recorded. Amortization expenses associated with acquired intangible assets are generally not tax deductible pursuant to our existing tax structure; however, deferred taxes have been recorded for non-deductible amortization expenses as a part of the purchase price allocation process. We have taken into account the allocation of these identified intangibles among different taxing jurisdictions, including those with nominal or zero percent tax rates, in establishing the related deferred tax liabilities. Income tax contingencies existing as at the acquisition dates of the acquired companies are evaluated quarterly and any adjustments are recorded as adjustments to goodwill during the measurement period.

Uncertainties in income taxes are measured in accordance with IFRIC 23 “Uncertainties over Income Tax Treatments”. Uncertain tax positions are reflected at the amount likely to be paid to the taxation authorities. A liability is recognized in connection with each item that is not probable of being sustained on examination by the taxing authority. The liability is measured using single best estimate of the most likely outcome for each position taken in the tax return. Thus, the provision would be the aggregate liability in connection with all uncertain tax positions.

Evaluation of tax positions and recognition of provisions, as discussed above, involves interpretation of tax laws, estimates of probabilities of tax positions being sustained and the amounts of payments to be made under various scenarios. Although we believe we are adequately reserved for our unresolved disputes with the taxation authorities, no assurance can be given with respect to the final outcome on these matters. To the extent that the final outcome on these matters is different to the amounts recorded, such differences will impact our provision for income taxes in the period in which such a determination is made.

 

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Derivative Financial Instruments and Hedge Accounting

We are exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in foreign operations, forecasted cash flows denominated in foreign currency and fluctuation in interest rates. We limit the effect of foreign exchange rate fluctuation by following established risk management policies including the use of derivatives. We enter into derivative financial instruments where the counterparty is a bank. We use derivative financial instruments such as foreign exchange forward and option contracts, currency swaps and interest rate swaps to hedge certain foreign currency and interest rate exposures. Forward and option contracts on various foreign currencies are entered into to manage the foreign currency exchange rate risk on forecasted transactions denominated in foreign currencies and monetary assets and liabilities held in non-functional currencies. Interest rate swaps are entered into to manage interest rate risk associated with floating rate borrowings. Our primary exchange rate exposures are with the US dollar or the pound sterling against the Indian rupee.

Cash Flow Hedges

We recognize derivative instruments as either assets or liabilities in the statement of financial position at fair value. Derivative instruments qualify for hedge accounting when the instrument is designated as a hedge; the hedged item is specifically identifiable and exposes us to risk; and it is expected that a change in fair value of the derivative instrument and an opposite change in the fair value of the hedged item will have a high degree of correlation. Determining that there is a high degree of correlation between the change in fair value of the hedged item and the derivative instruments involves significant judgment including the probability of the occurrence of the forecasted transaction. Although our estimates of the forecasted transactions are based on historical experience and we believe that they are reasonable, the final occurrence of such transactions could be different as a result of external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts, which will have a material effect on our earnings.

For derivative instruments where hedge accounting is applied, we record the effective portion of derivative instruments that are designated as cash flow hedges in other comprehensive income/(loss) in the statement of comprehensive income, which is reclassified into earnings in the same period during which the hedged item affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e. the ineffective portion), or hedge components excluded from the assessment of effectiveness, and changes in fair value of other derivative instruments not designated as qualifying hedges are recorded as gains/losses, net in our consolidated statement of income. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in the cash flow hedging reserve (in other comprehensive income/(loss)) until the period the hedges was effective remains in the cash flow hedging reserve until the forecasted transaction occurs. Cash flow hedge on interest rate swaps are recorded under finance expense, net. Cash flows from the derivative instruments are classified within cash flows from operating activities in the statement of cash flows.

When it is highly probable that a forecasted transaction will not occur, we discontinue the hedge accounting and recognize immediately, in our consolidated statement of income, the gains and losses attributable to such derivative instrument that were accumulated in other comprehensive income/(loss).

Gains/losses on cash flow hedges on forecasted revenue transactions are recorded in foreign exchange gains/losses forming part of revenue. Changes in fair value of foreign currency derivative instruments not designated as cash flow hedges are recognized in our consolidated statement of income and reported within foreign exchange gains, net within results from operating activities.

Fair Value Measurements

IFRS 13 “Fair Value Measurements” (“IFRS 13”) defines fair value as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations, without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit risk, foreign exchange rates, and forward and spot prices for currencies.

IFRS 7 “Financial Instruments: Disclosures” also requires the classification of fair value measurements using fair value hierarchy that reflects the significance of the inputs used in making the measurements as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

Level 3 — techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

The fair value is estimated using the discounted cash flow approach and market rates of interest. The valuation technique involves assumptions and judgments regarding risk characteristics of the instruments, discount rates and future cash flows.

Management uses valuation techniques in measuring the fair value of financial instruments, where active market quotes are not available. In applying the valuation techniques, management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

 

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Other Estimates

Allowance for Expected Credit Losses

We apply the forward-looking expected credit loss (“ECL”) model for recognizing impairment loss on financial assets that are measured at amortized cost or at fair value through other comprehensive income. We apply the simplified approach for determining the lifetime ECL allowance using our historical credit loss experience adjusted for factors that are specific to the debtor. For all other financial assets, we recognize lifetime ECL when there has been a significant increase in credit risk since initial recognition.

Accounting for Defined Benefit Plans

In accounting for pension and post-retirement benefits, several statistical and other factors that attempt to anticipate future events are used to calculate plan expenses and liabilities. These factors include expected return on plan assets, discount rate assumptions and rate of future compensation increases. To estimate these factors, actuarial consultants also use estimates such as withdrawal, turnover, and mortality rates which require significant judgment. The actuarial assumptions used by us may differ materially from actual results in future periods due to changing market and economic conditions, regulatory events, judicial rulings, higher or lower withdrawal rates, or longer or shorter participant life spans.

Leases

We determine the lease term as the non-cancellable period of a lease including any option to extend or terminate the lease, if the use of such option is reasonably certain. We make an assessment on the expected lease term on a lease-by-lease basis and thereby assess whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, we consider factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to operations, taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.

We have applied an incremental borrowing rate for the purpose of computing lease liabilities based on the rate prevailing in respective geographies.

Estimation uncertainty relating to the COVID-19 pandemic

In evaluating the recoverability of trade receivables, including unbilled revenue, contract assets, goodwill, long lived assets and investments, we have considered all internal and external information in the preparation of our consolidated financial statements including credit reports and economic outlook. We have performed sensitivity analysis on the assumptions used and based on current indicators of future economic conditions, we expect to recover the carrying amount of these assets. The impact of the COVID-19 pandemic may be different from the estimates used to prepare our consolidated financial statements included elsewhere in this annual report and we will continue to closely monitor any material changes to future economic conditions.

 

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Results of Operations

The following table sets forth certain financial information as a percentage of revenue and revenue less repair payments (non-GAAP) for the periods indicated:

 

   As a percentage of 
   Revenue  Revenue less repair payments
(non-GAAP)
 
   Year ended March 31,  Year ended March 31, 
   2021  2020  2021  2020 

Cost of revenue

   64.3  62.9  62.5  61.6

Gross profit

   35.7  37.1  37.5  38.4

Operating expenses:

     

Selling and marketing expenses

   5.4  5.7  5.7  5.9

General and administrative expenses

   13.8  13.9  14.5  14.3

Foreign exchange loss / (gain), net

   0.1  (0.4)%   0.1  (0.4)% 

Impairment of goodwill

   —     0.4  —     0.5

Amortization of intangible assets

   1.5  1.7  1.6  1.7

Operating profit

   14.8  15.8  15.5  16.4

Other income, net

   (1.4)%   (1.5)%   (1.4)%   (1.6)% 

Finance expense

   1.6  1.8  1.7  1.9

Income tax expense

   3.3  2.9  3.5  3.0

Profit after tax

   11.2  12.6  11.8  13.0

The following table reconciles revenue (a GAAP financial measure) to revenue less repair payments (a non-GAAP financial measure) and sets forth payments to repair centers and revenue less repair payments (non-GAAP) as a percentage of revenue for the periods indicated:

 

   Year ended March 31, 
   2021   2020   2021  2020 
   (US dollars in millions)        

Revenue

  $912.6   $928.3    100.0  100.0

Less: Payments to repair centers

   43.9    32.0    4.8  3.5

Revenue less repair payments (non-GAAP)

  $868.7   $896.2    95.2  96.5

 

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The following table presents our results of operations for the periods indicated:

 

   Year ended March 31, 
   2021   2020 
   (US dollars in millions) 

Revenue

  $912.6   $928.3 

Cost of revenue(1)

   587.2    583.9 
  

 

 

   

 

 

 

Gross profit

   325.4    344.3 

Operating expenses:

    

Selling and marketing expenses(2)

   49.6    52.8 

General and administrative expenses(3)

   126.3    128.6 

Foreign exchange loss / (gains), net

   0.8    (3.4

Impairment of goodwill

   —      4.1 

Amortization of intangible assets

   13.7    15.7 
  

 

 

   

 

 

 

Operating profit

   135.1    146.6 

Other income, net

   (12.5   (14.4

Finance expense

   14.8    17.0 
  

 

 

   

 

 

 

Profit before income taxes

   132.7    144.0 

Income tax expense

   30.1    27.2 
  

 

 

   

 

 

 

Profit after tax

  $102.6   $116.8 
  

 

 

   

 

 

 
    

Notes:

 

(1)

Includes share-based compensation expense of $4.9 million in fiscal 2021 and $4.6 million in fiscal 2020.

(2)

Includes share-based compensation expense of $4.3 million in fiscal 2021 and $4.8 million in fiscal 2020.

(3)

Includes share-based compensation expense of $29.0 million in fiscal 2021 and $28.1 million in fiscal 2020.

 

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Fiscal 2021 Compared to Fiscal 2020

Revenue

The following table sets forth our revenue and percentage change in revenue for the periods indicated:

 

   Year ended March 31, 
   2021   2020   Change  % Change 
   (US dollars in millions)    

Revenue

  $912.6   $928.3   $(15.6  (1.7)% 

The decrease in revenue of $15.6 million was primarily attributable to a decrease in revenue from existing clients of $44.1 million, and a decrease in the hedging gain on our revenue by $8.5 million to a gain of $4.2 million in fiscal 2021 from a gain of $12.7 million in fiscal 2020, partially offset by an increase in revenue from new clients of $36.9 million. The decrease in revenue was primarily due to lower volumes in our travel and leisure, utilities, and diversified businesses verticals and a depreciation of the South African rand by an average of 10.9% against the US dollar in fiscal 2021, as compared to the average exchange rate in fiscal 2020. This decrease in revenue was partially offset by business continuity cost recoveries from clients, higher volumes in our healthcare, insurance, shipping and logistics, consulting and professional services, and banking and financial services verticals and an appreciation of the Australian dollar, the pound sterling, and the Euro by an average of 5.3%, 5.0% and 2.7%, respectively, against the US dollar in fiscal 2021, as compared to the respective average exchange rates in fiscal 2020.

Revenue by Geography

The following table sets forth the composition of our revenue based on the location of our clients in our key geographies for the periods indicated:

 

   Revenue   As a percentage of
revenue
 
   Year ended March 31, 
   2021   2020   2021  2020 
   (US dollars in millions)        

North America (primarily the US)

  $403.5   $392.6    44.2  42.3

UK

   286.6    291.3    31.4  31.4

Australia

   70.3    79.9    7.7  8.6

Europe (excluding the UK)

   61.4    74.3    6.7  8.0

South Africa

   26.4    35.4    2.9  3.8

Rest of world

   64.3    54.8    7.1  5.9
  

 

 

   

 

 

   

 

 

  

 

 

 

Total

  $912.6   $928.3    100.0  100.0
  

 

 

   

 

 

   

 

 

  

 

 

 

The decrease in revenue from the Europe (excluding the UK) region was primarily attributable to lower volumes in our travel and leisure, diversified businesses, and banking and financial services verticals, partially offset by higher volumes in our shipping and logistics, consulting and professional services, and healthcare verticals, and an appreciation of the Euro against the US dollar by an average of 5.0%, as compared to the average exchange rate in fiscal 2020. The decrease in revenue from the Australia region was primarily attributable to lower volumes in our insurance, travel and leisure, utilities, and diversified businesses verticals, partially offset by higher volumes in our healthcare, and shipping and logistics, verticals, and an appreciation of the Australian dollar against the US dollar by an average of 5.3%, as compared to the average exchange rate in fiscal 2020. The decrease in revenue from the South Africa region was primarily attributable to lower volumes in our diversified businesses, travel and leisure, and banking and financial services verticals, and a depreciation of the South African rand against the US dollar by an average of 10.9%, as compared to the average exchange rate in fiscal 2020, partially offset by a higher volume in our consulting and professional services vertical. The decrease in revenue from the UK region was primarily attributable to lower volumes in our utilities, travel and leisure, healthcare, and consulting and professional services verticals, partially offset by higher volumes in our insurance, diversified businesses, shipping and logistics, and banking and financial services verticals, and an appreciation of the pound sterling against the US dollar by an average of 2.7%, as compared to the average exchange rate in fiscal 2020. The increase in revenue in the North America (primarily the US) region was primarily attributable to higher volumes in our healthcare, insurance, consulting and professional services, banking and financial services, and shipping and logistics verticals, partially offset by lower volumes in our travel and leisure, diversified businesses, and utilities verticals. The increase in revenue from the rest of world region was primarily attributable to higher volumes in our shipping and logistics, consulting and professional services, travel and leisure, healthcare, and banking and financial services verticals, partially offset by lower volumes in our diversified businesses, and insurance verticals.

 

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Revenue Less Repair Payments (non-GAAP)

The following table sets forth our revenue less repair payments (non-GAAP) and percentage change in revenue less repair payments (non-GAAP) for the periods indicated:

 

   Year ended March 31,        
   2021   2020   Change  % Change 
   (US dollars in million)    

Revenue less repair payments (non-GAAP)

  $868.7   $896.2   $(27.5  (3.1)% 

The decrease in revenue less repair payments (non-GAAP) of $27.5 million was primarily attributable to a decrease in revenue less repair payments (non-GAAP) from existing clients of $38.7 million, and a decrease in hedging gain on our revenue less repair payments (non-GAAP) by $8.5 million to a gain of $4.2 million in fiscal 2021 from hedging gain of $12.7 million in fiscal 2020, partially offset by an increase in revenue less repair payments (non-GAAP) from new clients of $19.6 million. The decrease in revenue less repair payments (non-GAAP) was primarily due to lower volumes in our travel and leisure, utilities, diversified businesses, and insurance verticals and a depreciation of the South African rand by an average of 10.9% against the US dollar in fiscal 2021, as compared to the average exchange rate in fiscal 2020. This decrease in revenue less repair payments (non-GAAP) was partially offset by business continuity cost recoveries from clients, higher volumes in our healthcare, shipping and logistics, consulting and professional services, and banking and financial services verticals and an appreciation of the Australian dollar, the pound sterling, and the Euro by an average of 5.3%, 5.0% and 2.7%, respectively, against the US dollar in fiscal 2021, as compared to the respective average exchange rates in fiscal 2020.

Revenue Less Repair Payments (non-GAAP) by Geography

The following table sets forth the composition of our revenue less repair payments (non-GAAP) based on the location of our clients in our key geographies for the periods indicated:

 

   Revenue less repair payments
(non-GAAP)
   As a percentage of
revenue less repair
payments  (non-GAAP)
 
   Year ended March 31, 
   2021   2020   2021  2020 
   (US dollars in millions)        

North America (primarily the US)

  $403.5   $392.6    46.5  43.8

UK

   242.7    259.2    27.9  28.9

Australia

   70.3    79.9    8.1  8.9

Europe (excluding the UK)

   61.4    74.3    7.1  8.3

South Africa

   26.4    35.4    3.0  4.0

Rest of world

   64.3    54.8    7.4  6.1
  

 

 

   

 

 

   

 

 

  

 

 

 

Total

  $868.7   $896.2    100.0  100.0
  

 

 

   

 

 

   

 

 

  

 

 

 

The decrease in revenue less repair payments (non-GAAP) from the UK region was primarily attributable to lower volumes in our utilities, travel and leisure, healthcare, and consulting and professional services verticals, partially offset by higher volumes in our diversified businesses, insurance, shipping and logistics, and banking and financial services verticals, and an appreciation of the pound sterling against the US dollar by an average of 2.7%, as compared to the average exchange rate in fiscal 2020. The decrease in revenue less repair payments (non-GAAP) from the Europe (excluding the UK) region was primarily attributable to lower volumes in our travel and leisure, diversified businesses, and banking and financial services verticals, partially offset by higher volumes in our shipping and logistics, consulting and professional services, and healthcare verticals, and an appreciation of the Euro against the US dollar by an average of 5.0%, as compared to the average exchange rate in fiscal 2020. The decrease in revenue less repair payments (non-GAAP) from the Australia region was primarily attributable to lower volumes in our insurance, travel and leisure, utilities, and diversified businesses verticals, partially offset by higher volumes in our healthcare, and shipping and logistics verticals and an appreciation of the Australian dollar against the US dollar by an average of 5.3%, as compared to the average exchange rate in fiscal 2020. The decrease in revenue less repair payments (non-GAAP) from the South Africa region was primarily attributable to lower volumes in our diversified businesses, travel and leisure, and banking and financial services verticals, and a depreciation of the South African rand against the US dollar by an average of 10.9%, as compared to the average exchange rate in fiscal 2020, partially offset by a higher volume in our consulting and professional services vertical. The increase in revenue less repair payments (non-GAAP) from the North America (primarily the US) region was primarily attributable to higher volumes in our healthcare, insurance, consulting and professional services, banking and financial services, and shipping and logistics verticals, partially offset by lower volumes in our travel and leisure, diversified businesses, and utilities verticals. The increase in revenue less repair payments (non-GAAP) from the rest of world region was primarily attributable to higher volumes in our shipping and logistics, consulting and professional services, travel and leisure, healthcare, and banking and financial services verticals, partially offset by lower volumes in our diversified businesses, and insurance verticals.

 

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Cost of Revenue

The following table sets forth the composition of our cost of revenue for the periods indicated:

 

   Year ended March 31,    
   2021  2020  Change 
   (US dollars in millions) 

Employee costs

  $404.4  $399.4  $5.0 

Facilities costs

   51.3   59.7   (8.4

Depreciation

   47.8   46.3   1.5 

Repair payments

   43.9   32.0   11.9 

Legal and professional costs

   14.1   12.0   2.2 

Travel costs

   1.4   11.9   (10.6

Other costs

   24.3   22.6   1.7 
  

 

 

  

 

 

  

 

 

 

Total cost of revenue

  $587.2  $583.9  $3.3 
  

 

 

  

 

 

  

 

 

 

As a percentage of revenue

   64.3  62.9 

The increase in cost of revenue was primarily due to higher repair payments, higher employee costs on account of wage inflation net off a one-time reversal of our corporate leave provision of $3.1 million on account of a policy change which removed our employees’ ability to carryforward unused leave for fiscal 2021, higher legal and professional costs, higher other costs, and higher depreciation on the ROU asset under IFRS 16. Also, we incurred incremental costs of $15.9 million due to COVID-19 pandemic for the provision of accommodation to our employees, rental laptops and WIFI dongles, which are devices that allow remote access via the Internet as we shifted to a “work from home” model, and employee carrying costs where clients have not agreed to a “work from home” model. These incremental costs contributed to our higher employee and facilities costs. Further, an appreciation of the Philippine peso against the US dollar by an average of 4.7% in fiscal 2021 as compared to the average exchange rate in fiscal 2020 resulted in an increase of our cost of revenue by approximately $4.4 million.

These increases were partially offset by lower travel costs, and lower facilities running costs due to lockdowns arising from the COVID-19 pandemic, and a depreciation of the Indian rupee and the South African rand against the US dollar by an average of 4.7% and 10.9% respectively, in fiscal 2021 as compared to the respective average exchange rates in fiscal 2020, which resulted in a decrease in our cost of revenue by approximately $15.4 million.

Gross Profit

The following table sets forth our gross profit for the periods indicated:

 

   Year ended March 31,    
   2021  2020  Change 
   (US dollars in millions) 

Gross profit

  $325.4  $344.3  $(18.9

As a percentage of revenue

   35.7  37.1 

As a percentage of revenue less repair payments (non-GAAP)

   37.5  38.4 

Gross profit as a percentage of revenue and revenue less repair payments (non-GAAP) decreased in fiscal 2021 from fiscal 2020, primarily due to lower revenues and a higher cost of revenue as a percentage of revenue and revenue less repair payments (non-GAAP) as discussed above.

During fiscal 2021, our built up seats decreased by 1.2% from 34,779 as at the end of fiscal 2020 to 34,365 as at the end of fiscal 2021 as we surrendered one of our facilities in each of Romania, and Pune, India, consolidated a few facilities in the Philippines, and added a new facility in New South Wales, Australia. Our total headcount decreased by 0.7% from 44,292 to 43,997 during the same period, as a result of attrition.

For further information, see notes (1) and (2) to the table presenting certain operating data in “— Operating Data” above.

 

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Selling and Marketing Expenses

The following table sets forth the composition of our selling and marketing expenses for the periods indicated:

 

   Year ended March 31,    
   2021  2020  Change 
   (US dollars in millions) 

Employee costs

  $43.6  $40.8  $2.8 

Other costs

   6.0   12.0   (6.0
  

 

 

  

 

 

  

 

 

 

Total selling and marketing expenses

  $49.6  $52.8  $(3.2
  

 

 

  

 

 

  

 

 

 

As a percentage of revenue

   5.4  5.7 

As a percentage of revenue less repair payments (non-GAAP)

   5.7  5.9 

The decrease in our selling and marketing expenses was primarily due to lower other costs due to lower travel costs and marketing-related spends as a result of restrictions in travel due to the COVID-19 pandemic, and a depreciation of the Indian rupee and South African rand against the US dollar by an average of 4.7% and 10.9%, respectively, in fiscal 2021, as compared to the respective average exchange rates in fiscal 2020, resulting in a decrease of selling and marketing expenses by approximately $0.3 million. This decrease was partially offset by an increase in employee costs which was primarily due to wage inflation, and an appreciation of the pound sterling against the US dollar by an average of 2.7% in fiscal 2021, as compared to the average exchange rate in fiscal 2020, resulting in an increase of selling and marketing expenses by approximately $0.5 million.

 

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General and Administrative Expenses

The following table sets forth the composition of our general and administrative expenses for the periods indicated:

 

   Year ended March 31,    
   2021  2020  Change 
   (US dollars in millions) 

Employee costs

  $104.1  $99.8  $4.3 

Other costs

   22.2   28.8   (6.6
  

 

 

  

 

 

  

 

 

 

Total general and administrative expenses

  $126.3  $128.6  $(2.3
  

 

 

  

 

 

  

 

 

 

As a percentage of revenue

   13.8  13.9 

As a percentage of revenue less repair payments (non-GAAP)

   14.5  14.3 

The decrease in general and administrative expenses was primarily due to lower other costs due to lower travel costs as a result of restrictions in travel due to the COVID-19 pandemic, lower legal and professional costs, and a depreciation of the Indian rupee and South African rand against the US dollar by an average of 4.7% and 10.9%, respectively, in fiscal 2021, as compared to the respective average exchange rates in fiscal 2020, which resulted in a decrease of general and administrative expenses by approximately $3.1 million. This decrease was partially offset by an increase in employee costs which was primarily due to wage inflation net off a one-time reversal of our corporate leave provision of $0.8 million on account of a policy change which removed our employees’ ability to carryforward unused leave for fiscal 2021 and higher share-based compensation costs.

Foreign Exchange Loss / (Gain), Net

The following table sets forth our foreign exchange loss / (gain), net for the periods indicated:

 

   Year ended March 31,     
   2021   2020   Change 
   (US dollars in millions) 

Foreign exchange loss/ (gain), net

  $    0.8   $(3.4  $4.1 

We recorded foreign exchange loss of $0.8 million in fiscal 2021, primarily on account of a revaluation loss of $0.6 million and a foreign exchange loss on de-designation of hedges of $0.2 million as compared to a foreign exchange gain of $3.4 million in fiscal 2020, primarily on account of a revaluation gain of $2.9 million and a foreign exchange gain on de-designation of hedges of $0.5 million.

Impairment of Goodwill

 

   Year ended March 31,     
   2021   2020   Change 
   (US dollars in millions) 

Impairment of Goodwill

  $—     $    4.1  $(4.1

During the fourth quarter of fiscal 2020, Brexit had a negative impact on the insurance industry and applied downward pressure on the expected future performance of the WNS Auto Claims reportable segment, due to contract renegotiations and loss of certain clients. These factors, together with the highly uncertain operating environment in the UK, have negatively impacted and caused us to significantly reduce our financial projections and estimates of the WNS Auto Claims BPM reportable segment from our previous estimate. Accordingly, we performed an impairment review of the goodwill associated with the companies we had acquired for our auto claims business, and recorded an impairment charge of $4.1 million to our results of operations in fiscal 2020 for the remaining goodwill balance of our auto claims business. There was no impairment charge recognized in fiscal 2021.

 

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Amortization of Intangible Assets

The following table sets forth our amortization of intangible assets for the periods indicated:

 

   Year ended March 31,     
   2021   2020   Change 
   (US dollars in millions) 

Amortization of intangible assets

  $  13.7   $  15.7   $(1.9

The decrease in amortization of intangible assets was primarily attributable to the completion of the amortization of certain intangible assets associated with our Telkom, Value Edge, Denali and HealthHelp acquisitions, and a depreciation of the Indian rupee and South African rand against the US dollar by an average of 4.7% and 10.9%, respectively, in fiscal 2021 as compared to the respective average exchange rates in fiscal 2020.

Operating Profit

The following table sets forth our operating profit for the periods indicated:

 

   Year ended March 31,    
   2021  2020  Change 
   (US dollars in millions) 

Operating profit

  $135.1  $146.6  $(11.5

As a percentage of revenue

   14.8  15.8 

As a percentage of revenue less repair payments (non-GAAP)

   15.5  16.4 

Operating profit as a percentage of revenue and revenue less repair payments (non-GAAP) was lower in fiscal 2021 from fiscal 2020, due to lower revenues, higher cost of revenue, and a foreign exchange loss. This decrease in operating profit was reduced due to an impairment of goodwill recorded in fiscal 2020 and also partially offset by lower selling and marketing expenses, general and administrative expenses and amortization of intangible assets.

 

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Other Income, net

The following table sets forth our other income, net for the periods indicated:

 

   Year ended March 31,     
   2021   2020   Change 
   (US dollars in millions) 

Other income, net

  $(12.5  $(14.4  $1.9 

Other income, net was lower in fiscal 2021 as compared with fiscal 2020, primarily due to lower interest yield, partially offset by higher cash and cash equivalents and investments.

Finance Expense

The following table sets forth our finance expense for the periods indicated:

 

   Year ended March 31,     
   2021   2020   Change 
   (US dollars in millions) 

Finance expense

  $14.8   $17.0   $(2.2

Finance expense decreased primarily due to lower interest on the reduced principal amounts outstanding under our long-term loans taken for the acquisition of Denali and HealthHelp, as the term loan obtained to fund our acquisition of Denali was fully repaid in fiscal 2020.

Income Tax Expense

The following table sets forth our income tax expense for the periods indicated:

 

   Year ended March 31,     
   2021   2020   Change 
   (US dollars in millions) 

Income tax expense

  $30.1   $27.2   $2.9 

The increase in income tax expense was primarily due to a higher effective tax rate as a result of a change in the profit mix among geographies with higher taxable profits in jurisdictions with higher tax rates in fiscal 2021.

Profit After Tax

The following table sets forth our profit after tax for the periods indicated:

 

   Year ended March 31,    
   2021  2020  Change 
   (US dollars in millions) 

Profit after tax

  $102.6  $116.8  $14.2 

As a percentage of revenue

   11.2  12.6 

As a percentage of revenue less repair payments (non-GAAP)

   11.8  13.0 

The decrease in profit after tax was primarily on account of lower operating profit, an increase in income tax expenses, and lower other income, partially offset by lower finance expenses, as explained above.

Fiscal 2020 Compared to Fiscal 2019

For a discussion of our results in fiscal 2020 compared to fiscal 2019, please see “Part I — Item 5. Operating and Financial Review and Prospects — Results of Operations — Fiscal 2020 Compared to Fiscal 2019” contained in our Annual Report on Form 20-F for fiscal 2020 filed with the SEC on May 1, 2020.

 

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Results by Reportable Segment

For purposes of evaluating operating performance and allocating resources, we have organized our company by operating segments. See Note 28 to our consolidated financial statements included elsewhere in this annual report. For financial statement reporting purposes, we aggregate the segments that meet the criteria for aggregation as set forth in IFRS 8 “Operating Segments” (“IFRS 8”). We have separately reported our Auto Claims BPM segment, as it does not meet the aggregation criteria under IFRS 8. Accordingly, pursuant to IFRS 8, we have two reportable segments: WNS Global BPM and WNS Auto Claims BPM.

WNS Global BPM is delivered out of our delivery centers in Australia, China, Costa Rica, India, the Philippines, Poland, Romania, South Africa, Spain, Sri Lanka, Turkey, the UK and the US. This segment includes all of our business activities with the exception of WNS Auto Claims BPM. WNS Auto Claims BPM is our automobile claims management business which is primarily based in the UK and is part of our insurance business unit. See “Part I — Item 4. Information on the Company — B. Business Overview — Business Process Management Service Offerings.” We report WNS Auto Claims BPM as a separate segment for financial statement reporting purposes since a substantial part of our reported revenue in this business consists of amounts invoiced to our clients for payments made by us to third party automobile repair centers, resulting in lower long-term gross margins when measured on the basis of revenue, relative to the WNS Global BPM segment.

Our revenue is generated primarily from providing business process management services.

 

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In our WNS Auto Claims BPM segment, we provide both “fault” and “non-fault” repairs. For “fault” repairs, we provide claims handling and repair management services, where we arrange for automobile repairs through a network of third party repair centers. In our repair management services, where we act as the principal in our dealings with the third party repair centers and our clients, the amounts which we invoice to our clients for payments made by us to third party repair centers are reported as revenue. Where we are not the principal in providing the services, we record revenue from repair services net of repair cost. Since we wholly subcontract the repairs to the repair centers, we evaluate the financial performance of our “fault” repair business based on revenue less repair payments (non-GAAP) to third party repair centers, which is a non-GAAP financial measure. We believe that revenue less repair payments (non-GAAP) for “fault” repairs reflects more accurately the value addition of the business process management services that we directly provide to our clients.

For our “non-fault” repairs business, we generally provide a consolidated suite of accident management services including credit hire and credit repair, and we believe that measurement of such business on a basis that includes repair payments in revenue is appropriate. Revenue including repair payments is therefore used as a primary measure to allocate resources and measure operating performance for accident management services provided in our “non-fault” repairs business. Our “non-fault” repairs business where we provide accident management services accounts for a relatively small portion of our revenue for our WNS Auto Claims BPM segment. In our WNS Auto Claims BPM segment, effective July 1, 2015, WNS Legal Assistance LLP, a subsidiary of WNS Assistance Limited, commenced providing legal services in relation to personal injury claims.

Revenue less repair payments is a non-GAAP financial measure which is calculated as (a) revenue less (b) in our auto claims business, payments to repair centers for “fault” repair cases where we act as the principal in our dealings with the third party repair centers and our clients. This non-GAAP financial information is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Our revenue less repair payments (non-GAAP) may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation.

We allocate resources based on segment revenue less repair payments (non-GAAP) and measures segment performance based on revenue less repair payments (non-GAAP) and to a lesser extent on segment operating income. The accounting policies of our reportable segments are the same as those of our company. See “— Critical Accounting Policies.”

We may in the future change our reportable segments based on how our business evolves.

The following table shows revenue and revenue less repair payments (non-GAAP) for our two reportable segments for the periods indicated:

 

   Year ended March 31, 
   2021   2020 
   (US dollars in millions) 
   WNS
Global
BPM
   WNS
Autoclaims
BPM
   WNS Global
BPM
  WNS Autoclaims
BPM
 

Segment revenue(1)

  $858.4   $54.6   $882.0  $46.4 

Less: Payments to repair centers

   —      43.9    —     32.0 
  

 

 

   

 

 

   

 

 

  

 

 

 

Revenue less repair payments (non-GAAP) (1)

   858.4    10.7    882.0   14.4 

Cost of revenue (excluding payments to repair centers)(2)

   528.7    10.0    536.2   11.3 

Impairment of goodwill

   —      —      —     4.1 

Other costs(3)

   140.1    3.2    140.8   4.3 
  

 

 

   

 

 

   

 

 

  

 

 

 

Segment operating profit / (loss)

   189.6    (2.6   205.0   (5.3

Other income, net

   (11.8   (0.6   (13.3  (1.1

Finance expense

   14.8    0.1    16.9   0.1 
  

 

 

   

 

 

   

 

 

  

 

 

 

Segment profit before income taxes

   186.7    (2.0   201.4   (4.3

Income tax expense

   29.7    0.4    27.4   (0.2
  

 

 

   

 

 

   

 

 

  

 

 

 

Segment profit / (loss)

  $157.0   $(2.4  $174.0  $(4.1
  

 

 

   

 

 

   

 

 

  

 

 

 

Notes:

 

(1)

Segment revenue and revenue less repair payments (non-GAAP) include inter-segment revenue of $0.3 million and $0.2 million in fiscal 2021 and 2020, respectively.

 

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(2)

Cost of revenue includes inter-segment expenses of $0.3 million and $0.2 million in fiscal 2021 and 2020, respectively, and excludes share-based compensation expense of $4.9 million and $4.6 million in fiscal 2021 and 2020, respectively, which are not allocable between our segments.

(3)

Other costs include selling and marketing expenses, general and administrative expenses and foreign exchange gain/loss. Excludes share-based compensation expense of $33.3 million and $32.9 million in fiscal 2021 and 2020, respectively, which are not allocable between our segments.

WNS Global BPM accounted for 94.1% of our revenue and 98.8% of our revenue less repair payments (non-GAAP) in fiscal 2021, as compared to 95.0% of our revenue and 98.4% of our revenue less repair payments (non-GAAP) in fiscal 2020.

WNS Global BPM

Segment Revenue

Fiscal 2021 Compared to Fiscal 2020

Revenue in the WNS Global BPM segment decreased by 2.7% to $858.4 million in fiscal 2021 from $882.0 million in fiscal 2020. This decrease was primarily attributable to the decrease in the volume of transactions executed for existing clients by $33.0 million, and $8.5 million being attributable to the decrease in hedging gains on our revenue to $4.2 million in fiscal 2021 from $12.7 million in fiscal 2020. This decrease was partially offset by revenue from new clients of $17.9 million, business continuity cost recoveries from clients and an appreciation of the Australian dollar, the pound sterling, and the Euro by an average of 5.3%, 2.7% and 5.0%, respectively, against the US dollar in fiscal 2021, as compared to the respective average exchange rates in fiscal 2020.

Fiscal 2020 Compared to Fiscal 2019

For a discussion of our segment revenue in fiscal 2020 compared to fiscal 2019, please see “Part I — Item 5. Operating and Financial Review and Prospects — Results by Reportable Segment — WNS Global BPM — Segment Revenue — Fiscal 2020 Compared to Fiscal 2019” contained in our Annual Report on Form 20-F for fiscal 2020 filed with the SEC on May 1, 2020.

Segment Operating Profit

Fiscal 2021 Compared to Fiscal 2020

Segment operating profit in the WNS Global BPM segment decreased by 7.5% to $189.6 million in fiscal 2021 from $205.0 million in fiscal 2020. The decrease was primarily attributable to lower segment revenue, and lower foreign exchange gains, partially offset by lower cost of revenue, lower general and administrative expenses, and lower selling and marketing expenses.

Our cost of revenue includes employee costs, facilities costs, legal and professional costs, depreciation, travel costs and other related costs. Employee related costs represent the largest component of our cost of revenue for the WNS Global BPM segment. Our cost of revenue decreased by $7.5 million to $528.7 million in fiscal 2021 from $536.2 million in fiscal 2020, primarily on account of a decrease in travel costs as a result of travel restrictions due to the COVID-19 pandemic, and lower facilities running costs due to lockdowns arising from the COVID-19 pandemic, and a depreciation of the Indian rupee, and the South African rand against the US dollar by an average of 4.7% and 10.9% respectively, in fiscal 2021 as compared to the respective average exchange rates in fiscal 2020, which resulted in a decrease in our cost of revenue by approximately $15.4 million.

These decreases in cost of revenue were partially offset by higher employee costs on account of wage inflation, net off a one-time reversal of our corporate leave provision of $3.1 million on account of a policy change which removed our employees’ ability to carryforward unused leave for fiscal 2021, higher legal and professional costs, higher other costs, and higher depreciation costs on the ROU assets under IFRS 16. Also, we incurred incremental costs of $15.9 million due to COVID-19 pandemic for the provision of accommodation to our employees, rental laptops and WIFI dongles, which are devices that allow remote access via the Internet, as we shifted to a “work from home” model and employee carrying costs where clients have not agreed to a “work from home” model. These incremental costs contributed to our higher employee and facilities costs. Further, an appreciation of the Philippine peso against the US dollar by an average of 4.7% in fiscal 2021 as compared to the average exchange rate in fiscal 2020 resulted in an increase of our cost of revenue by approximately $4.4 million.

Our other costs include selling and marketing expenses, general and administrative expenses and foreign exchange loss or gain. Our other costs decreased by $0.7 million to $140.1 million in fiscal 2021 from $140.8 million in fiscal 2020, primarily on account of a decrease in selling and marketing expenses by $2.6 million and general and administrative expenses by $2.4 million, partially offset by lower foreign exchange gain by $4.4 million to a loss of $0.9 million in fiscal 2021 as compared to a gain of $3.5 million in fiscal 2020.

Selling and marketing expenses decreased by $2.6 million to $45.0 million in fiscal 2021 from $47.6 million in fiscal 2020, primarily due to lower travel costs and lower marketing-related spends as a result of restrictions in travel due to COVID-19 pandemic, and a depreciation of the Indian rupee and South African rand against the US dollar by an average of 4.7% and 10.9%, respectively, in fiscal 2021, as compared to the respective average exchange rate in fiscal 2020. This decrease was partially offset by an increase in employee costs which was primarily due to wage inflation, and an appreciation of the pound sterling against the US dollar by an average of 2.7% in fiscal 2021, as compared to the average exchange rate in fiscal 2020.

General and administrative expenses decreased by $2.4 million to $94.2 million in fiscal 2021 from $96.6 million in fiscal 2020, primarily due to lower travel costs due to COVID-19 pandemic as a result of restrictions in travel, lower legal and professional costs, and a depreciation of the Indian rupee and South African rand against the US dollar by an average of 4.7% and 10.9%, respectively, in fiscal 2021, as compared to the respective average exchange rates in fiscal 2020. This decrease was partially offset by an increase in employee costs which was primarily due to wage inflation, net off a one-time reversal of our corporate leave provision of $0.8 million on account of a policy change which removed our employees’ ability to carryforward unused leave for fiscal 2021 and higher share-based compensation costs.

We recorded a foreign exchange loss of $0.9 million in fiscal 2021, primarily on account of a revaluation loss of $0.6 million and a foreign exchange loss on de-designation of hedges of $0.2 million as compared to a foreign exchange gain of $3.4 million in fiscal 2020, primarily on account of a revaluation gain of $2.9 million and a foreign exchange gain on de-designation of hedges of $0.5 million.

Fiscal 2020 Compared to Fiscal 2019

For a discussion of our segment operating profit in fiscal 2020 compared to fiscal 2019, please see “Part I — Item 5.Operating and Financial Review and Prospects — Results by Reportable Segment — WNS Global BPM — Segment Operating Profit — Fiscal 2020 Compared to Fiscal 2019” contained in our Annual Report on Form 20-F for fiscal 2020 filed with the SEC on May 1, 2020.

 

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Segment Profit

Fiscal 2021 Compared to Fiscal 2020

Segment profit in the WNS Global BPM segment decreased by 9.7% to $157.0 million in fiscal 2021 from $174.0 million in fiscal 2020. The decrease in profit was primarily attributable to lower operating profit, higher income tax expense and lower other income, net, partially offset by lower finance expenses.

The income tax expense in fiscal 2021 was $29.7 million as compared to $27.4 million in fiscal 2020. The increase in income tax expense was primarily due to a higher effective tax rate as a result of a change in the profit mix among geographies with higher taxable profits in jurisdictions with higher tax rates in fiscal 2021.

The other income, net decreased by $1.5 million in fiscal 2021 to $11.8 million from $13.3 million in fiscal 2020 primarily due to lower interest yield, partially offset by higher cash and cash equivalents and investments.

The finance expense in fiscal 2021 was $14.8 million as compared to $16.9 million in fiscal 2020 primarily due to lower interest on reduced balance outstanding on our long-term loans obtained to fund our acquisitions of Denali and HealthHelp, as the loan obtained to fund our acquisition of Denali was fully repaid in fiscal 2020.

Fiscal 2020 Compared to Fiscal 2019

For a discussion of our segment profit in fiscal 2020 compared to fiscal 2019, please see “Part I — Item 5. Operating and Financial Review and Prospects — Results by Reportable Segment — WNS Global BPM — Segment Profit — Fiscal 2020 Compared to Fiscal 2019” contained in our Annual Report on Form 20-F for fiscal 2020 filed with the SEC on May 1, 2020.

WNS Auto Claims BPM

Segment Revenue

Fiscal 2021 Compared to Fiscal 2020

Revenue in the WNS Auto Claims BPM segment increased by $8.2 million to $54.6 million in fiscal 2021 from $46.4 million in fiscal 2020. The increase was primarily on account of revenue from new clients of $19.1 million and an appreciation of the pound sterling against the US dollar by an average of 2.7% in fiscal 2021 as compared to the average exchange rate in fiscal 2020, partially offset by a decrease in revenue from existing clients by $10.9 million. Payments made to repair centers in fiscal 2021 increased by $11.9 million to $43.9 million in fiscal 2021 from $32.0 million in fiscal 2020.

Revenue less repair payments (non-GAAP) in this segment decreased by $3.7 million to $10.7 million in fiscal 2021 from $14.4 million in fiscal 2020. The decrease was primarily on account of a decrease in revenue from existing clients by $5.5 million and a depreciation of the pound sterling against the US dollar by an average of 2.7% in fiscal 2021 as compared to the average exchange rate in fiscal 2020, partially offset by revenue from new clients of $1.8 million.

Fiscal 2020 Compared to Fiscal 2019

For a discussion of our segment revenue in fiscal 2020 compared to fiscal 2019, please see “Part I — Item 5. Operating and Financial Review and Prospects — Results by Reportable Segment — WNS Auto Claims BPM — Segment Revenue — Fiscal 2020 Compared to Fiscal 2019” contained in our Annual Report on Form 20-F for fiscal 2020 filed with the SEC on May 1, 2020.

Segment Operating Profit

Fiscal 2021 Compared to Fiscal 2020

The segment reported an operating loss of $2.6 million in fiscal 2021 as compared to a loss of $5.3 million in fiscal 2020. The lower segment operating loss recorded in fiscal 2021 was primarily due to nil impairment of goodwill recorded in fiscal 2021 versus $4.1 million charged in fiscal 2020, lower cost of revenue (excluding payments to repair centers), lower general and administrative expenses, and lower selling and marketing expenses.

Our cost of revenue (excluding payments to repair centers) decreased by $1.3 million to $10.0 million in fiscal 2021 from $11.3 million in fiscal 2020. The decrease in cost of revenue (excluding payments made to repair centers) was primarily on account of a decrease in facilities costs by $1.5 million, partially offset by an increase in our employee costs by $0.2 million.

Our other costs include selling and marketing expenses, general and administrative expenses, impairment of goodwill, and foreign exchange loss or gain. Our other costs decreased by $5.1 million to $3.2 million in fiscal 2021 from $8.4 million in fiscal 2020, primarily on account of an impairment of goodwill of $4.1 million recorded in fiscal 2020 versus nil in fiscal 2021, lower general and administrative expenses by $0.7 million to $3.1 million in fiscal 2021 from $3.8 million in fiscal 2020, partially offset by an increase in foreign exchange gains by $0.2 million.

Fiscal 2020 Compared to Fiscal 2019

For a discussion of our segment operating profit in fiscal 2020 compared to fiscal 2019, please see “Part I — Item 5. Operating and Financial Review and Prospects — Results by Reportable Segment — WNS Auto Claims BPM — Segment Operating Profit — Fiscal 2020 Compared to Fiscal 2019” contained in our Annual Report on Form 20-F for fiscal 2020 filed with the SEC on May 1, 2020.

Segment Profit

Fiscal 2021 Compared to Fiscal 2020

The segment reported a loss of $2.4 million in fiscal 2021 as compared to a loss of $4.1 million in fiscal 2020. This was primarily attributable to lower segmental operating losses, lower other income, net in fiscal 2021 of $0.6 million as compared to $1.1 million in fiscal 2020 and higher income tax expense.

Fiscal 2020 Compared to Fiscal 2019

For a discussion of our segment profit in fiscal 2020 compared to fiscal 2019, please see “Part I — Item 5. Operating and Financial Review and Prospects — Results by Reportable Segment — WNS Auto Claims BPM — Segment Profit — Fiscal 2020 Compared to Fiscal 2019” contained in our Annual Report on Form 20-F for fiscal 2020 filed with the SEC on May 1, 2020.

 

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Quarterly Results

The following table presents unaudited quarterly financial information for each of our last eight fiscal quarters on a historical basis. We believe the quarterly information contains all adjustments necessary to fairly present this information. As a business process management services provider, we anticipate and respond to demand from our clients. Accordingly, we have limited control over the timing and circumstances under which our services are provided. Typically, we show a decrease in our first quarter operating profit margins as a result of salary increases. For these and other reasons, we can experience variability in our operating results from quarter to quarter. The operating results for any quarter are not necessarily indicative of the results for any future period.

 

   Fiscal 2021  Fiscal 2020 
   Three months ended  Three months ended 
   March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
 
   (Unaudited, US dollars in millions) 

Revenue

  $243.9  $238.4  $222.6  $207.8  $248.3  $239.2  $226.2  $214.6 

Cost of revenue

   158.5   150.3   137.9   140.4   158.4   150.0   142.1   133.5 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Gross Profit

   85.4   88.0   84.7   67.4   90.0   89.2   84.1   81.1 

Operating expenses:

         

Selling and marketing expenses

   12.9   12.2   12.1   12.4   15.2   13.0   12.2   12.4 

General and administrative expenses

   34.5   31.3   28.6   31.9   32.4   33.5   32.7   30.0 

Foreign exchange loss / (gain), net

   0.0   (0.1  1.4   (0.6  (1.3  (0.2  (1.1  (0.8

Impairment of Goodwill

   —     —     —     —     4.1   —     —     —   

Amortization of intangible assets

   3.3   3.3   3.3   3.7   3.8   4.0   3.9   3.9 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating profit

   34.6   41.2   39.2   20.0   35.8   38.9   36.3   35.6 

Other income, net

   (3.6  (2.6  (3.0  (3.2  (4.0  (3.5  (3.3  (3.7

Finance expense

   3.7   3.7   3.7   3.7   4.0   4.2   4.3   4.4 

Income tax expense

   7.0   9.2   9.3   4.6   6.3   7.3   6.5   7.2 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Profit

  $27.5  $31.0  $29.2  $14.8  $29.5  $30.9  $28.7  $27.6 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

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The following table sets forth for the periods indicated selected consolidated financial data:

 

  Fiscal 2021  Fiscal 2020 
  Three months ended  Three months ended 
  March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
 
  (Unaudited) 

Gross profit as a percentage of revenue

    35.0    36.9    38.0    32.4    36.2    37.3    37.2    37.8

Operating profit as a percentage of revenue

  14.2  17.3  17.6  9.6  14.4  16.3  16.1  16.6

Gross profit as a percentage of revenue less repair payments (non-GAAP)

  37.4  39.2  39.5  33.5  38.2  39.1  38.1  38.3

Operating profit as a percentage of revenue less repair payments (non-GAAP)

  15.2  18.4  18.3  9.9  15.2  17.1  16.5  16.8

The following table reconciles our revenue (a GAAP financial measure) to revenue less repair payments (a non-GAAP financial measure):

 

   Fiscal 2021   Fiscal 2020 
   Three months ended   Three months ended 
   March 31,
2021
   December 31,
2020
   September 30,
2020
   June 30,
2020
   March 31,
2020
   December 31,
2019
   September 30,
2019
   June 30,
2019
 
   (Unaudited, US dollars in millions) 

Revenue

  $243.9   $238.4   $222.6   $207.8   $248.3   $239.2   $226.2   $214.6 

Less: Payments to repair centers

   15.5    13.8    8.2    6.4    12.6    11.0    5.5    3.0 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue less repair payments (non-GAAP)

  $228.4   $224.5   $214.4   $201.4   $235.8   $228.2   $220.7   $211.6 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Contractual Obligations

Our principal commitments consist of expected principal cash payments relating to our obligations under debt and operating leases for office space, which represent minimum lease payments for office space, and purchase obligations for property and equipment. The following table sets out our total future contractual obligations as at March 31, 2021 on a consolidated basis:

 

   Payments Due By Period 
   Total   Less than
1 year
   1-3 years   3-5 years   More than
5 years
 
   (US dollars in thousands) 

Long-term debt (before netting off debt issuance costs)

   16,800    16,800    —      —      —   

Estimated interest payments (1)

   349    349    —      —      —   

Trade payables

   28,015    28,015    —      —      —   

Lease liabilities

   256,305    39,591    73,833    63,462    79,419 

Purchase obligations (net of capital advances)

   7,027    7,027    —      —      —   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $308,496   $91,782   $73,833   $63,462   $79,419 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note:

 

(1)

Interest payments on debt includes payout for interest rate swaps which convert our floating rate debt to fixed rate debt. There is no contractual obligation to renew this debt.

Our pension and other employee obligations (non-current) amounting to $19.6 million as at March 31, 2021, included in our consolidated statement of financial position, have not been disclosed in the table above as the amounts and timing of payments cannot be reliably estimated or determined at present.

Uncertain income tax liabilities totaling $10.6 million have not been disclosed in the table above because we cannot make a reasonable estimate of the period of cash settlement with the relevant taxing authority.

 

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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements or obligations.

Tax Assessment Orders

Transfer pricing regulations to which we are subject require that any international transaction among the WNS group enterprises be on arm’s-length terms. We believe that the international transactions among the WNS group enterprises are on arm’s-length terms. If, however, the applicable tax authorities determine that the transactions among the WNS group enterprises do not meet arm’s-length criteria, we may incur increased tax liability, including accrued interest and penalties. This would cause our tax expense to increase, possibly materially, thereby reducing our profitability and cash flows. We have signed an advance pricing agreement with the Government of India providing for the agreement on transfer pricing matters over certain transactions covered thereunder for a period of five years starting from April 2013 which has been renewed on similar terms for another five years starting from April 2018. The applicable tax authorities may also disallow deductions or tax holiday benefits claimed by us and assess additional taxable income on us in connection with their review of our tax returns.

From time to time, we receive orders of assessment from the Indian tax authorities assessing additional taxable income on us and/or our subsidiaries in connection with their review of our tax returns. We currently have orders of assessment for fiscal 2004 through fiscal 2017 pending before various appellate authorities. These orders assess additional taxable income that could in the aggregate give rise to an estimated 2,007.9 million ($27.5 million based on the exchange rate on March 31, 2021) in additional taxes, including interest of 690.9 million ($9.5 million based on the exchange rate on March 31, 2021).

 

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The following sets forth the details of these orders of assessment:

 

Entity

  Tax year(s)   Amount demanded
(including interest)
  Interest on amount
Demanded
 
       ( and US dollars in millions)        

Permanent establishment of WNS North America Inc (“WNS NA Inc”) and WNS Global Services UK Limited (“WNS UK”) in India

   Fiscal 2003   0.1   $(0.1)(1)  —     $—   

Permanent establishment of WNS NA Inc and WNS UK in India

   Fiscal 2004   8.1   $(0.1)(1)  2.2   $(0.1)(1) 

Permanent establishment of WNS NA Inc and WNS UK in India

   Fiscal 2005   4.1   $(0.1)(1)  1.2   $(0.1)(1) 

WNS Global Services Private Limited (“WNS Global”)

   Fiscal 2006   457.3   $(6.1)(1)  160.4   $(2.1)(1) 

Permanent establishment of WNS NA Inc and WNS UK in India

   Fiscal 2006   13.2   $(0.2)(1)  5.6   $(0.1)(1) 

Permanent establishment of WNS NA Inc. and WNS UK in India

   Fiscal 2007   23.1   $(0.3)(1)  5.4   $(0.1)(1) 

WNS Global

   Fiscal 2009   55.2   $(0.8)(1)  —     $—   

WNS Business Consulting Services Private Limited (“WNS BCS”)

   Fiscal 2010   1.0   $(0.1)(1)  —     $—   

Permanent establishment of WNS NA Inc in India

   Fiscal 2011   31.0   $(0.4)(1)  8.2   $(0.1)(1) 

WNS Global

   Fiscal 2013   423.0   $(5.7)(1)  137.2   $(1.8)(1) 

WNS Global

   Fiscal 2014   480.1   $(6.5)(1)  257.5   $(3.5)(1) 

WNS Global

   Fiscal 2015   258.6   $(3.5)(1)  94.9   $(1.3)(1) 

WNS Global

   Fiscal 2016   195.2   $(2.8)(1)   18.3    (0.3)(1) 

WNS Global

   Fiscal 2017   57.9   $(0.8)(1)   —      —   

Total

    2,007.9   $(27.5)(1)  690.9   $(9.5)(1) 

Note:

 

(1)

Based on the exchange rate as at March 31, 2021.

The aforementioned orders of assessment allege that the transfer prices we applied to certain of the international transactions between WNS Global or WNS BCS (each of which is one of our Indian subsidiaries), as the case may be, and our other wholly-owned subsidiaries named above were not on arm’s-length terms, disallow a tax holiday benefit claimed by us, deny the set off of brought forward business losses and unabsorbed depreciation and disallow certain expenses claimed as tax deductible by WNS Global or WNS BCS, as the case may be. As at March 31, 2021, we have provided a tax reserve of 774.3 million ($10.6 million based on the exchange rate on March 31, 2021) primarily on account of the Indian tax authorities’ denying the set-off of brought forward business losses and unabsorbed depreciation. We have appealed against these orders of assessment before higher appellate authorities.

 

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In addition, we currently have orders of assessment pertaining to similar issues that have been decided in our favor by appellate authorities, vacating tax demands of 4,180.1 million ($57.2 million based on the exchange rate on March 31, 2021) in additional taxes, including interest of 1,417.0 million ($19.4 million based on the exchange rate on March 31, 2021). The income tax authorities have filed or may file appeals against these orders at higher appellate authorities.

In case of disputes, the Indian tax authorities may require us to deposit with them all or a portion of the disputed amounts pending resolution of the matters on appeal. Any amount paid by us as deposits will be refunded to us with interest if we succeed in our appeals. We have deposited 916.4 million ($12.5 million based on the exchange rate on March 31, 2021) of the disputed amount with the tax authorities and may be required to deposit the remaining portion of the disputed amount with the tax authorities pending final resolution of the respective matters.

As at March 31, 2021, corporate tax returns for fiscal year 2017 and thereafter remain subject to examination by tax authorities in India.

After consultation with our Indian tax advisors and based on the facts of these cases, legal opinions from counsel on certain matters, the nature of the tax authorities’ disallowances and the orders from appellate authorities deciding similar issues in our favor in respect of assessment orders for earlier fiscal years, we believe these orders are unlikely to be sustained at the higher appellate authorities and we intend to vigorously dispute the orders of assessment.

In 2021, we received an assessment order from the Indian service tax authority, demanding payment of 148.9 million ($2.0 million based on the exchange rate on March 31, 2021) towards service tax for the period April 1, 2014 to June 30, 2017. The tax authorities have rejected input service tax credit on certain types of input services. We have orders of assessment pertaining to similar issues for earlier fiscal years that have been decided in our favor by appellate authorities. We intend to vigorously dispute the assessment.

In 2016, we also received an assessment order from the Sri Lankan Tax Authority, demanding payment of LKR 25.2 million ($0.1 million based on the exchange rate on March 31, 2021) in connection with the review of our tax return for fiscal year 2012. The assessment order challenges the tax exemption that we have claimed for export business. We have filed an appeal against the assessment order with the Sri Lankan Tax Appeal Commission in this regard. Based on consultations with our tax advisors, we believe this order of assessment is more likely than not to be upheld in our favor. We intend to continue to vigorously dispute the assessment.

No assurance can be given, however, that we will prevail in our tax disputes. If we do not prevail, payment of additional taxes, interest and penalties may adversely affect our results of operations, financial condition and cash flows. There can also be no assurance that we will not receive similar or additional orders of assessment in the future.

Liquidity and Capital Resources

Our capital requirements are principally for the establishment of operating facilities to support our growth and acquisitions, debt repayment and to fund the repurchase of ADSs under our share repurchase programs, as described in further detail below, see “— Share Repurchases.” Our sources of liquidity include cash and cash equivalents and cash flow from operations, supplemented by equity and debt financing and bank credit lines as required.

As at March 31, 2021, we had cash and cash equivalents of $105.6 million which were primarily held in US dollars, Indian rupees, South African rand, pound sterling and Philippine pesos. We typically seek to invest our available cash on hand in bank deposits and money market instruments. Our investments include primarily bank deposits, marketable securities and mutual funds which totaled $289.6 million as at March 31, 2021.

As at March 31, 2021, our total debt outstanding was $16.8 million. We also had available lines of credit amounting to $99.4 million, all of which were available as at March 31, 2021. These limits can be utilized in accordance with the agreed terms and prevailing interest rates at the time of borrowing. We are continually evaluating the impact of the COVID-19 pandemic on our liquidity position, and we believe that we are able to source additional lines of credit, if required.

As at March 31, 2021, our Indian subsidiary, WNS Global, had an unsecured line of credit of 840 million ($11.5 million based on the exchange rate on March 31, 2021) from The Hongkong and Shanghai Banking Corporation Limited, 600 million ($8.2 million based on the exchange rate on March 31, 2021) from BNP Paribas, 800 million ($11.0 million based on the exchange rate on March 31, 2021) from Citibank N.A., 750 million ($10.3 million based on the exchange rate on March 31, 2021) from Axis Bank, 600 million ($8.2 million based on the exchange rate on March 31, 2021) from DBS Bank, 600 million ($8.2 million based on the exchange rate on March 31, 2021) from HDFC Bank, 600 million ($8.2 million based on the exchange rate on March 31, 2021) from ICICI Bank and 600 million ($8.2 million based on the exchange rate on March 31, 2021) from Standard Chartered Bank for working capital purposes. Interest on these li