Jarrod Yahes - Treasurer Rohit Kapoor - Vice Chairman and CEO Vishal Chhibbar - Executive Vice President and Chief Financial Officer.

Ashwin Shirvaikar - Citigroup Joseph D. Foresi - Janney Montgomery Scott LLC Manish Hemrajani - Oppenheimer Amit Singh - Jefferies & Company Puneet Jain - JPMorgan Vincent Colicchio - Noble Financial.

Good day, ladies and gentlemen and welcome to the EXL Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder this conference call is being recorded.

I would now like to introduce your host for today's conference, Jarrod Yahes, EXL's Treasurer. You may begin..

Thank you, operator. Greetings and thanks to everyone for joining EXL's first quarter 2014 financial results conference call. I'm Jarrod Yahes, EXL's Treasurer. With us here today in New York this morning are Rohit Kapoor, our Vice Chairman and Chief Executive Officer and Vishal Chhibbar, our Chief Financial Officer.

We hope that you've had an opportunity to review the financial results quarter press release we issued this morning. We have also updated our Investor Fact Sheet in the Investor Relations section of EXL's website. As you know some of the matters we'll discuss in this call are forward-looking.

Please keep in mind that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Such risks and uncertainties include, but are not limited to, general economic conditions, those factors set forth in today's press release, discussed in the company's periodic reports and other documents filed with the Securities and Exchange Commission from time to time.

EXL assumes no obligation to update the information presented on this conference call. During our call today we may reference certain non-GAAP financial measures which we believe provide useful information for investors. Reconciliation of those measures to GAAP can be found in our press release as well as the investor fact sheet.

Now I'll turn the call over to Rohit Kapoor, EXL's Chief Executive Officer.

Rohit?.

First, I will discuss this quarter's results and our outlook for the remainder of 2014. Second, I will give color on new wins and provide an update on progress made in executing our key priorities for 2014. Third, I will comment on our demand environment.

Then I will turn the call over to Vishal for a more detailed financial discussion following which we will be happy to take your questions. In the first quarter we exceeded expectations in terms of our revenue growth and our profit growth. Our revenue grew 5% year-over-year despite a negative impact of 2.8% due to foreign exchange fluctuations.

Q1, 2014 revenue included a $2.5 million reimbursement to a client for transition and disentanglement costs. On a constant currency basis our revenue excluding client transitions and reimbursements grew 12.9% year-over-year.

This strong double-digit growth was primarily driven by our analytics and platform businesses in addition to expansion of key existing clients in insurance, health care and travel, transportation and logistics.

While previously mentioned client transitions will continue to negatively impact revenues we expect our underlying growth momentum to sustain through the second half of the year such that we meet our full year guidance. There are multiple factors that give us this confidence.

First, in our outsourcing business volume growth increased as we aggressively ramped up wins at new and existing clients that we announced last year. In addition, we continue to see good growth momentum in some of our large existing clients in insurance, health care and travel and transportation and logistics.

Second, we renewed two of our largest analytics clients to long-term annuity contracts. These are big wins for us as they have the potential to grow into $10 million plus annual revenue accounts and more importantly they validate the business impact that we create for our clients.

The reduction in volatility of analytics revenues by converting a larger proportion of revenue from project-based to annuity-based revenues was one of the strategic priorities for our analytics business over the last 12 months. I am very pleased to note that we have made good progress in achieving this goal.

Based on our aggressive growth projections for the analytics business and the 39% year-over-year growth we experienced in the first quarter we established a new facility in Mumbai, India and an entity in Johannesburg, South Africa to help service our analytics clients better and work closely with their regional teams.

We are very bullish about this business and as the demand for sophisticated analytics increases in our key verticals companies increasingly turn to us to provide data-based insights.

Thirdly, we started investing in productizing some of our operations management offerings towards the end of 2012 and we've had good success with the launch and implementation of [MED] connection product at some of our key insurance clients. MED connection is a product for managing medical data that makes the claim process more efficient.

It delivers five times greater return on investment to improve consistency and time savings that increases the case loads staff can handle. It also results in indemnity improvements, better file documentation and a centralized data warehouse of valuable claim information. Our MED connection product is gaining significant traction in the market.

We have already received a go ahead for implementation at two large insurance clients and have seen strong interest from another. One of the go ahead mandates is a multi-million dollar integrated deal where we'll implement our platform and provide servicing on top of our platform.

Our pipeline for this product is strong and we expect several other insurance clients to follow suit. Finally as we have previously observed the second half of 2014 will add several project-based engagements in our transformation business especially finance transformation which got off to a slow start this year.

Overall we have begun 2014 highly encouraged. In addition to the new strategic large deal wins that we announced in our last earnings call EXL has signed three significant consummation deals. The first is an integrated operations consulting, analytics and transaction processing deals with a Fortune 500 client.

The second is an analytics win with a he regional U.S. Bank and the third deal is with a global provider of retail analytics. Also we won a new deal to implement our LifePRO platform. In our last earnings call, I had mentioned multiple key strategic priorities for EXL in 2014. I am pleased with the progress and would like to provide an update.

First, we continue to invest in our Business EXLerator Framework and we have set aggressive goals for its implementation. Initial feedback from our clients has been very positive and I would like to talk about two examples to outline the value that this Framework can deliver.

First, for a large utilities client implementation of our analytic models and technology tools resulted in a 70% reduction in the value of unbilled receivables.

The ability of this framework to provide an exponential increase in the value we can deliver makes EXL a much more trusted partner for our clients and provides us with an opportunity to win additional business.

The second example is where we partnered with one of our large insurance clients to transform that new business acquisition engine using a mix of workflow management tools and analytical models.

The client developed tremendous confidence on the ability of EXL to deliver quality work and is discussing a 50% increase in the number of FTs in the second half of 2014. Second, we continue to strengthen our information life cycle management capabilities and have engaged a third party specialist firm to develop the right set of policies and tools.

In Q1 we partnered with Everest Consulting Group to jointly develop an industry code of conduct and a marketing framework which we would deploy across all our existing and new businesses. This is a first in our industry and demonstrates our commitment to safeguard our client's information assets and intellectual property.

Third, we are expanding our delivery footprint, especially in the Philippines. We are establishing new facilities in Cebu and Alabang which are expected to go live within the next few quarters. We have also bolstered our leadership and delivery teams in the Philippines with some senior new hires.

Fourth, as I mentioned previously we remain focused on building IP and products and are seeing good traction in our MED connection product. This strategy will not only help us significantly increase the value that we can deliver to our clients but we will also increase the stickiness of our business model.

Moreover it is becoming increasingly clear that clients are moving towards an as-a-service business model in order to remain nimble, agile and responsive to a dynamic marketplace. Therefore they are increasingly turning to service providers like EXL to deliver business process as-a-service solutions.

This market demand fits nicely with our stated strategy of providing integrated platform-plus servicing solutions to our clients in our chosen domains. Fifth, we continue to invest in upgrading our talent. We hired a Chief Actuarial Officer as the demand for complex data analytical services increases in our insurance and healthcare businesses.

I am also pleased to share that we hired Nancy Saltzman as our new General Counsel and Corporate Secretary effective April 21, 2014. She will be a great addition to our management team and will significantly bolster our compliance and controls while mitigating any new businesses risks that may arise as we charter an aggressive growth path.

Finally M&A is going to be a key driver of growth for EXL in the next couple of years. With our strong cash and balance sheet position we continue to pursue multiple inorganic opportunities to expand our multilingual delivery capabilities, deepen our industry leading insurance capabilities and enhance our healthcare and analytics businesses.

Our commitment to remain ahead of the industry curve in our chosen domains has received good coverage from leading industry analysts. We were mentioned in the Winners Circle in the HFS Insurance BPO Blueprint and were positioned in the Leader’s quadrant in the NelsonHall Insurance CNC BPO NEAT Metrics report.

Turning to our demand environment, the business pipeline remained strong, both among potentially new clients and existing customers.

We've seen strong prospects across all our service line including operations management for insurance, healthcare and travel, transportation and logistics, analytics engagement in banking, healthcare and insurance and platform deals across insurance and healthcare.

Although competition continues to remain high in our deals with large technology players investing in BPO we are confident that our Business EXLerator Framework led solutions, domain expertise and focus on providing high business impact to clients will help us drive growth in our chosen domains.

Overall we remain optimistic on our future outlook as our client relationships and pipeline continue to remain strong while our servicing capabilities continue to constantly evolve to be market leading. With that, I will turn the call over to Vishal..

Thank you, Rohit and thanks everyone for joining us this morning. In the first quarter EXL reported revenues of 121.8 million and net of 2.5 million reimbursement to previously disclosed client for transition and disentanglement costs, our revenues were 124.3 million, up 7% year-over-year and flat quarter-on-quarter.

The dollar INR depreciation had a negative impact of 2.8% on our year-over-year revenue growth and had a negligible impact sequentially. On a constant currency basis and excluding previously announced transitioning client and disentanglement costs revenue grew 15% year-over-year and are flat quarter-over-quarter.

In our outsourcing business revenues grew 3% year-over-year and flat sequentially. Foreign exchange had a negative impact of 3.8% on outsourcing business year-over-year growth. On constant currency basis and excluding transitioning client and disentanglement costs this translated to 12% growth year-over-year and 2% sequentially.

In transformation business revenues grew 18% year-over-year and declined 8% sequentially. As mentioned by Rohit, year-over-year growth was by strong growth of over 39% in our business analytics business.

The sequential decline is primarily in the finance transformation business which tends to be a more projective and experienced as a weak seasonal first quarter.

As mentioned in our fourth quarter 2000 earnings call we are seeing strong momentum in our analytics business coupled with pickup and project based revenues which will drive sequential growth in transformation business for the rest of the year.

In the first quarter, our gross margins were 38.5%, up 140 basis points year-over-year driven by the impact of rupee depreciation partially offset by disentanglement costs. Gross margin sell 350 basis points sequentially driven by lower utilization in transformation business and the disentanglement costs impact.

Excluding the disentanglement costs, our gross margin were 39.7% for the quarter, 260 basis points higher year-on-year and basis points down sequentially. Outsourcing gross margin were 41.2% up 210 basis points year-over-year driven by the FX impact and improved margins impact on business. .

:.

Sales and marketing margins were 8.4% flat year-over-year and up 160 basis points sequentially driven by investment in new hires as we continue to expand our firms and demand expertise. Foreign exchange loss was about $800,000 and for the full year we expect foreign exchange loss of approximately $1.5 to $2 million.

And cash and other income was at a $1 million up $300,000 year-over-year driven by one-time benefit of income tax fund and better yield on cash balances. In the first quarter our tax rate was 28.6%, up 510 basis points year-over-year primarily due to a one-time benefit on account of discrete tax items in Q1 2013.

For 2014, we will continue to expect a tax rate in the high 20s. EBITDA margin was 22.9%, up 370 basis points year-over-year and down 260 basis points sequentially driven by the decline in our gross margin. CapEx spent for the first quarter was 10.7 million against 6.6 million in the same quarter last year.

This increase was primarily due to various license payment and new facilities in and a new analytic center in Mumbai. For 2014, we expect CapEx to be within the $25 million to $30 million range driven by growth in investments, in infrastructure as well as developing our business capabilities.

Net income was 11.1 million, up 14% year-over-year and down 30% quarter-on-quarter. Adjusted EPS was $0.50 up 25% from $0.40 in first quarter last year driven by our revenue growth and operating leverage. We continue to enjoy a strong balance sheet with over $150 million in cash and equivalents and no debt.

M&A, the strategic to our growth plans and we will plan to use our cash on accretive. We have healthy pipeline of M&A opportunities which could give us a decisive advantage in the marketplace in our chosen verticals. DSO stood at 57 days in the first quarter up two days sequentially.

For 2014, we are maintaining a guidance of $480 million to $500 million and adjustment EPS guidance of $1.70 to a $1.80 in using an Indian Rupee U.S dollar exchange rate of 61. Guidance excludes the impact of reimbursement of transition and disentanglement costs for the disclosed client previously.

We expect our second quarter revenues to be flat to down driven by the ramp downs expected with the previously disclosed transition in clients. In the second quarter we will also recognize annual mid to high digit salary increments at our offshore professional thereby impacting our adjusted EPS in Q2.

We are encouraged by our quarter results and we remain extremely bullish about the long term prospects in our operation management and decision analytics business. We are in a robust growth market we have healthy deal prospects and enjoy the blue chip client base.

We are making the right investment to best solution ourselves for the multi-year growth we see in our business. And now, we would be happy to take your questions. Thank you..

(Operator Instructions). Our first question comes from Joseph Foresi with Janney Montgomery Scott. I apologize our first question comes from Ashwin Shirvaikar of Citi. Your line is now open..

Thank you guys.

Can you hear me?.

Yes Ashwin we can hear you..

Okay. So congratulations, good quarter here. My question has had with regards to the timing exam of you announced and you talked about a lot of caption deals including on the innovative side for.

Can you talk a little bit more about the timing with regards to how the revenues go through and another question would be are you seeing any kind of delays or any update on what clients are doing with existing in ramping the client?.

So Ashwin let me respond to your question in two parts. One is what we are seeing with our analytics clients physically in annuity based services that we provide to them and then talk about the broader operations management in BPO and the service lines that we provide to our customers.

On analytics we continue to see extremely strong demand for services and a real urgency to get deployed in terms of providing services to our clients.

We are seeing good traction in terms of our existing client scaling up and ramping up their operations with us and we are also seeing very strong signing up new deals takes place which previously would start out at much smaller engagement and now we are seeing them actually start out with much larger engagements and there seems to be greater confidence amongst clients to engage with providers such as we excel to service them on analytics.

So we are really pleased with demand, our ability to execute and the ramp up is taking place in our analytics minor business.

On the broader operations management work that we do I think the ramp ups are pretty consistent with our previous experience and there certainly continues to be some choppiness in terms of outlines ramp up, there is also some pushes and as far as those ramp ups are concerned, but it's very consistent with our experience in the past.

Some of the new clients which we have signed up and some of our existing clients' ramp up continue to be on track and as we build out a much more broadly diversified client portfolio, we are seeing traction across multiple industry verticals and domain compliance and therefore it sort of tends to balance..

Okay. One question I had with regards to the maybe client transition charge the 2.5 million.

Is that one time or is this something that happened you know because this is I think going to be a multi quarter transition so it is something that will come up each quarter until the transition is complete?.

So the transition is expected to take place as we have previously announced over in 18 months period..

Right..

And the disentanglement and transition cost will take place during the duration of the transition and it will be approx multiple quarters..

So should we model in you know , what should we model in with regards to those kind of cost, is this going to be a consistent occurrence through the 18 months period?.

Unfortunately Ashwin we have very little visibility in these costs and we are not in a position to forecast this cost at all. We will be providing you with an update at the end of each quarter as we report as to what these cost have been for that quarter, but we just do not have any ability to forecast these costs..

Okay. Got it. My last question if I can is you tend to normally have a pretty strong second half with regards to both revenues and with margins ramping.

So should we expect something similarly strong off of the first quarter that you just reported?.

Hi Ashwin. This is Vishal. Yeah typically our second half is more stronger as our transformation business goes and also the ramps in our outsourcing business was up and we would expect second half to be stronger both in revenue growth and in terms of margins and EPS..

Okay. Got it. Thank you..

Just also to add to what Vishal just said, please keep in mind that the ramp downs that are going to take place are going to negatively impact our overall reported revenue numbers.

So the ramp down that we have and previously disclosed to you that will be taking place over the next three quarters and the underlying core business that will continue to scale up and ramp up during the balance of the year. So it really there will be offset to the increase in revenues that will be taken place..

Understood. Fair enough. Thank you..

Thank you. Our next question comes from Edward Caso of Wells Fargo. Your line is now open..

Yeah hi. Good morning. This is actually [Rick] on for Ed. My first question is just on the industry competition Rohit I head you talked about you are saying that the larger offshore providers go on the analytics side.

So just wondering if maybe you could segment out what you are seeing across your business among the typical BPO competitors with any of the offshore providers that are moving more into BPO and then the multi nationals?.

Rohit Kapoor:.

We continue to see that competition complete for this in our business and with our Business EXLerator Framework, domain focus and our ability to add value to our customers we are able to effectively complete against much larger player.

The bigger global players, we don't see much competition from them because they tend to play a lot more on large scale transformational project and in those type of situations EXL plays only in select industry verticals.

So I think the competition for us on operations management is that other BPO companies and with offshore centric IT players which are trying to build up their BPO capabilities..

Has there been much change in the pricing environment, I believe the last time you talked that it was relatively stable?.

So the pricing environment it does tend to be fairly stable. We have seen in some isolated instance, isolated cases that for strategic reasons, competition may adopt some very aggressive pricing, but that still seems to be in a few cases where they are strategically trying to acquire a footprint.

On the broader spectrum and in terms of a longer term outlook the pricing environment is competitive but fairly stable..

Thanks. And then just a last one from me. I am wondering if you could sort of update us on the platform businesses and particularly with Landa, I know when you had bought it, you talked about making some investments and trying to transition that model. So one that was maybe more annuity based as your base business was at the time.

So maybe you could talk about sort of the platform businesses as a whole and what you are doing in Landa to move to sort of the as a service model that you talked about? Thank you..

So three years back, we started to apply our platform businesses in an efforts to move towards business process as a service business model and we done that with LifePRO which is a policy administration platform for life and annuity, we have done that with Trumbull which is a subrogation platform and we have done that with Landacorp which is a healthcare platform.

What we have found is this transition is a multi-year transition that takes place in a fairly gradual format, but we are continuing to make aggressive investments in terms of trying to get to our end goal of providing these products and services to our clients as a service.

On Landacorp in particular there seems to be a fair amount of transition taking place in the healthcare industry verticals. So there is a unique opportunity for us to leverage our platform and provide our operations management capability on top of that as a service.

There are number of clients where the Landacorp care radius platform has been implemented and we are working with these clients to try and see if we can provide them the service on top of the platform.

We are also taking the platform into a format and that will again allow us to offer these services with much greater and for clients to engage with us on a per transaction basis. However the journey is going to be a long journey and I would expect that the change will happen gradually over a period of time..

Thank you very much..

Thank you. Our next question comes from the line of Joseph Foresi of Janney Montgomery Scott. Your line is now open..

Hi.

My first question here is have you seen any change in the timing on the sales cycles on small or larger deals?.

Hi Joe. No, not really, I don't think we have seen any real shift take place in the sales cycle. I think the outsourcing deals that continue to be long sales cycle and some of the analytics deals do tend to be a shorter sales cycle, but that use to be the case previously as of..

Okay. And to your quarter, I think the last two quarters it seems that your pipeline either re-filled or gotten incrementally better.

Is that a case and what's causing that, is that a secular uptick in maybe bookings or amount of business out there or do you feel like you are gaining market share, it just seems like the tone is improved at least on the demand side over the last couple quarters?.

I think from our perspective, a few of our strategies seem to be resonating well with the market demand and the environment Joe.

Number one, we continue to remain very sharply focused on select industry verticals and domain and as we become better and better in understanding the subject matter expertise of the industry verticals and the business of our clients we are becoming a much more valuable and a meaningful partner to them.

The second is the investment that we made in our Business EXLerator Framework, that seems to be resonating very nicely with our prospects and with our clients and we are going to be making a very strong push to embracing that framework across the enterprise on a global basis and delivering value to our customers.

And the third is the investment that we've made in the platform businesses those are long investments but we continue to have very exciting conversations with our clients as to how we can leverage our platform and provide that as a service to them..

Great. And then just lastly from me.

Is it safe to say that your pipelines increased over the two last quarter and then I think on the transition business, we think are we still expecting I think it was $12 million to $20 million impact this year, so is the pipeline increasing and is that still the expectation on the transition?.

Sure. So the pipeline certainly continues to mature and develop and we have seen new deals coming to our pipeline, we have seen our existing deals mature and we have seen good progress in our pipeline pretty much across the industry verticals.

It's also a reflection of the investments that we have made in our sales and marketing engine and that's something which seems to be bearing fruit now.

On the transition of the disclosed client, the estimate that we had previously provided was that we expected a $12 million to $20 million revenue ramp down in 2014 and our expectation is that ramp down number will be inline with our previously provided estimate.

So there is a two transitioning clients, the 12 to 20 for one client and then the second client will also have $10 million impact..

Got it. Got it. Thank you..

Thank you. Our next question comes from Manish Hemrajani of Oppenheimer. Your line is now open..

Hi. Thanks for taking the call.

Can you talk a little bit more of the net why do you think it's getting better and if you could answer that as the change to decision making towards existing clients?.

So I think demand has continued to be strong throughout it's something which we shared with you that we see a fair amount of opportunity and engagement and interaction with our existing clients and our prospects.

I think what we now started to see some very specific opportunities that are opening up which fit in with our capabilities and they fit in what our clients are seeking. So by virtue of us seeking our business model and virtue of what the prospects are looking for, I think the fit seems to be a bit better than what it was previously..

And then can you talk about decision coordinating with some existing clients?.

So the decision making cycles continue to be strong but I think for us we are able to show the business impact that we create and the value that we can deliver upfront to our clients and prospects and based on that, I think we are seeing a greater engagement by our prospects and we are seeing them engage with us with a greater confidence and doing business with us..

You saw pretty good dealers in analytics, what would be the actual that to, are you seeing this pick up industry wise globally and then how many folks do you have currently doing analytics at EXL of Mumbai?.

So Manish I think what we are seeing in analytics is extremely strong demand, we position ourselves for the analytics business a couple of years ago by starting to invest in dedicated sales people only for analytics. Today we've got seven sales people who are fully dedicated just to see analytical services and this is done on a global basis.

So in addition to our regular sales force cross selling analytics, we have few sales people who are solely dedicated into selling analytics. .

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Correct. A couple of housekeeping questions.

How should we model it in terms of revenue for the next five quarters or so for the transition cost, payment decline, is it going to be I know this is accurate but is it going to be every quarter, fixed amount or is variable?.

So Manish unfortunately we really cannot provide you any more color than what we have shared. We just don't have any ability to forecast that number and we are unable to share any of the detail longer..

Manish Hemrajani - Oppenheimer:.

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Manish, hi this is Vishal. For stock comp we estimate for the stock comps for the year to be in the range of $12 to $13 million..

Okay. Got it. That's all I have. Thanks..

Thank you. Our next question comes from Jason Kupferberg of Jefferies. Your line is now open..

Hi. This is Amit Singh for Jason. Just wanted if you could speak your guidance which was reiterated for the first quarter itself where the top line and the bottom line were strong much above expectations I would say and your pipeline remains strong and then all of the expectations related to the client transition were sort of reiterated as well.

So I am trying to understand the reasoning behind why guidance was not increased, is it just FX or is it just timing of the impact of transition is more backend loaded now?.

Yeah. Hi Amit this is Rohit. I think that's a fair question, I think we certainly have seen a couple of our performance in calendar year 2014 and we have greater confidence in our guidance as we go into the balance part of the year. However there are two factors which I think are unknown to us at this point in time.

Number one is the ramp up that takes place in the second half of the year in our transformation line of business i9s largely project based revenue that increases and that project based revenue can be volatile and there is uncertainty associated with that.

The second is we are also uncertain about the ramp downs of the previously disclosed clients and there is a broad range that we have provided out there and that provides a fair amount of uncertainty. The underlying business for the rest of our client portfolio that continues to be quite strong.

And since we are only 60 days from the time that we first gave guidance on March 1st, we have chosen to stay with our current guidance. As we get a greater amount of visibility and confidence we will update our guidance accordingly..

Fair enough. And just quickly speak about the overall environment.

I think that your net headcount has increased by around 600 since the last quarter so just wanted to get a sense that you guys are, you know you are in the process of reassigning a lot of peoples who are working on the large client that is transitioning, So what you are using behind continuing to invest higher and then on top of that, I wanted to just check on your attrition rate, I think it decreased to around 29% from 25% last quarter, if you could provide a little bit more color on that?.

Sure. So I think the hiring for us basically shows the underlying business demand for our services and the growth in our existing portfolio. The transitioning client portfolio ramp downs are not a factor in right now as in Q1. So most of these are for the increased underlying growth of our businesses.

I think the other area that we continue to hire strongly is in analytics and we will be making significant investments in hiring additional workforce for our analytics business through the second quarter and the third quarter of this year. And so that's something we are excited about.

And we think it's a great time for us to continue to build up our capabilities out there.

From an attrition standpoint, attrition did move up in Q1, we think that this attrition increase is a combination of market environment in India as well as certain seasonal factors which do impact attrition in the market there, but there isn't anything else that we are seeing by way of attrition.

I think our employee engagement, our ability to manage our workforce, all of those continue to be pretty much on track. And there may be some quarters there, there may be higher attrition, but in general, we would target mid-20s type of attrition rate and we would expect that to stabilize at that level.

The important element on attrition is year-on-year our attrition rate continues to keep coming down and we are seeing that not only in India, but we are also seeing in the Philippines and that's a good thing for us to be able to monitor..

Great. Thank you guys..

Thank you. Our next question comes from Puneet Jain of JPMorgan. Your line is now open..

Hi. This is Puneet. So Rohit just help me your clients are trying to get more efficient in the score in internal spending and they are adopting automation.

So what does that mean for your listeners which is still mostly at the?.

Rohit Kapoor:.

So we are seeing our clients demand, we are still are investing in that and we think that that's a win value proposition for us to make that investment, deliver the benefit to our customers and get greater confidence and acceptance from our customers and hence get greater volumes of business.

So I think it does act as a short term detractive of revenue, but longer term, I think it will help us build our revenues and build our business to that front..

Okay. I understood it. And Vishal I think you mentioned that you expect revenue to be flat down in Q2.

And so what's the transition impact on revenue this quarter and what do you expect in Q2?.

Yeah. So in this quarter, the transitioning impact was minimal in terms of the clients which we have announced, majority of that we will start in Q2 and that's the reason we think that the revenues will decline in Q2..

Okay. Thank you..

Thank you. Our next question comes from the line of Vincent Colicchio of Noble Financial. Your line is now open..

Yeah.

I am just curious if anything the company has done over that you recently had do internally to better safeguard against further client problems?.

We have actually taken a number of steps to try and do that.

Number one is we continued to make a much stronger investments in information lifecycle management, we've invested in technologies and tools, we've beefed up our processing, we've made investments with our partners in terms of defining appropriate industry standards as well as policies and procedures that we can knowledge here too.

We've invested in greater amount of training to all our employees and created a much better awareness and that scenario that we will continue to invest in a very strong way because it's such an important element of our relationship with our clients.

We also continue to make investments in our Business EXLerator Framework, which provides greater value to our customers and then we continue to make investments in our platforms and analytics businesses so that we can improve the stickiness for services.

And I think a number of these measures across the board should help us manage our client portfolio in a much more stable format..

Okay. That's it from me. Thank you..

Thank you. And I'm showing no further questions at this time. And I would like to hand the call back over to Rohit Kapoor for any closing remarks..

I just want to thank everybody for joining this call. EXL continues to execute very strongly and I think for us the next couple of quarters would be really critical as we ramp up on our existing clients and the new clients wins that we have and we have transitions which might offset the growth that has taken place.

But there seems to be a greater validation of our business model in the marketplace and we will continue to strive to meet our guidance and continue to deliver our numbers. Thanks for joining the call and we look forward to posting another good fall next quarter..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Have a great day everyone..