Steven Barlow - Rohit Kapoor - Co-Founder, Vice Chairman and Chief Executive Officer Vishal Chhibbar - Chief Financial Officer, Principal Accounting Officer and Executive Vice President.

Anil K. Doradla - William Blair & Company L.L.C., Research Division Richard Eskelsen - Wells Fargo Securities, LLC, Research Division Jordan Fox - Goldman Sachs Group Inc., Research Division Kunal Doctor David M.

Grossman - Stifel, Nicolaus & Company, Incorporated, Research Division Puneet Jain - JP Morgan Chase & Co, Research Division Amit Singh - Jefferies LLC, Research Division Joseph D. Foresi - Janney Montgomery Scott LLC, Research Division.

Good day, ladies and gentlemen, and welcome to the EXL Q3 2014 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to Mr. Steven Barlow. Sir, you may begin..

Thank you, Candace. Hello, and thanks to everyone for joining EXL's Third Quarter 2014 Financial Results Conference Call. I'm Steve Barlow, EXL's Vice President of Investor Relations. With us here today in New York are Rohit Kapoor, our Vice Chairman and Chief Executive Officer; and Vishal Chhibbar, our Chief Financial Officer.

We hope that you had an opportunity to review the quarterly financial results in the press release we issued this morning, and the press release about our acquisition of Overland Solutions. We've 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 on our press release, as well as the investor fact sheet.

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

First, I will discuss this quarter's results and will comment on our pipeline and the areas of opportunity and growth we are seeing in the market; second, I will comment on our acquisition of Overland Solutions we announced this morning and provide an update on our recent Blue Slate acquisition.

I will then turn the call over to Vishal for a more detailed financial discussion. Following which, we would be happy to take your questions. Before I talk about the quarter, I want to welcome Henry Schweppe, our new president for Global Business and Marketing, and a member of our Executive Committee.

Henry joined us earlier this month from IBM, where he led IBM's North American finance and accounting and procurement practices within global process services. In this role as a general manager, he was responsible for all aspects of the group, including overall P&L responsibility, client delivery and satisfaction, and new business development.

At EXL, Henry will provide leadership in sales and marketing and have executive oversight for the business units of finance and accounting, travel, transportation and logistics, and our consulting businesses. I'm delighted to have Henry join EXL and add his expertise to our talented team. Moving on to earnings.

I am delighted to report that in the third quarter, our revenue grew 10.8% organically year-over-year, on a constant-currency basis, excluding disentanglement costs and client transitions taking place. The revenue growth was primarily driven by our Transformation segment, which was up 33% organically, and 38% including our acquisition of Blue Slate.

Our Outsourcing segment was up 5% year-over-year, excluding disentanglement costs and client transitions. Our existing clients continue to have increasing confidence in our business model and have driven a significant portion of our business growth this year and in this quarter.

Year-to-date, 110 new processes have been migrated to EXL, including 32 new processes across all domains in the third quarter. Also importantly, EXL had 7 new client wins in the third quarter, 5 in Transformation and 2 in Outsourcing. For the first 9 months of 2014, we have signed 19 new clients.

EXL continues to demonstrate its ability to attract new clients and build up revenue growth momentum. The client wins were across all our major industry verticals, including banking and financial services, health care, insurance, utilities, and travel, transportation and logistics.

Several of the new clients have already started to generate revenue in the third quarter. As we head towards the end of 2014, our sales pipeline in Outsourcing looks promising, and we are seeing demand across all of our major industry verticals, including health care.

In health care, we are investing in combining our EXL Landa technology platform, with service offerings around total population health management, medical management, and payment integrity. In several verticals, current and prospective clients have moved past FTE-based process solutions and are looking to create more robust partnerships with EXL.

To further differentiate ourselves, we are continually investing in our proprietary EXL Business EXLerator Framework, which uses our core strength in operations management in combination with our embedded analytics, consulting and proprietary technology platform solutions.

The Business EXLerator Framework is resonating well with all our new and existing clients, who are seeing the business benefits of this framework being able to drive incremental business impact for them. The pipeline for decision analytics is extremely strong, especially in banking and financial services.

We expect to see new opportunities in the years to come as a result of increasing demand for services, including insight generation and model creation, risk management and analytics around changing regulatory requirements.

We have also seen increased traction in decision analytics cross-selling to our outsourcing clients in the insurance and healthcare industry verticals. We believe that the demand we are seeing in decision analytics, combined with the suite of services EXL provides, will create a long runway for sustainable growth.

In the third quarter, our decision analytics revenue within Transformation segment grew 53%, and now represents almost 14% of total EXL revenue. As such, we are now providing additional public disclosures to investors regarding our analytics revenues each quarter, which can be found in Investor Materials.

In the second quarter, I spoke about how we had hired 300 new employees that had joined EXL in decision analytics as we projected higher demand. The advanced hiring was a good decision and we have been able to more than fully utilize the 300 professionals we hired.

Our team is focused on developing solutions that integrate our proprietary analytics methodology with data management platforms in order to meet our clients' need for real-time analytics embedded in their systems and operations. In the third quarter, we invested in our infrastructure to match increased demand for our services.

In August, EXL opened our fourth operation center in the Philippines, in Alabang, with 570 seats to serve our banking and financial services and travel, transportation and logistics clients.

In September, we opened a new delivery center in Dallas to serve our F&A clients with a full suite of products, including transaction processing, risk management and working capital optimization. During the quarter, EXL received several recognitions from industry analysts and advisers.

Gartner positioned EXL in the Magic Quadrant for North American Life Insurance Policy Administration Systems for EXL's LifePRO Policy Administration System for life, health and annuity companies.

We were positioned as a major contender in the Everest Group finance and accounting outsourcing service provider landscape, with peak metrics assessments 2014. We also achieved recognition as a leader in the transportation management supply chains management BPO segment within the HFS blueprint report Supply Chain Management BPO.

We are delighted with the overall performance of the company and the industry recognitions that we are receiving. This morning, we issued a press release on an important strategic development for EXL. We announced that EXL has acquired Overland Solutions Inc. for $53 million in cash.

Overland solutions is a leader in underwriting services for the property and casualty industry, and specializes in premium audit, commercial and residential underwriting surveys and loss control consulting.

Overland will enhance EXL's position in the property and casualty industry with a broad range of client relationships, a deeply experienced leadership team and services that leverage proprietary workflow technology.

Overland Solutions uses a proprietary workflow technology that fulfills the industry's growing demand for business process as a service, or BPAS service, offerings by providing an attractive variable cost operating model for clients.

Overland's technology and data directly connects and interfaces with its clients, providing a truly integrated operations management solution. Overland will bring to EXL 3 key benefits. Number 1, its clients.

Founded in 1951 and based in Overland Park, Kansas, the company is a market leader, with more than 400 P&C clients, including 21 of the top 25 P&C underwriters. Overland Solutions provides distinctive services that improve carrier underwriting precision and reduce risk exposures.

EXL is already a clear leader in providing operations management to P&C insurers. Overland's strong foothold with many loyal and long-standing clients creates an attractive springboard to cross-sell outsourcing and transformation services, and adds additional points of contact with EXL's client base. Number 2, its people.

An experienced and talented team of professionals with an impressive wealth of knowledge about underwriting, including premium audit, property surveys and loss control. Overland will add approximately 750 U.S.-based employees to EXL, including 8 regional offices, and leverages a nationwide network of auditors and surveyors to provide its services.

And number 3, an opportunity to add value to clients through analytics. The Overland Solutions acquisition presents an enormous opportunity to provide decision analytics offerings to Overland's client base in order to provide better insights and effectiveness in their underwriting decisions.

We will invest in new products and services related to predictive analytics, underwriting analysis and risk and loss protection, which we believe will be valued by our respective clients and are difficult to replicate in the P&C industry, given our combined capabilities.

Overland Solutions enables EXL to offer a more comprehensive end-to-end solution offering for the P&C insurance clients, thereby strengthening our competitive position and reinforcing our commitment to the insurance industry.

This combination bolsters EXL's insurance capabilities today and enhances our ability to create innovative solutions, leveraging technology and data. I want to personally welcome all of Overland Solutions employees to EXL. We are very excited to have them become part of the EXL family, and look forward to a successful integration.

In our last call, we talked about the acquisition of Blue Slate, which combines deep technology expertise to transform clients' core mission-critical applications inside their IT environments, fundamentally transforming their business processes.

Blue Slate's primary market has been the health-care industry, but we believe its consulting expertise can be leveraged to all outsourcing clients. The Blue Slate team is already working with EXL's clients, and is now actively engaged in several implementations and projects. Overall, the first 9 months of the year have been very exciting at EXL.

Our organic revenue growth, averaging 12.4% year-to-date on a constant-currency basis and excluding client transitions, is healthy, and new client wins so far this year give us continued momentum. We have increased our revenue guidance again this quarter, owing to both organic revenue growth as well as our acquisitions.

We're pleased with the strategic transactions and investments in our people and infrastructure that we have made this year, and we believe they will benefit our clients for many years to come. With that, I turn it over to Vishal..

Firstly, Overland Solutions should add approximately $10 million of revenues in the fourth quarter or approximately $5 million per month; secondly, the strong performance in our core business and higher revenue from transitioning clients resulted in $9.5 million compared to prior expectations.

As compared to our prior expectations of $12 million to $20 million headwind from one of our transitioning clients, we now expect this headwind to be in the range of $12 million to $16 million.

Based on the midpoint of our revised guidance, we do expect a sequential decline and lower margins in the fourth quarter, excluding the contribution from Overland solutions. In addition to revising our revenue guidance, we now forecast our full year adjusted EPS to be at the higher end of our guidance range of $1.70 to $1.80.

Reviewing our third quarter results and looking at the final quarter of the year, We see strength in our underlying core business as the impact of transitioning clients abate. And with our strong balance sheet, we remain quite positive about the long-term prospects in all areas of business. And now, we would be happy to take your questions..

[Operator Instructions] And our first question comes from the line of Anil Doradla of William Blair..

A couple of questions, Rohit. Now the disentanglement costs that we're witnessing quarter-over-quarter, there's been a rise. You talk about it too impacting until April of next year, but qualitatively, is this amount going to increase? Or do you think we have peaked in the current quarter? And I have a couple of follow-up questions..

Sure, Anil. So we recorded approximately $9.6 million of disentanglement costs in the third quarter. The total year-to-date number for the disentanglement costs is $17.8 million. The transitioning of this client relationship is expected to take place over an 18-month period and we expect that to be completed by April of 2015.

And beyond that, we have no certainty around the level of disentanglement costs, so I really cannot give you any further comment on this..

So just for our sake of our modeling purposes, when I look at the December quarter and March quarter, should we be modeling an increased absolute dollar amount of the disentanglement impacts on the revenue? Or should we be moderating it from the $9 million levels?.

So this is one number that we really do not have any good estimate of, and I really cannot give you any guidance on that number..

Okay, great. And congratulations on the acquisition. Now if I understand rightly, you guys talked about Overland having lower operating margins than you guys, yet you're talking about being accretive.

Can you walk us through what steps are you going to take? Are these 750 people U.S.-based, is there going to be some labor arbitrage going forward? What steps are you going to be taking over the next 6 to 9 months to make this accretive overall?.

So Overland is a U.S.-based organization and the primary strategic rationale for doing this deal is for us to be able to grow our business with P&C carriers on a global basis and leverage the strong platform that Overland Solutions already has.

So the growth will actually contribute to our ability to generate increasing revenues and improving the margins of this business.

And we think that there is a terrific opportunity for us to cross-sell our Outsourcing and Transformation services to the existing client base of Overland Solutions, and there is also a terrific opportunity for us to be able to leverage our decision analytics services and embed that into Overland Solutions for its clients.

And therefore, a large part of the revenue growth and the accretion in EPS is all expected to come from the growth that we hope to be able to generate here..

And also, bear in mind, Anil, that the cash which we are using is primarily cash which we have invested in the U.S. and earning a very low return. And hence, Overland is a profitable company and when we consolidate, we will have accretion..

Great. And finally, attrition has inched up, and when I look at -- you talk about the decision analytics, you hired, I think, about 200 to 300 people and they're fully employed. So if I extract that our out, the overall attrition metrics are a little bit more worse incrementally.

What's going on, on that front?.

Yes. Attrition has gone up for us. We believe that the fundamental reason why attrition has gone up is because we do have a number of clients that are transitioning and there's a fair amount of dislocation that is taking place.

Our preliminary indications are that towards the end of the third quarter, the attrition rate started to come down and our estimates of October are very, very encouraging. So we do believe that this is a trend that will come down from where we are right now.

And I think once all the clients have transitioned by the first quarter of next year, I think the noise associated with this attrition metric will become much clearer and would be -- the attrition levels would be much lower.

We are, of course, doing a number of things to manage attrition, so we have increased our -- the communication with all of our employees across the organization.

We are focused on making sure that the key employees within the organization, particularly in middle management and the high-performance and high-potential employees, are in a segment that we watch very carefully. And we're very pleased that in that group, our attrition rates continue to remain low.

And right now we have inched up in our attrition rate, but we're very confident that, that will come down once these transitions are complete..

And our next question comes from the line of Ed Caso of Wells Fargo..

It's actually Rick Eskelsen on for Ed. My questions are just around the decision analytics business.

You guys talked more this call than I can remember about having some success on the cross-selling, so I wonder if you could just talk a little bit more about and how you've been able to improve the cross-selling, because I believe, before you talked about having more success selling the Transformation work to outsourcing clients.

So has it gone the opposite way as well where you can sell Outsourcing to Transformation-only clients?.

Sure, Rick. We'd be happy to take that. So first of all, we've been talking about the decision analytics business for several quarters and a couple of years now, because we think that that's a great business opportunity for the company, and we continue to demonstrate a tremendous capability in our execution and our engagement with our clients.

This quarter we've started to now report that revenue by segment for the decision analytics business, and you'll find that in our fact sheet and that's disclosed there. What we have done in decision analytics is a decision that we took 3 years back, where we invested in a dedicated sales force for decision analytics.

And I think that is paying us rich dividends. That sales force not only is responsible for bringing in new clients into decision analytics, but they also scout for opportunities where we can sell our Outsourcing services to clients in decision analytics.

So the cross-sell ability is -- has certainly been stepped up by virtue of this dedicated sales force.

Number 2, we moved towards a model of integrating analytics and Outsourcing a couple of years back, and with our Business EXLerator Framework, we are actually forcing that integration because we believe that providing real-time analytical insights to our clients, while we are running their operations for them, is tremendously valuable in their decisions.

And that message is resonating well, and so our clients are not only adopting analytics being embedded into their existing outsourcing relationships with us, they are also actually engaging with us to get started in Outsourcing if we start off the relationship with decision analytics.

So I think these are the 2 factors that are really contributing to that cross-sell increasing..

Then my may follow up, again on the Transformation side of things, you've done a nice job moving that number up throughout the year, even with hiring ahead of demand. Just wondering if we can look out a little bit.

Where do you think that the gross margins in that business can get to once you've moved to some of maybe the upfront investments? Where do you think a sustainable-type level could be for gross margin in that business?.

Sure. So we do think that the gross margins, particularly for the decision analytics business, can be much higher than where we are today. At the current moment, we are investing for growth, we are investing for making sure that we have the right products and capabilities within decision analytics, and so this is really an investment cycle for us.

But over the next couple of years we do think that these margins will improve. Over the long-term, we would believe that decision analytics gross margins can be above the Outsourcing gross margins. So I think there is a significant headway and room out there for us to be able to get that value accretion..

And our next question comes from the line of S.K. Prasad Borra of Goldman Sachs..

This is Jordan Fox on for S.K. Prasad Borra.

I was wondering if you can provide some additional color on the pricing pressure in the industry? And to follow on that, most of the IT service vendors have been aggressively expanding in their analytics practice, and given your success there, what is EXL's differentiation compared to traditional IT service vendors?.

Certainly. As far as pricing is concerned, we think that the pricing environment continues to be fairly stable. There are pressures on pricing, of course, which are there throughout, but there's nothing which has changed in the last quarter or so.

We think our ability to differentiate ourselves in terms of the service offerings that we have for our clients in Outsourcing include the domain knowledge that we have, the Business EXLerator Framework that we've got, and the -- some of the tool sets and the decision analytical capabilities that we've embedded into our operations.

That's what creates the secret sauce for us vis-à-vis our clients and then what resonates for them. As opposed to comparing ourselves to the IT service providers and particularly on decision analytics, I think our strength is much more in terms of model creation and insight generation, and that's an area that we specialize in.

We also specialize in a number of industry verticals, particularly insurance, health care, banking and financial services. Just to give you an example, in banking and financial services, 4 of the top 5 banks now do their decision analytics work with us.

So we are continuing to make great progress in terms of being able to attract new clients and build up our capabilities at that..

Okay, great. And then just a follow-up to that.

In addition to the revolver, are you open to levering up your balance sheet further to pursue M&A? And if so, which verticals are you most concentrated on?.

Sure. The revolver is for $50 million, and that gives us flexibility to be able to use that as and when needed. We also have an ability to increase that revolver at short notice. And strategically, we do think that we can lever up the balance sheet for the right acquisitions.

So if we come across the right transaction, and that requires a significant outlay of capital, I think EXL has got a tremendous amount of financial strength to be able to use its existing cash, use the revolver or borrow additional money to be able to do those acquisitions.

The areas that are of interest for us on doing acquisitions continue to remain some of the core places where we are investing in. So these include the health-care industry vertical, which is one of the primary areas of investment for the company.

It includes decision analytics -- that's another area that we want to build up -- and some of our other industry verticals, like banking and financial services, insurance, travel transportation and logistics and utilities..

And our next question comes from the line of Manish Hemrajani of Oppenheimer..

This is Kunal Doctor on behalf of Manish. Just a broad based question in demand. Can you guys give some color on the demand going into 2015? And at that time how does the pipeline look and how -- and do we expect at least to reach on or above the industry growth rate? And also, secondly, if you can give some color on Europe.

I think you used to break it out in geography, but I just wanted to know how do you see the opportunity [indiscernible] and give some color?.

Sure. So we think that the demand characteristics of the markets that we serve are very strong and favorable. We see a broad-based strength across industry verticals. We're seeing that there are a number of deals which are there in insurance, in banking and financial services, in health care.

And recently, we just announced some wins in utilities and in travel, transportation and logistics. So the demand is strong and our pipeline is strong in terms of the opportunities that we're seeing.

I think the other aspect is as we mentioned within decision analytics, the pipeline is exceptionally strong, and so we continue to see momentum of building up that segment of our business at a much faster growth rate. As far as the geographical mix is concerned, we are seeing more opportunities in the U.S. and in the U.K.

And there are a fewer set of opportunities that we're seeing in Europe, but we are also seeing great demand from the European divisions of our U.S. and U.K.-based clients, which want to do work for us in that geography.

And the last comment that I will have for you is that we are also beginning to see traction for demand in Latin America, and that's something which, again, we are focused on. And we are working towards in making sure that we can leverage the requirements of services in Latin America..

And our next question comes from the line of David Grossman of Stifel..

I was wondering if we could just go back to the core business. If I think if I heard you right, you talked about 5% of organic or, I guess, constant currency growth in the outsourcing business x the client transitions, which I think is down a little bit from where we were in the first half of the year.

So just wondering if you could help us better understand what are the factors that are impacting the gross of that business from lines decelerating.

Is it within the installed base where there's transactional components? Is it just bookings over the last 12 to 18 months? Is there anything you can share with us to help us understand that dynamic and whether, in fact, you think that growth rate has bottomed?.

Sure, David. Let me try and address your question a bit holistically. So for the overall company, in the third quarter, our revenues grew at 10.6%. If you take it on a year-to-date basis, it's at 12.4% organically for the company as a whole.

When you break it up by the different segments of Outsourcing and Transformation, our Outsourcing business in the third quarter grew by 5%, but on a year-to-date basis grew at 8.4%. And the Transformation business for us is, obviously, growing at a much faster pace.

So commenting specifically on the Outsourcing segment, the 5% growth rate in the third quarter is driven by the fact that last year in the third quarter, we did have a onetime license sale in our platform businesses and that is skewing the numbers.

So if you think about the quarterly number, I think it does not give the accurate picture in terms of the growth rate of our Outsourcing business. We believe that we've got a great runway ahead in Outsourcing. We've been signing up new deals, and we think that this growth rate will accelerate from this point going forward into 2015.

As our client transitions abate and that picture becomes clearer by the end of Q1 and beginning of Q2, we think that the growth rate of our Outsourcing business will get close to double digits, and that's something which we will be looking at very, very carefully.

The other data point that we'd like to share with you is some of the new clients that we signed up last year in Outsourcing, they have actually performed better than expectations and they have ramped up nicely in 2014.

However, the absolute revenue contribution from these clients is still low, and because of the ramp up, we think that we will see that growth rate reflect itself in the numbers in 2015. So just to kind of summarize, I think the 5% growth rate in Outsourcing for this quarter is an aberration.

We do think that, that will recover in 2015 as we go forward, and we fully expect that Outsourcing business to perform at a much faster growth rate..

And just as a clarification then, how much was that license sale in the prior year?.

Approximately -- this is Vishal. I think it was approximately around $3 million..

Okay. And then if we look at the acquired company, Overland, can you give us a sense for at what rate that business has been growing? And if you could help us also understand what that revenue model is? Maybe I may have misunderstood your prepared remarks, but I wasn't sure how their services are built currently, and how you expect to migrate that..

Sure. So the revenue model that Overland Solutions has is a transaction-based pricing model, and it is much more on a BPaaS model than on an FTE-based pricing model.

The revenue growth rate of Overland, historically, for the last couple of years, has been slightly below the growth rate of EXL's Outsourcing business, but we see opportunity in terms of taking that platform, adding on to our service capabilities and adding on decision analytics to help improve the growth rate of that business..

And what is the client overlap, just so we can understand what the opportunity is? I guess you gave us the client count. I wasn't quite sure what the overlap is with EXL's client base..

So with the large clients, the overlap is more or less a full overlap, because Overland deals with 21 of the top 25 P&C carriers, and EXL works with a number of these carriers already. But when you go to the midsize and the smaller size client segment, Overland has 400 clients in total.

And so they practically deal with a very wide range of clients in the P&C world, and there the overlap for EXL will be minimal.

Now keep in mind that these organizations currently only use a limited set of services that Overland provides, and there would be a great opportunity for EXL to provide its Outsourcing services and Transformation services to this client base..

Okay. And then just one last one, Rohit.

The growth in the Transformation business, can you remind us how much of that business now is project-based versus longer-term contracts? And I guess, secondly, do you feel that the margin structure in that business is pretty much bottomed and that we should see the combination of mix and utilization continuing to drive those margins higher from the point they're at right now?.

Sure. So the Transformation business, David, as you know, includes decision analytics, finance transformation and operations consulting. And finance transformation and operations consulting are largely project-based businesses. But decision analytics, we've been converting more and more of that business into an annuity-based framework.

Today, 65% of the decision analytics business is on an annuity-based format, so that's where we are in terms of the annuity versus project-based. On the margins, I guess, keep in mind that our businesses are growing at a very, very fast pace.

I mean, for decision analytics to grow at 53% year-on-year, that's a blistering pace of growth that we are seeing out there. So we are not as concerned about the margins as we are about making sure that we continue to remain in a leadership position as far as that particular set of service offerings is concerned.

And so we will continue to invest to build up that business and make it into a very meaningful and a sizable business for us, and our hope and our goal is to try and make that into a very, very strong business segment for ourselves.

There is definitely room for us to improve margins in that business as we go along, but we will be very careful in terms of when we decide to move towards optimizing on margins versus optimizing on growth. At the present moment, we are focused on the growth..

And our next question comes from the line of Tien-tsin Huang of JPMorgan..

This is Puneet, sitting in for Tien-tsin.

Rohit, could you share your expectations from travelers and OPI transition for this year? Given the update on the annual guidance, do you now expect a [indiscernible] range for travelers impact?.

Sure, Puneet. We'd be happy to do that. So our largest client in 2013 contributed approximately $46 million in revenue. And we expect, based on the comments that we shared on today's call, that the reduction in our revenue from that client this year will be somewhere between $12 million to $16 million.

So we are still recognizing a fair amount of revenue from that client, which is expected to fall off completely in 2015. As regards to our client -- our other client is concerned, it will provide a headwind of between 2% to 2.5% for next year in terms of the follow-up of the revenue.

I guess the point we'd like to emphasize to you is that there is a pretty steep deceleration of the revenue that takes place in the fourth quarter of this year, and that goes into 2015. And therefore, there will be a pretty significant impact on these transitions in 2015..

Understood.

And could you talk about how big predictive analytics services are within overall analytics? And broadly, your approach to analytics, is that to combine data scientists with proprietary technology tools and solutions? Or do you think that you might need to add more Tech assets in your analytics option?.

So, Puneet, I didn't get the first part of your question?.

How big predictive analytics is within overall analytics?.

Decision analytics and analytics is the same thing. Within Transformation, decision analytics is nearly about 60%..

I meant predictive..

Predictive, yes. So most of the work that we do, Puneet, in decision analytics is around predictive analytics. There is a small segment of work that we do around reporting and working around that, but I would say the bulk of the work that we do in decision analytics is predictive analytics.

To the second part of your question about using proprietary technology for decision analytics, we do use, currently, a number of industry-specific technology platforms, but we have created a number of internal technology platforms that are proprietary that allow us to create these business models on a much faster and a much more accurate basis at a much lower cost.

And those investments, we will continue to make, and there are also certain domains and certain functional areas where we've got the expertise and we have productized these offerings, and that will allow us to be able to have repeat sales take place at a much more accelerated pace..

And our next question comes from the line of Jason Kupferberg of Jefferies..

This is Amit for Jason. Just quickly on Overland Solutions, just wanted to clarify there. So the $10 million revenue benefit this year, so -- and the acquisition is expected to be immediately accretive.

I just wanted to clarify, what is the EPS, adjusted EPS benefit this year from this acquisition?.

Jason, this year, we would have a minimal impact, considering that there are deal costs, which we are also associated with the closing of the transaction. So this year, the impact would be minimal..

Okay. And just clearly looking at your guidance, $10 million upside from this acquisition, but if I look at the midpoint of your revenue guidance, it was raised by around $20 million. And then on top of that, the exchange rate seems to be now you're expecting rupee to be slightly weaker.

So just trying to understand, even though revenue guidance has been raised substantially and then the exchange rate is a little bit favorable, why was the EPS guidance not raised?.

So the EPS guidance, we are now saying that we're going to be on the higher end. Bear in mind that we've done several deals -- reviews and deals which we have completed during this year.

And deal costs associated with those acquisitions and other deals which we have looked at was not part of our initial forecast which we had given, the guidance which we had given. But now we are kind of taking all those costs and still coming on the higher end of our estimate..

Okay, great. And just one follow-up to one of the questions that was asked earlier.

OPI client transition impact, you said 2% to 2.5% for next year, but what is the impact in '14, in fiscal '14?.

This year, we -- the impact which we initially estimated was roughly around the same level of 2% to 2.5%, but the actual impact has been probably lower, at less than about 1%..

Less by 1%?.

Yes, about 1%..

And our next question comes from the line of Joseph Foresi of Janney Montgomery Scott..

You mentioned the acceleration of the growth rate in the Outsourcing business, can you give a time frame for that? And are there any other large deals in that increase in the client base that you can point to?.

Sure, Joe. I think for us, there are a couple things that are playing in. Number 1, obviously, there are some transitioning clients and there is some noise associated with that. We think that will get completed by end of first quarter, beginning of the second quarter of next year, and you'll be able to see our clean numbers going forward from there on.

I think we've signed up for some new clients last year, which have given us good growth this year, and they will continue to give us growth going forward into next year. We have signed up a number of clients this year.

We signed up 19 new clients, and we think a number of them will contribute very significantly to our growth rate going forward in 2015.

We also think that the platform businesses are lumpy and these are businesses that can provide revenues in any one quarter, and therefore, we will expect to see the growth to take place in that business next year as well.

So there are a number of these factors, which give us confidence that our growth rate in Outsourcing would accelerate from here going forward into 2015..

Okay. And then on the acquisition today, are there any large customers at Overland? And I think I understand the top line story, but how do we feel about margins and any color on seasonality? I'm just trying to get a little bit more detail on it..

Sure. The customer base of Overland Solutions is very, very broad based. So there are no clients which contribute a significant part of their revenue, so it's very well diversified. And we think the diversification provides a huge stability to the revenue and the client base.

And in terms of seasonality, there is very limited seasonality associated with the business, so we don't think that, that should be, again, anything that would create challenges in terms of the modeling..

Okay. And then just finally, I know it's a little bit early to talk about 2015. You've given some color about sort of where you think the Outsourcing growth rates could be. How do we think about the margin profile of the company? I know that we had targets out there, but clearly a couple of acquisitions are involved.

And how do we think about sort of just the general goalposts that you have out there for next year?.

So as Vishal said in his prepared remarks, the combination of Overland Solutions to our business does take down our margins and, therefore, for next year, that will be a factor that will reduce our margins.

At the same time, our core business, we would expect that to perform better than where we were in 2014 and, therefore, on an overall basis, our margins are likely to remain flattish, but the core business would increase in margins. And the Overland Solutions business, which has lower margins, would offset that..

Okay.

And just to clarify, are you trying to get -- I know it's more transaction-based, but will you try to get Overland margins -- will you try to gain efficiencies in Overland margins? And how would you do that?.

Yes, we absolutely would be doing that. We would do that through a number of different ways. One is for us to increase the volume and to be able to get operating leverage on that business model.

The second is because the business model is on a transaction-based pricing model, if we are able to introduce efficiencies associated with that business, that can help us improve their margins. And the third is if we can upsell services, like analytical services, that will allow us to be able to build margins into that platform..

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

Thank you, Candace. Thank you, everyone for attending EXL's third quarter earnings call. We look forward to talking to you next year when we report our full year numbers and provide guidance for 2015. Thanks..

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