ExlService Holdings (NASDAQ:EXLS) Q2 2020 Earnings Call

0:01 Good morning, ladies and gentlemen. Thank you for standing by and welcome to the Q2 2020 EXL Service Holdings, Inc. Earnings 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. If anyone should require assistance during the conference, please press star then zero on your touch-tone telephone. As a reminder, This conference call may be recorded. I would now like to turn the conference over to your speaker today, Mr. Stephen Barlow. Please go ahead, sir.

0:39 Thank you, Andy. Hello, and thanks to everyone for joining EXL's second quarter 2020 financial results conference call. I'm Steve Barlow, EXL's Vice President of Investor Relations. With me today by telephone are Rohit Kapoor, our Vice Chairman and Chief Executive Officer, and Maurizio Nicolelli, our Chief Financial Officer. We hope you've had an opportunity to review our Q2 2020 earnings release we issued this morning. 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.

1:46 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 these measures to GAAP can be found in our press release, as well as the investor fact sheets. Now we'll turn the call over to Rohit Kapoor, EXL's Chief Executive Officer. Rohit.

2:09 Thank you, Steve. Good morning, everyone. Welcome to our Q2 2020 earnings call. I hope you and your families are all safe and healthy. As each day brings headlines about the economic recovery, a resurgence of COVID-19 cases, and concerns about what comes next, I am reminded of the lessons we learned During the early days of the pandemic, we need to stay agile, embrace uncertainty, and keep focused on the things that matter. This is no small task in this environment, but we are progressing thanks to the efforts and the innovation of our people and close partnerships with our clients.

2:56 Today, a vast majority of our employees are working from the safety of their homes. Over 95% of our clients' demand is currently being fulfilled through work-from-anywhere business models. We are slowly reopening offices throughout parts of India, Europe, and the Philippines as stay-at-home orders are relaxed and conditions in those countries allow us to operate with enhanced safety protocols. We have taken a methodical and thoughtful approach aligned with local guidelines on social distancing, sanitization, and other safety measures. At the same time, we continue to improve our work from anywhere capabilities to enable the flexibility to switch between the two models seamlessly and provide uninterrupted service delivery for our clients.

3:54 In fact, we have seen tremendous appreciation from our clients Thank you very much. with an increased need for digital and analytics capabilities and pressure to manage costs, client organizations are ready to embrace change and to collaborate with EXL to pursue new operating models.

4:41 We are seeing a robust demand across industry verticals and business lines to elevate customer experience, drive end-to-end operations digitization and Optimize Cost Structures. To illustrate this, I would like to share three specific developments over the last quarter that reaffirm my confidence in our current growth trajectory. One, we signed several significant long-term renewals in Q2. Two, we have developed new solutions leveraging our data and analytics capabilities to cater to the unique market requirements of this crisis. And three, we have signed multiple new clients in a completely virtual sales cycle.

5:34 First, we signed three strategic renewals in Q2 which included one of our top five operations management clients and two of our top 10 analytics clients. Each of these renewals faced strong competition But in each case, EXL came out as the key strategic partner, differentiated by our innovative approach, strong execution focus, and the trust built across the organization. Second, we rapidly launched new solutions in direct response to the crisis, which helped our clients manage volatility in consumer demand and respond to the disruption from the pandemic.

6:19 These solutions include managing loan servicing demand for the U.S. Small Business Paycheck Protection Program and the development of breakthrough recovery indicators to help our clients predict the shape and timing of the recovery across the U.S. These new recovery indicators are an important example to demonstrate how we are innovating to help our clients improve their agility. Because this crisis is unprecedented in its scale and impact, traditional models and crisis management plans are limited in their ability to support growth and recovery-related decisions. Our solution leverages a large number of high-frequency, granular, non-traditional data elements aggregated across government directives, infection and hospitalization, consumer behavior and business activity across industries to create a composite score.

7:21 We use this score to predict a range of metrics such as infection progression, spending patterns, unemployment trends, and consumer confidence. One of our large global bank clients is using these indicators to better align their marketing initiatives with the uneven recovery across the U.S. Understanding these emergent trends has been critical to optimizing the timing of marketing and new business underwriting strategies, and EXL is playing a key role in unlocking these insights. Third, I wanted to give you some color on new client wins.

8:06 We signed a leading Australia-based property and casualty insurer as a part of their operational resiliency enhancement plan. Thank you very much. delivered for other clients in this complex area. Another compelling win was a utilization management engagement with a large U.S. health plan that had never previously outsourced its operations.

9:01 All of these wins are great examples of opening new clients with strong potential for expansion into new buying centers and product lines. Thank you for joining us. and many more. Higher than expected revenues from ramp-ups and new wins driven by our pivot to new offerings relevant to our clients in the current market.

10:19 And three, lower than expected decline in demand as the quarter progressed. Operations management revenue declined 8% sequentially on a constant currency basis. The most significant drop as expected was in our travel business. In insurance, we saw some impact from decrease in claims volume and our premium audit and survey businesses were impacted by stay-at-home mandates. This was partially offset by new growth in insurance business resulting in a relatively lower impact in the business. Our analytics business revenue declined 11.5% sequentially on a constant currency basis, Thank you very much.

11:34 Thank you for joining us. The monthly revenue run rate of the analytics business has continued to improve. With the implementation of Q2 wins, ongoing client conversations for engagement expansions, and a strong pipeline for our new solutions, we expect a strong bounce back in the analytics business in the second half of the year.

12:28 Our adjusted EPS for the quarter was 53 cents. Higher than our guidance of 20 to 40 cents. This was a result of better than expected performance on revenue and the timely and proactive cost containment actions taken during the quarter. As you know, we temporarily reduced senior leadership compensation and took a sharp look at discretionary expenses such as professional fees and subscription costs. We also took some employee actions to align our cost base with our revenue. Overall, we continue to have a solid financial position and we are well prepared to withstand the crisis.

13:14 Throughout this period, I have been inspired by the selflessness and the resilience of the EXL community. We have navigated through a challenging few months and we continue to build momentum. Both in terms of new business development and personal growth. I am very proud to be part of that effort and I want to thank all of our associates for that commitment. As we move ahead, we continue to collaborate closely with our clients on new solutions and operating models, leveraging our ability to unlock the full power of our data and analytics capabilities and striking the right balance between and many more.

14:27 has given our clients the confidence to continue with new ramp-ups without hesitation. This is a strong foundation for business development and growth for EXL in a work-from-anywhere model. Our focus remains on the long-term sustainability of EXL, and we are optimistic about our future growth. In the near term, the crisis continues to be volatile. Collectively, the overall health of the global economy remains uncertain and the pace of recovery is likely to be gradual and uneven, causing some clients to delay decisions or slow transitions. At the same time, EXL and our clients both have increased confidence and better visibility into Q3 and Q4 financials than we did three months ago.

15:20 Our full-year revenue guidance is in the range of $922 million to $938 million, with growth coming from the implementations of wins from the first half of the year and conversion of our pipeline across new and existing accounts. We expect an adjusted EPS in the range of $2.60 to $2.80 per year, driven by higher revenue, lower work-from-home enablement expenses, and the full benefit of cost actions taken over the past few months. Overall, we are well positioned to acquire our share of market growth as the economy recovers. The pandemic has created many business challenges, but it has also sparked a mandate to innovate and introduce new ways of working that are driving companies of all types to challenge the status quo. We are encouraged by what we are seeing in our own business as well as in our client businesses.

16:19 Our client relationships were strengthened by working even more closely throughout this period of heightened stress and we continue to collaborate and innovate to find solutions to emerging challenges. Look forward to embracing this culture of change as an opportunity to grow. I will now turn the call over to Maurizio.

16:40 Thank you, Rohit, and thanks, everyone, for joining us this morning. I will provide insights into our financial performance for the second quarter of 2020, followed by our outlook for the business. All revenue growth numbers mentioned hereafter are on a constant currency basis. My discussion of year-over-year growth percentages or improvements will be excluding health integrated for 2019 for a true comparison with 2020 performance, unless mentioned otherwise. For the quarter, we generated revenue of $222.5 million, down 6.8% year over year. This includes one-time COVID-related pass-through revenue of $3.3 million.

17:26 Sequentially from Q1, revenue was down 9.3%. Revenue for the quarter was higher than the guidance we provided Due to more than anticipated demand and a higher level of fulfillment. Revenue from our operations management business, as defined by three reportable segments, excluding analytics, was $140.8 million, down 6.7% year-over-year. Compared to Q1 of this year, revenue was down 8%. Insurance had revenue of $81.3 million, down 4.2% year-over-year. This decline was driven by lower volumes and supply constraints related to clients' refusal to allow work from home due to data sensitivity.

18:21 Healthcare showed strong improvement with revenue of $25 million, up 33.2% year-over-year. This growth was driven by the ramp-up of new client wins in 2019 in the area of clinical services. Emerging reported revenue of $34.5 million, which was a year-over-year decline of 26.8% due to the reduction in travel, transportation, and logistics volumes. Analytics had revenue of $81.7 million, down 6.8%. This decline was driven by lower volumes in banking and financial services clients due to COVID-related demand contractions while insurance analytics continued to grow year over year. Our SG&A expenses declined 80 basis points year over year to 18.8% of revenue driven by cost initiatives we announced in May and Lower Discretionary Spending. The full quarterly impact of these cost initiatives should be reflected in the second half of the year.

19:36 Adjusted operating margin for the quarter was 9.4% down 520 basis points year over year, driven by lower revenue due to COVID-related demand and supply constraints, higher employee costs and net COVID-related expenses of $6 million. Our GAAP income tax rate for the quarter was 32.4%. Excluding the impact of a one-time discrete tax expense totaling $1.3 million related to the re-measurement of deferred tax balances in India, our income tax rate was 22.1%. Our adjusted EPS for the quarter was 53 cents, down 28.4% year-over-year. During this pandemic period, liquidity and cash conservation remained a key priority.

20:32 We exited the quarter with a very strong balance sheet. Our cash flow from operations for the quarter was $72.5 million, which is the highest quarterly amount we have ever achieved. We ended June with $336 million of cash in short-term investments. and borrowings of $249 million, resulting in a net cash position of $87 million, up from $32 million on March 31st. As a reminder, in April, we repaid $100 million of amounts previously drawn from our credit facility in March. Now, moving to our six-month performance. Our revenue for the period was $468.5 million, down 0.9% year-over-year.

21:23 This decline was driven by COVID-related supply and demand constraints, as mentioned earlier. Adjusted operating margin for the period was 12.3%, down 220 basis points year-over-year, driven by a one-time COVID-related headwind and negative operating leverage. Adjusted EPS for the period was $1.35, down 7.5% year-over-year on reported basis. In the first half of the year, we generated cash flow from operations of $58.9 million compared to $47.7 million in the same period last year. This reflects an effective implementation of our cash conservation strategy and efficient working capital management.

22:09 During the first six months of the year, we spent $22 million on capital expenditures as we continue to invest in the business for the long term. We expect our capital expenditures to be between 32 and 38 million in 2020. Our effective tax rate for the first half of the year was 25.5%, and we expect the 2020 effective tax rate to be between 25 and 26%. During the first quarter, we repurchased 12 million of our shares. We suspended our repurchase program in the second quarter But we have resumed purchases in the third quarter with our intent to keep our share count flat in 2020 over 2019. Now, moving on to the outlook for the year. The economic environment remains uncertain and the pace of recovery evolves each day given the nature of the pandemic.

23:08 So there are a number of factors that we may not be able to predict accurately. Thus, our outlook could change later this year. However, as mentioned by Rohit, we have better visibility in the business today as we look at the second half of the year compared to May this year. We have seen increased demand in operations management as the economy slowly opens up and the pandemic has provided multiple opportunities in analytics as our clients re-evaluate their risk models and opportunities. This gives us confidence to resume providing full year 2020 guidance. We expect revenue for the year to be in the range of $922 and $938 million, which represents a year-over-year decline of 3.5% to 5% on a constant currency basis. Sequentially, we expect steady quarter-over-quarter revenue growth for the rest of the year.

24:09 Analytics should have a higher growth rate than operations management as the pipeline is strong and the sales cycle is shorter. Our guidance for adjusted EPS is for a range of $2.60 to $2.80. In conclusion, we think the second quarter was the trough in revenue and adjusted EPS. We cannot control outside economic forces created by the pandemic that may impact our business But our visibility gets better as each month goes by. We do have the flexibility to manage our costs, and we have shown that we can adapt our infrastructure to the changing conditions. Now, Rohit and I will be happy to take your questions.

25:16 Annie, are you queuing up the questions? Yes, sir. Ladies and gentlemen, if you have a question at this time, please press star, then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, press the pound key. Please note that we will only allow one initial question and one follow-up question. Okay. We have our first question from the line of Dave Coney from Beard. Your line is open. You may ask your question.

25:48 Yeah. Hey, guys. Thanks, and nice job. Thanks, Dave. Yeah, and I guess I was wondering, so Q2, the revenue decline in the high single digits, it seems like the guidance for the rest of the year is also kind of along those same lines, kind of mid to high, I guess high single-digit decline. Why wouldn't that get a little bit better? Or, you know, maybe this is a little bit of conservatism just kind of weaved in.

26:20 So, Dave, the guidance for the full year for us is basically between a decline of 3.5% to 5% on a constant currency basis. and as you know that in 2019 we had revenues from Health Integrated which was completely gone down. So the decline really is only 3.5% to 5% from last year which is much better than the decline that has taken place in the second quarter. So we do see a sequential improvement in our revenues to take place in Q3 and Q4 and, you know, that's how we've modeled out our business.

27:07 Okay. Okay. Gotcha. And I guess the second thing, you know, we look at margins ex-health integrated from last year. You know, I think they were around 14% or 14.5% or something like that. This year when we look at the revenue decline, it seems like give or take a $50 million revenue decline, let's say, but about a $25 million adjusted EBIT decline, which is pretty high incremental margin. I'm wondering, I guess, why is that? And then I would imagine next year you get a lot of that back again. But maybe you can just talk through the margin dynamics.

27:45 Yeah, Dave, I'd be happy to take that question. So we've done a lot of work in terms of our cost initiatives in many different areas. You know, compensation is 60% of our costs. and we've done a lot of work in the last three months to really bring down that cost to be better aligned with our revenue now going forward. If you look at our margin in our guidance, you're gonna see that Q3 and Q4 margin is getting very close to what our historical margins are and we feel very confident about that because we've put a lot of that in place and we feel like we've put ourselves in a nice position for the next six to 12 months as we get out of this pandemic.

28:31 And then what you'll see is revenue growth start to grow later on in the year and into 2021. And that's when you'll see some of the costs come back. But, you know, I think the one thing that has, you know, shown us in this last three to four months is that, you know, we can adjust our model and get back to our historical margins, even in a period that we have, you know, reduced revenue. versus the prior period.

29:00 Yeah, that's helpful. It seems like you're really well positioned for the snapback. So thanks a lot. Thank you. We do have another question from the line of Morsi Kati from Red Bull Securities. Your line is open. You may ask your question.

29:20 Hey, thanks. Good job, guys. Can you comment on new logos for the quarter 2021? Maybe some color there. The booking pipeline also for the quarter and maybe for the first half. And then in this context, where do you see the most promise in terms of your pipeline into the second half and maybe even into calendar 21? Thanks.

29:44 Sure, Moshi. So, look, I think we're very proud of the fact that we were able to sign up 19 wins in the first half of the year. and many of these are large renewals in addition to the new wins that we had. And also in the second quarter of the year, we had, as we announced, nine wins. So actually it's a fairly even-paced activity, a little bit better than 2019. In terms of bookings, we really don't provide any information on that, but in terms of our pipelines, Our pipeline at the end of the second quarter is much stronger than where we were at the end of the first quarter.

30:30 So actually we've seen new deals coming into the pipeline, larger deals coming into the pipeline, and the total size of the pipeline has increased at the end of the second quarter. So we are very encouraged by the client conversations that are taking place and how that pipeline is progressing. Looking forward into the second half of the year, the one thing that we've been pleased about is that not only have we been able to effectively operationalize the work-from-anywhere business model, but we are also being able to do remote transitions, remote hiring, and remote processing. Thank you very much.

31:49 Thank you, sir. Our next question comes from the line of Brian Bergen from Cohen. Your line is open. You may ask your question.

31:59 Hi, all. Good morning. Thank you. One of the key in on the deal signings that you called out, particularly the new ones, can you give us a sense on whether those were competitive takeaways or more so initial outsourcing relationships? Just curious how you're seeing demand play out in those two subsets.

32:17 Sure. I think the three deals that we highlighted in our prepared remarks, two of those were actually sole-sourced deals, and that's where we had client relationships, and I think the clients felt that we were best positioned to support them in those endeavors. One of them was a competitively bid deal, and we won that against competition. Thank you very much. and using a lot more data and analytics, they're going to gravitate towards those players that can effectively deploy digital transformation and effectively deploy a better use of data management and analytics. And I think that trend plays very favorably for us.

33:36 Okay. And then a follow-up here on fulfillment. First, are there still some short-term fulfillment constraints in 3Q and 4Q? and then just longer term, how are you thinking about the operating model here given how it's working well in this work-from-home environment?

33:54 Sure, Brian. So, yes, there still is a fulfillment issue for us and we think it's roughly about 5% at the present moment. We think it's going to get a little bit better in Q3 and we think it might only be 2% or 3% and then it will probably remain 2% or 3% in the fourth quarter. The reason for that is As you know, there are, you know, the spikes in the COVID cases taking place all across different geographies and different cities and countries are being impacted by that, you know, on a continuous basis. So as that takes place, there is a shifting of our working and operating business model that we have to enable. And that definitely caused for some amount of slippage.

34:42 Now, going forward into the future, We really think that we as an organization and as a strategic partner to our clients need to have the fluidity and the flexibility to rapidly move from one business model to the next. And this kind of volatility and this kind of uncertainty is going to remain for a long period of time. So we need to be prepared to be able to make that shift as it's needed. And I think introducing that level of resiliency into our business model is going to give our clients increased amount of confidence of partnering with us giving us more work to do, more strategic work to do and more complex work to do as they move forward. And again, we think that that is a very, very positive development that we can see as a long-term trend as we partner with our clients.

35:59 Okay, makes sense. Thank you. Thank you. We do have another question from the line of Puneet Jain from J.P. Morgan. Your line is open. You may ask your question.

36:11 Hey, thanks for taking my question and good to hear your voice and that all of you are healthy. Rohit, are you seeing clients willing to outsource work that they would not have considered offshoring before? You mentioned one health client that had never outsourced and you signed that client in the quarter. I'm wondering if your addressable market within some of your existing clients could also increase as a result of this pandemic.

36:46 Sure, Puneet. And good to hear you as well and know that you're safe and healthy as well. Let's hope everybody stays that way. Yes, we are seeing a number of new clients emerge that previously would not have considered outsourcing or using a partner for operations management as well as for our analytics practice. and I think, you know, in many ways this pandemic has been a catalyst in terms of companies thinking about resiliency in a much, much more broader way and in a much more open way, you know, as such. So today what we are seeing is clients and prospects are willing to engage with partners if that relationship is going to help them improve their resiliency and and many more.

37:38 Thank you very much. Our fear when we entered Q2 was that the transition might be difficult, the due diligence on these processes by us might be difficult, and clients would in general be hesitant to embrace operations management and outsourcing in this environment. It seems like that's not proving out to be correct. What we are seeing is actually we are quite effective in recruiting remotely clients and many more.

39:07 Long-term changes to the cost structure, margins, or pricing in a virtual sales and transition model.

39:15 Yes. So, you know, there are several questions that you've asked in that, Purita, and I'll try and address each of the elements. So on the sales cycle, we clearly are seeing a bipolar decision-making by our clients. On the one side, we are seeing clients actually accelerate their decision-making and their cycles, and they want to move forward much more rapidly and enjoy the benefits of the kind of value that we can deliver to them and the kind of partnership that we can provide to them. On the other side, we are seeing some clients who are pushing out decision-making as well. because they don't want to undertake this kind of a transition in this kind of an uncertain and a volatile environment.

40:06 So frankly, we've got clients and prospects at both ends of the spectrum which are there. But I would tell you that taking a look at our pipeline and taking a look at the deal activity, on average, we are actually seeing an improved decision-making on behalf of our clients. The second question around virtual transition and migration and that reducing the cost.

40:33 Absolutely.

40:34 Because there is no cost for people to travel, that cost certainly goes down very significantly. There are no issues in terms of visas and things like that. That takes on the timeline quite significantly. But on the other hand, the time period and the tools that need to be developed In order to have knowledge transfer and learning, that is an investment that we are making to allow our employees to be able to learn much more quickly in a remote environment. So there's a fair amount of investment that is being made in terms of enhancing the learning and reskilling opportunities for our employees, and that kind of offsets some of the travel-related costs that are there for migration and transitions. I think overall, the cost structure and the margins, our expectation is that it would largely remain the same as what it was before.

41:36 So that should not really change. And this should be perhaps a much more stable kind of situation that we will enter into.

41:45 Got it. Thank you. Thank you. Our next question is from the line of Vincent Colicchio from Barrington Research. Your line is open. You may ask your question.

42:04 Yes, Rohit. I'm curious. Are you seeing opportunities to outsource more processes at clients in some of your weaker verticals, such as travel, to sort of offset some of the current weakness? Yes.

42:18 Sure, Vincent. So, you know, first of all, for us, the travel industry vertical is a very small percentage of our total revenues, and, you know, therefore the impact to us out there has been, you know, minimal. But at the same time, you're right. I think in those industries and in those areas where our clients' business models have been more significantly impacted by There is a greater propensity for them to think about innovative ways of being able to reduce their cost structure, be able to create increased amount of flexibility into their operations, and introduce a lot more resiliency. So we are seeing that the traditional conventional ways in which clients would partner with us Those business models are being changed and now people are looking at this with a much, much more holistic and open way of thinking about it. And the drivers of this really are resiliency, flexibility, and cost. And that plays very well to our strengths.

43:33 And we're hearing that there's some captive opportunities out there. Is that something you would consider now or is that, you know... Something that's off in the distance.

43:45 Yes. So, first of all, you know, captive for us and growth in the captive is always a positive trend because it validates the business model. But I think your question is much more about whether there's an opportunity to take over operations from a captive or might that actually happen the other way around where, you know, a client might set up a captive and try and build something on their own. Thank you very much. and our leadership talent that can manage large-scale operations.

44:47 And so there are definitely a number of opportunities out there for us to be able to manage. On the other hand, there are definitely concerns on information security and that is something which will lead to a greater creation of captives as well. So again, we're going to see this trend play out in both directions and I think On balance, this is, again, going to be positive for the industry and positive for us. Thank you. Thank you, sir. We do have another question from the line of Justin Donati from Wells Fargo. Your line is open. You may ask your question.

45:38 Hi. Thanks for taking my question. The first one, are you seeing any sort of volume or transactional work in your healthcare or insurance business that could be just temporarily deferred rather than lost in general?

45:57 Sure, Justin. So, you know, we have seen a reduction in volume, particularly around claims in the insurance space on the PNC side, on the property and casualty side. but on the flip side, we have actually seen greater volumes on disability and life and annuities. In healthcare, again, some of the work that is done around pre-certification, we've seen a reduction in volume out there because obviously the number of elective surgeries came down quite significantly and that's been reduced. Now, longer term, Thank you for joining us. New cars and car sales and auto sales that take place and the amount of usage of automobiles that takes place. And there it's a mixed picture because clearly people are moving away from a shared ride model and going more into a direct ownership or leasing of their own automobiles and taking more control of things themselves.

47:27 And therefore we see that as a positive trend. and also since less people are flying, more people are actually taking road trips, I think eventually we'll see more traffic as such. So it obviously depends on how things play out. Some of the recovery indicators that we monitor on this, which is on the basis of mobility, seems to indicate that that volume will come back for us. But that's something we'd have to wait and watch and see how it progresses.

48:00 I appreciate the color there. And then just as a follow-up, can you talk a little bit about how you're managing your talent pool, having enough staff and capacity to fulfill the demand when it comes back versus some of the near-term decisions to maybe put people on the bench or furlough?

48:26 Yes, I think that's an incredibly important question, and we're dealing with that in a very thoughtful, strategic, and planned manner. So we know that there will be some ebbs and flows with regard to the requirement of the deployment of talent at EXL, and when there's a reduction of volume in a particular client area or in a particular process, We look at ways in which we can redeploy that talent in other client areas where there is actually an increase in requirements. And therefore, what becomes really critical is an ability to quickly reskill and relearn capabilities and redeploy resources.

49:13 We've actually been very successful in terms of redeploying our resources, not only across clients and processes, but also across geographies and that's been very helpful. And I think maintaining that agility and giving the right tools to our employees to be able to reskill and redeploy them, that's going to be very, very critical. In areas where we do have surplus talent, we've actually used this time to train and develop them. and we've undertaken a huge amount of training and development of our talent pool during this time period. And with the higher productivity that we are seeing, that's been very, very effective.

50:01 Now, going forward, we do see a number of areas there where we will be adding on new talent. So, for example, in our analytics business, we do have an annual cycle of hiring from campus and from college campuses. That program for us is fully intact and we are hiring new employees from the campuses and we'd be hiring more than 300 employees there in the analytics side over the next several months to be able to help us with the growth that we anticipate in the analytics business. Thank you. Thank you. Again, everyone, if you would like to ask a question, please press the star and then the number one key on your touchtone telephone.

50:52 We do have another question from the line of Maggie Nolan from William Blair. Your line is open. You may ask your question, please. Hey, this is Ted. I'm from Maggie. I kind of wanted to build on that last point there. Could you expand on the pipeline that you're seeing within the analytics and just add a little bit more color to what you're seeing there? Thanks.

51:16 Sure. So, Ted, one of the things which we anticipated and expected is that the use of data and the use of analytics will increase given the increased volatility in the market environment. So every single client, in order to be able to take better decisions in a volatile economic environment, needs to actually leverage data and analytics and make decisions based on the data and not on the basis of a gut feel. And that's becoming, you know, that's being highlighted very, very clearly in this environment. So what we are seeing is there are many clients who actually have a lot of data internally as well as externally, but this data is dark for them and they are unable to use it Thank you very much.

52:11 Thank you. In the months of March and April and May. And now that the economy is reopening, we are seeing all of those marketing efforts come right back. And as you know, whether it's a bank or an insurance company or a retail company or whatever, there are risks associated with marketing where if you acquire the wrong kind of customers, you'll have higher level of credit losses. And on the other hand, Thank you very much.

53:39 The pipeline for us today in analytics is actually very full, and this is across industry verticals. I think the other thing that happens in analytics is that the decision cycles are small, and they're much shorter in time frame, and our ability to deploy and quickly realize revenue from this is also much better. So, frankly, we have increased confidence in our analytics business, the growth of that in the second half of the year. All right. Thank you. And then just what is your current level of visibility into the full year guidance? And then what kind of takes you from the low end of the range to the top end of the range?

54:26 Yeah, I'll let Maurizio answer that question for you.

54:31 Sure. Ted, could you just repeat your question? You came in and out a little bit. Yeah, sure. So what is the current level of visibility into guidance, and then what is kind of represented at the bottom end of the range, and then what gets you to the top end of the range?

54:49 Yeah, so we are very focused at that midpoint of the range. We have about 90% visibility into the second half of the year, which has come up significantly since we released back in early May. We start to see it in each of the different segments, and a lot of what Rohit just went through, particularly in analytics, whereby we have a much stronger pipeline and also a lot more visibility. When you look at our range of 922 to 938, We are focused at the midpoint at that 930 area. 922 is more of conservatism because we really don't know to a certain extent if the environment will change at all between now and the end of the year in terms of the pandemic and how business conditions could change if there is a worsening conditions that occur because of the pandemic. and that's what that 922 really reflects.

55:57 The 938 is more of a best case scenario within our pipeline if potentially everything comes through that we believe would give us the ability to get to that high end. But for modeling purposes and how we're kind of looking at the second half of the year, it's really at that midpoint is what we're focused on. All right, great. Thank you very much. Thank you. We do have another question from the line of Ashwin Shervaker from Citi. Your line is open. Let me ask your question. Thanks. Hey, guys. Hope you guys are doing well. My question, I just wanted to kind of think past the current situation and ask about how you feel with regards to the industry.

56:56 Exiting all of this, do you think that you guys will be in a situation you can grow faster than before? I mean, how well positioned are you as it relates to the types of conversations that you're currently having with your clients? Do you need to add any capabilities? Any comment on that?

57:20 Sure, Ashwin. And Thank you for joining us. and many more. and a number of tools and technologies to be able to enable that.

58:23 If you think about it, we're going to go to a much more distributed workforce. and many more. and many more. Thank you.

59:48 So these are not necessarily capability sets from the perspective of domain expertise. These are more how do you deliver. Is that an accurate representation?

1:00:05 Well, there are two different things, Ashwin. I think when you talk about collaboration, learning, and well-being, Thank you very much. The second part which you spoke about is Thank you for that. We certainly live in interesting times.

1:01:48 Thank you all for your interest. This concludes today's call.