Good day, ladies and gentlemen, and welcome to the Second Quarter 2012 Genpact Limited Earnings Conference Call. My name is Deanna, and I'll be the operator for today. [Operator Instructions] As a reminder, today's conference is being recorded for replay purposes. I would like to turn the call over to your host, Mr. Shishir Verma, Head of Investor Relations. Please go ahead, sir.

Thank you, operator. Welcome to Genpact's earning call to discuss our results for the second quarter ended June 30, 2012. With me, I have Tiger Tyagarajan, our President and Chief Executive Officer; and Mohit Bhatia, our Chief Financial Officer. We hope you have had a chance to review our earnings release, as well as the second announcement regarding a significant transaction involving current investors. Our agenda for today as follows. Tiger will begin with an overview of our results in the context of our long-term strategy with a perspective on the current environment, as well as our announced special dividend and the investor transaction, followed by Mohit, who will discuss our financial performance in greater detail. And then Tiger will have some closing comments. Finally, Tiger and Mohit will be available to take your questions. We expect the call to last about an hour. Please note that some of the matters we will discuss in today's call are forward looking. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in such forward-looking statements. Such risks and uncertainties include, but are not limited to, general economic conditions and those factors set forth in our press release and discussed under the Risk Factors section of our annual report on Form 10-K and other SEC filings. Genpact assumes no obligation to update the information presented on this conference call. In our call today, we will refer to certain non-GAAP financial measures, which we believe provide additional information for investors and better reflect the way management views the operating performance of the business. You can find a reconciliation of those measures to GAAP, as well as related information in our news release, on the Investor Relations section of our website, genpact.com. Please also refer to the Investor Fact Sheet on the front page of the IR section of our website for further details on our quarter results. With that, let me turn over the call to Tiger.

Thank you, Shishir. Good morning, good afternoon and good evening, everyone, and thank you for joining us on our call today. Genpact had another great quarter in 2012 with Q2 results representing strong growth in revenues, adjusted operating income and EPS on a year-over-year basis. Overall revenues grew by 18%, led by Global Clients which increased 24% from quarter 2 of last year, with growth across all geographies, including Europe. Both overall revenues and Global Client revenues also increased approximately 7% sequentially. We grew growth in both Business Process Management and IT services. BPM services for Global Clients grew at a healthy 20% compared to quarter 2 of 2011, reflecting strong client demand for traditional annuity services, such as financial accounting and Smart Decision Services. IT Services for Global Clients grew at a robust 38% from quarter 2 of 2011, reflecting the strategic and organizational changes we have made in the IT business since late 2010, which are resonating with clients. We established 35 new client relationships this quarter across all major industry groups, up from 26 in quarter 2 of 2011. We continue to expand relationships with existing clients in key growth verticals, such as CPG, BFSI and manufacturing. Clients representing between $1 million and $5 million in annual revenues increased to 120 from 103 in quarter 2 of 2011, which provides a good runway for future growth. These results were in line with our expectations and continue the momentum we've had since the beginning of 2011. We have evolved our growth strategy over time. Let me discuss our results in the context of the 5 key elements of the strategy with some recent examples. First, guide Global Enterprises to best in class through our proprietary Smart Enterprise Process framework that delivers improved outcomes for them. Clients tell us…

Thank you, Tiger, and good morning, everyone. Today I will review our second quarter performance, followed by a summary of key highlights on the balance sheet and statement of cash flow. On a year-to-date basis, our revenues were $903 million, up 24% compared to the first 6 months of 2011. Our adjusted operating income for the first 6 months of 2012 was $149.4 million, up 28% compared to the same period last year, representing a margin of 16.5%, up 50 basis points. We closed the second quarter of 2012 with net revenues of $467.6 million, an increase of 17.6% year-over-year and 7.4% sequentially. Business Process Management revenues increased 14%, driven by strong Global Client BPM growth of 20%, which included Smart Decision Services growth of 26%. In addition, our overall IT business continue to grow very well with revenues increasing 29% versus the previous year. Within that, overall IT business, Global Clients grew 38% and GE grew 6%. Global Clients revenues increased 24% in the second quarter and represented 73% of Genpact's total revenue. Growth was driven by strong demand for nearly all major service lines and industries, including SDS, banking and insurance operations, IT and F&A, and all industry verticals. We also saw double-digit growth across all major geographies, including the U.S., but particularly strong growth in Asia Pacific and Europe. Revenue from GE in the second quarter totaled $126 million, up 3% year-over-year, driven by growth from Smart Decision Services and IT. Adjusted income from operations totaled $77.8 million in the second quarter of 2012, an increase of $12.5 million or 19% from the prior-year quarter. This represents a margin of 16.6%, up from 16.4% in the second quarter of 2011. The margin improvement was driven by higher revenues and higher gross profit margins that included the impact…

Thank you, Mohit. In closing, our second quarter results continue the great momentum we have established over the past 1.5 year. As we look ahead, clients continue to face volatility and uncertainty that is constantly forcing them to take a relook at their business models. We are well positioned to partner with them on their transformational journeys, especially through continued implementation of our key growth strategies and our targeted investments. We have delivered a terrific first half of the year despite some softness around discretionary spending. In an uncertain macro environment, we continue to expect Genpact's full-year revenues to be in a range of $1.86 to $1.90 billion and adjusted operating income margin in a range of 16% to 16.5%. Lastly, I want to announce that after 3 years of leading our Investor Relations team, Shishir Verma is rotating into a business role managing a few key client relationships. I want to thank Shishir for all the hard work he has put in through a very exciting part of our journey as a public company. To replace Shishir, I'm delighted to announce the appointment of Barney Bova [ph] as our new Investor Relations leader based in New York and will ask him to introduce himself.

Thank you, Tiger. It's a pleasure to join all of you on the earnings call today. In terms of my background, I've been involved in both the buy and sell side over the course of my 18 career at firms such as Merrill Lynch. A significant portion of that time has been spent covering this sector. I'm excited to be part of the Genpact leadership team and look forward to working with all of you going forward. Now I'd like to open it up for questions. Operator, can you please give the instructions?

[Operator Instructions] And your first question comes from the line of Joseph Foresi, Janney Montgomery Scott.

First of all, Mohit, could you give us the core BPO organic growth rate for the quarter, and maybe comment a little bit on how the traction is going with the new sales hires?

So your question was on core BPM growth?

BPO, BPO organic growth rate.

BPO Organic, right. So if I were to exclude the impact of Headstrong and Accounting Plaza, our organic growth rate for the quarter was approximately 13%.

And any color you guys could provide on the traction that you're getting with the new sales hires?

Joe, a little unclear on the traction we are getting -- sorry?

The new sales hires, and how is the traction going with the new sales hires?

Okay, okay. Got it, got it. Early sign's very good, Joe. We just finished our sales conference. We have that once a year. We got everyone together. Early sign is very good. We've got a number of them working on live deals. We got a number of them who won deals. We're very focused on hiring people who have spent time in the industry that they are now serving, whether it is life sciences, pharmaceuticals, capital markets, banking, insurance. So I think -- I would say very, very pleased with early signs on the way that's impacting the pipeline.

Okay. And then maybe you could talk a little bit about your decision to hold guidance here, given the results in the quarter?

Joe, this will sound familiar to you, because I've said this before. We are in an uncertain, volatile world. We did have a great first half. We've done that in the face of softness, as I've said, particularly, for example, in capital markets, which is not a surprise, you've seen that across the sector, and in some discretionary analytics spend. But we've had some good compensating traction in many other areas that I talked about. Thinking about the second half, we think the ramp will be a little slower. The world is uncertain, so we just are cautious and concerned about the way the world always look these days.

Okay. And then the last one for me. With Bain, maybe you could talk about what the representation is going to be on the board? And I know you touched on this in your opening remarks, but any general sense of what their thoughts are in holding the asset and for the business?

So they will have 4 board members joining us and replacing the 4 board members who will step down from General Atlantic and Oak Hill Partners. So the overall composition of the board, therefore, from non-Bain board members will remain the same. From the perspective of how long Bain -- Bain expects to be a long-term investor. That's their reputation. They have a 2.5-year lockup that they have agreed to. But I suspect, one could expect a much longer horizon than that.

And your next question will come from the line of Tien-Tsin Huang, JPMorgan. Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division: Just a -- I guess a follow-up to Joe's question, just around the margin guidance being reiterated. I guess that implies the second half margins will be consistent with the first. I think, typically, it's a little bit higher than the second half. So how much of that is conservatism? Was there some mix or some other start-up costs that we should be aware?

So the key reasons why the margin profile will be more flattish in the second half is 2 reasons, and I touched on it in my script earlier. One is that the investments that we had planned to make were more weighed towards the second half. And just as for our own plan, we will be making a substantial part of the investment in quarter 3 and quarter 4, which will weigh down margins that you typically see as better in the second half of the year. And the second thing is just on the way our hedges are. We did get more benefit in the first half as compared to the second half, and that will also, to a certain extent, normalize, if I may, the margins in the second half of 2012. That's really the key reasons.

Tien-Tsin, if I can just add one other color to the investment aspect of Mohit's answer. A substantial portion of our investment, as you can imagine, is front end and other domain experts that we are hiring, and that hiring is through, let's say, the first half of the year that we've done. The full half-year impact of that is going to be ferried in the second half, and we'll continue to ramp that up because we still have some runway to add there. The second is the new delivery centers that we've opened. Those investments also will come through in the second half. So a lot of the investments that we had planned will continue to happen, and it's all focused around driving growth. So we think that that's the way the margin will look this year. Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division: Okay, good. And I'm glad you're continuing with the investments. That makes sense. So just a couple of more. Just on GE, that was a little bit faster than we had expected. What's the outlook for the rest of year, especially in the next couple of quarters? Anything unusual to call out?

No, nothing unusual at all, Tien-Tsin. We, obviously, are very happy with the first half. We still think the full year is broadly expected to be broadly flat, which is what we had said at the beginning of the year. I don't think -- we don't monitor in our business, as we've said before, quarter-by-quarter changes, but we feel good about the first half. Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division: Excellent, excellent. And just a housekeeping question, Mohit. Did the employee count -- I don't know if you shared that. Just the headcount in the quarter?

Yes. Our total headcount that we are...

58,600.

58,600, that's right. Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division: 58,600, there you go.

The next question comes from the line of Edward Caso, Wells Fargo Securities.

Could you give us sort of your best sense of timing on the dividend and the investment?

So there are a lot of customary close processes that we have to still grow through. It appears right now that we will be able to close by the fourth quarter, this entire transaction, of 2012. And as regard to dividends, like we mentioned, it's going to be after we've got the financing agreement in place, which we believe may happen by the end of August, and then we will announce the record date and the payment date for that dividend subsequent to that.

And we expect, therefore, dividend to be a third-quarter event, once financing is put in place.

Can you give us a sense of what kind of pricing that you expect on your financing? And is the incremental amount of debt roughly $600 million? Is that what I heard? What's the amount? If you could help out there.

Right. So as regard to pricing, it's premature for me to talk about it because we still have to launch the syndication. But you guys are well aware of the market rates that are happening at this point in time. Once we have the final pricing, we'll definitely communicate that back to you. As far as the credit facility is concerned, we had taken on a $380 million debt in May last year, of which we have approximately $341 million outstanding as of date. We're going to retire that $341 million of debt, take on a new facility of $925 million, but we will not use all of that. We will be using about $750 million. So in summary, we will take on new debt of $750 million, retire the existing $340 million and use the balance, basically, for dividend expenses.

So again, Ed, really, what this does is it actually, one, resolves $300 million of cash on the balance sheet and creates unfunded lines that, along with that cash, continues to allow us to look for the right growth opportunities, both organic and inorganic.

Terrific. Well, thank you very much for getting rid of this share overhang. So hopefully, the stocks start moving up now.

Your next question comes from the line of Bhavan Suri, William Blair & Company.

It's Rahul Bhangare in for Bhavan. Just one question. How much visibility do you have to the full-year guidance, say the midpoint of the guidance range?

So we -- our visibility this year is actually very similar to the visibility we've had over the last 3 or 4 years. Typically, by the time you get to this part of the year, our long-cycle businesses will not -- new stuff will not add much revenue to the current year because it's long cycle. So a lot of the visibility for new business will always be in the shorter sales cycle of our business, which is analytics, all the Smart Decision Services, IT, and the visibility there is exactly what we expect it to be for what we are heading towards.

That's a good segue to my next question. What exactly was SDS growth in the quarter?

The Smart Decision Services growth for the quarter was 20%.

Okay. And then just demand within financial services. I know it's picking up a little bit. But can you just break it into components? Where specifically are you seeing strength within that industry vertical?

So we are clearly seeing strength come back on the retail banking side in the U.S. And as you remember, over many quarters now, we've called that out as not as strong as it's been in the historic past. That is beginning to come back. I think a lot's driven by the fact that everyone has rationalized capacity, and therefore, any further capacity needed, as well as variabilization of cost are the journeys that they're all on, as well as some of the regulatory-type work and compliance-type work that is -- that needs to be done. We're also seeing real traction in insurance, property and casualty insurance, health insurance. With all the changes that are happening in that world, seeing good traction there. We're seeing traction in banking in Europe, which is new for us. As you know, we actually have no exposure to European banking as a business. But with all the changes happening there now, we're having conversations with European banks there. And then the traditional markets of -- in terms of geographies of U.K., Australia, Canada, so it's pretty broad based, and capital markets separately. And I talked about the fact that out there, it's more transformational, longer-cycle discussions with short-cycle discretionary spends under intense pressure.

Just to add to your question on the Smart Decision Services. The company grew 20% in this quarter, but the Global Client part of that was about 26%.

Your next question comes from the line of David Koning, Baird. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: And I guess just one other thing on the loan, first of all. Would you think of letting that float, or would you think of fixing it off for 5 years? Or I guess I'm just wondering what type of length, just so we can kind of back into our own estimates on what type of rate you might get.

The current facility of $925 million would be in 2 parts. There would be a revolver and there would be a term. The term would be the bulk of it, about $675 million then it has [ph] to be the term, and $250 million will be the revolver. The term will be over a 7-year tenor but it -- I have the flexibility of paying back early and paying whenever I feel like depending on my cash flows and opportunities and flexibility that I see that we need as a company. But it will have a tenor of 7 years, pretty much bullet 7 years. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: Okay, great. And then secondly, I guess you've been kind of in the 13% or so organic revenue growth rate for several quarters now. And considering the economy, that's very good. I'm just wondering kind of as you look at your current pipeline and kind of think about the signings and everything, I mean, is this kind of the normal rate right now? Or do you look at it and say, "Hey, next year could be better?" Or, "We're a little concerned it could be worse"? How do you just look at the pipeline and kind of the current pace of revenues kind of going into next few years?

So, Dave, first, I'll answer the question on -- this is the way we had expected it to be. Obviously, there are puts and takes in the final number, but our expectations for the year and, therefore, for the first half are pretty much where it seems to have been. And as we think about 2013 and beyond, I think it's a little early to use our current pipeline. We haven't done the exercise that we normally do. We tend to do it typically at the end of the third quarter, in the fourth quarter, so that we are ready to think about 2013 and talk about it. But given the investments that we've been making on the sales side, given the early read on some of the way the salespeople are turning out, we feel good. It's also very clear that corporations across the world are rethinking the way they run their businesses. And as long as we can continue to find ways to add value to them as we are, on a major long-term transformational journey, we feel good about the way this business looks going into the future. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: Okay, great. And then 2 just quick ones. What was the FX impact to revenue? And then when you look at your tax rate next year, is that biased higher or lower?

Sure. The impact of ForEx on our revenue was a negative 1.3%. So actually, on constant currency, my revenue was more like 18.9%. We -- the negative impact was mainly on account of the euro and the Indian rupee, and these 2 currencies, together, impacted our quarterly revenue by about $5 million. The -- sorry, the second question on the tax rate, we still have to work the puts and takes for 2013. There's obviously lots of dynamics, and our growth -- which jurisdiction the growth comes from, et cetera. At a very high level though, at this point, we see that tax rate should have peaked by the end of 2012. So in 2013, it should be equal or lower. But this is high-level, we still have to do the math, and we will come back to you. Though from where I sit today, I see the tax rate having peaked in 2012.

Your next question comes from the line of Bryan Keane with Deutsche Bank.

Wanted to ask about the capital markets. What did that grow organically sequentially? And then maybe -- I don't know if you can break out Headstrong separately, but how is Headstrong growing as an entity separate from Genpact as a whole?

I mean, the second part of your question first, we are not really measuring Headstrong separately anymore. It's been a full year. We've done lots of changes. There's cross-sell happening. There are people who moved between the 2 organizations. We even shifted portfolio of the business. We have taken some part of the consulting business of Headstrong and put it with our China practice and so forth. So honestly, it's not a unit anymore, and so that would be hard and -- even attitudinally, we don't just want to do that. It's one organization. As far as capital markets is concerned, that business has grown about 8% to 10% and -- year-over-year, and you're aware we had mentioned in the previous calls that they've had to take an impact of one of their clients that went bankrupt, and that definitely caused a slowdown in terms of a year-over-year comparison. We're obviously looking at capital markets very closely, given the current macro uncertainty. But there are many opportunities that are presenting themselves out, too, because all the investment banks are looking at how to variablilize their cost structures more. So on the one hand, we're looking at it from a risk perspective, but we're also looking at how to capitalize on the opportunities.

So, Brian, I mean, just to summarize that. There is no separate business in Genpact that is Headstrong today. It's capital markets as a vertical, and then there are different businesses that have now become parts of other businesses of Genpact. So actually, we will not -- we don't track Headstrong because it actually -- the original Headstrong doesn't exist.

Yes. I mean, I guess the -- one of the bear thesis, if there was a bear thesis on Genpact, was that, that capital markets' exposure from Headstrong would deteriorate. And besides the one client going bankrupt, we really haven't seen it, which is a little bit different than the peer group. So maybe you could just help us understand why -- is it just the cost savings that Headstrong can provide to the capital markets group is a lot different than your traditional IT peer?

I think it's very simple, Bryan. It's just a better team. Sandeep and the management team of the original Headstrong business that now leads capital markets as a vertical and IT as a horizontal is just a better team, and I'm just being a little jocular here. But it is a great team. It's integrated really well. I think the domain expertise that they bring is unique, which is what we always liked about that business. They understand the technology, the products and the platform very intimately, and they work very closely with their clients here in the U.S. and Singapore, in Hong Kong, in Tokyo, in London, in Paris. It's a very different business, and it's clearly shining through now in times that are turbulent for capital markets.

Okay, great. Last question for me. Revenue per employee, I think, was down about $1,100 year-over-year, which I think is the first time I've ever seen Genpact have that -- have a downtick on the year-over-year. I'm just wondering what helps explain that.

So the good news is that the revenue per headcount is down not because of any change in our billing rates or the actual revenue that we have agreed to with our customers. This is more a math thing. We mentioned earlier that we are making investments in resources, in our support people, in our front-end teams, in resources in advance of growth, and you just -- it's a headcount metric. So you'd -- at this point in time, the revenues, actually, are good. The billing rates are fine. It's just the denominator of the people right now. We've hired a lot of people, and that's why you're seeing a drop of the $1,000 -- or $1,100 in the revenue per headcount. There is no change in our actual production billing that we are doing to our customers.

What about pricing year-over-year?

Pricing is stable, Bryan, across the board. It's competitive, as it's always been. But we aren't seeing any new things around pricing pressure in any specific segment of our business that is material and worth calling about.

[Operator Instructions] The next question comes from the line of Manish Hemrajani with Oppenheimer & Co.

This is Kunal Doctor sitting in for Manish Hemrajani. Good quarter. Okay, one of your peers mentioned that they are seeing gradual changes in the opportunity set [ph] from larger deals to mainly smaller deals. Are you seeing such trend in the market when you're approaching new clients?

Yes. There was -- the line was not very clear. Are you talking about trends we are seeing in the market? Or may I just request you repeat the question?

Yes. One of your peer [indiscernible] had spoken about the trends in which they are seeing opportunity set [ph] from larger deals to more smaller deals. Are you seeing such trends when you're approaching clients or [indiscernible] the deal?

So we aren't seeing a change from larger deals to smaller deals. In the last couple of quarter, it's actually been stable. However, for some time now, and we've said this actually for many quarters now, we've said that if you compare the size of deals from large corporations today versus the prerecession 2007-type period, it's much smaller deals now from large corporations. And the reason for that is actually very simple, most corporations tend to attack any of these opportunities in multiple phases. They want to attack the one that has the fastest payback first, for obvious reasons, and then they want to reinvest the savings again into the next attack. So there's no change that we've seen recently. The trend is not any different from what it was. It is obviously different from the past, but it's now become, to use a cliché, "the new normal."

Okay. And just another question if I can squeeze in. With the U.S. election around the corner, have you seen any clients [indiscernible] or pushing back large deals or avoiding for new development [ph] [indiscernible], or have you seen any push back in 2Q?

Nothing that is broad based. A lot of such discussions have always been very client specific, very local, very industry specific and what each client is going through. So nothing that is different from what it's always been.

Okay. And then just last one. What was SDS as a percentage of revenue?

Was that SDS as a percentage of revenue?

Yes.

Yes. Smart Decision Services as a percentage of revenue is in the range of 14% to 15%.

This concludes the question-and-answer portion for today. I would now like to turn the call back to Mr. Shishir Verma, Head of Investor Relations, for closing remarks.

Thank you, [indiscernible].

Thank you, everyone, for joining us on the call today. It's been a pleasure working with all of you. I'm glad to have gotten to know all of the investors and analysts, and I look forward to keeping in touch. As we transition to Barney, I will continue to be available for questions. Thank you.

Thank you.

Thank you.

This concludes today's conference. Thank you again for your participation. You may now disconnect, and have a great day.