Good day, ladies and gentlemen, and welcome to the Q4 FY 2014 Genpact Earnings Call. My name is Joyce, and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to your host for today, Bharani Bobba, Head of Investor Relations. Please proceed.

Thank you, Joyce. Welcome to Genpact’s earnings call to discuss our results for the fourth quarter and full year ended December 31, 2014. We hope you’ve had a chance to review our earnings release, which you’ll also find in the IR section of our website, genpact.com. With me in New York today are Tiger Tyagarajan, our President and Chief Executive Officer; and Ed Fitzpatrick, our Chief Financial Officer. Our agenda today is as follows: Tiger will provide an overview of our results and address the progress in executing our more focused strategy, followed by Ed who will discuss our financial performance in greater detail. Tiger will provide closing comments and then we’ll all be available to take your questions. We expect the call to last about an hour. 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 are set forth in our press release. 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 in our earnings release in the IR section of our website. With that let me turn the call over to Tiger.

Thank you, Bharani. Good afternoon, everyone, and thank you for joining us today. We are very pleased with Genpact’s fourth quarter and full year results for 2014. We delivered on our stated financial expectations, made significant progress on the execution of our growth strategy and made all our planned investments. Our 2014 total revenues increased 7% to $2.28 billion. Global Clients revenues grew 10% for the full year at the high-end of our expectations. GE revenues declined approximately 2%, less than we expected at the beginning of the year. Adjusted operating margins were in line with our expectations at 15.1%. In the fourth quarter, total revenues increased 8% year-over-year and 2% sequentially and our Global Clients revenues grew 11% year-over-year. We continued the momentum we have had in our big deal wins since the beginning of the year, signing two more large transformational deals. 2014 was a pivotal year for Genpact. It is clear that the industry is evolving. Companies, particularly in our targeted verticals are looking for partners to bring an innovative approach to their operating models and deliver significant transformation. In this environment, we are working with our clients to identify new sources of value to create productivity and efficiency gains beyond cost savings. The solutions we are developing and building for our clients increasingly bundle advanced new technologies such as social, mobile analytics and cloud. What clients are really looking for in these new technologies are one, depth of understanding of the best design; two, a deep appreciation of the context; three, knowledge and experience of domain and process; and four, ability to leverage the data that flows through those processes in order to make more intelligent business decisions. We are uniquely qualified to partner with our clients on these transformational journeys, given our strong industry and…

Thank you, Tiger and good afternoon everyone. Today I’ll review our fourth quarter performance and full year results followed by a summary of key highlights on the balance sheet and cash flows, and finally our outlook for 2015. We closed the fourth quarter of 2014 with revenues of $602 million, an increase of 08% year-over-year or 9% on a constant currency basis. Excluding Pharmalink which we acquired in May 2014, revenue growth was 6% or 7% on a constant currency basis. Fourth quarter revenues from Global Clients increased 11% year-over-year or approximately 13%, on a constant currency basis. Excluding Pharmalink, revenue growth was 9% or approximately 10% on constant currency basis. Within Global Clients, business process outsourcing revenues increased 16%. Our Global Clients IT services revenues declined 3%. GE revenues declined 5%, in line with our expectations. In this quarter, our overall business process outsourcing revenues increased 11%. Our overall IT services revenues declined 2%. Adjusted income from operations totaled $82 million compared to $86 million in the prior year. This represents a margin of 13.6% compared to 15.3% in the fourth quarter of 2013. This reduction was driven by the planned investments in sales and marketing, in fact gross margins grew to 40.3% from 38.1% last year due to operating efficiencies and favorable foreign exchange. As a result of the increased revenue and gross margin levels, total gross profits grew to $242 million from $213 million in the fourth quarter of 2013. SG&A expenses totaled $167 million compared to $136 million in the fourth quarter of last year. Our sales and marketing expense as a percentage of revenues this quarter was approximately 7.6%, up from 5.4% in the same quarter last year, driven by the ramp in client facing teams. The ramp in subject matter experts also contributed to…

Thank you, Ed. In summary, we believe we have the right strategy with the right area of the focus to increase our market share and drive growth in our underpenetrated markets. The four pillars of our strategy are as follows: One, concentrate our investments to ensure market leadership in select key industry verticals, focused services lines and targeted geographic markets; Two, expand our team of subject matter experts and lead solution architects who bring extensive knowledge and deep domain expertise to clients; Three, further integrate our core operations, new technology and analytics offerings to differentiate our solutions; and finally, deepen our client relationships. Our performance and progress in 2014 clearly demonstrates that we are executing very well against our strategy. And with the acceleration in growth in the second half of the year, I’m pleased with the momentum in our business as we enter the new fiscal year. We are providing relevant and highly differentiated services that are clearly resonating with the needs of our clients. We also look forward to see you all and plan to give a more detailed update on the progress of our strategy execution journey at our Investor Day on February the 27th in New York. I’ll now hand the call back to Bharani.

Thank you, Tiger. We’d like to open it up for Q&A. Operator, can you please provide the instructions?

[Operator Instructions]. The first question comes from the line of Bryan Keane of Deutsche Bank. Please proceed.

Hi guys. Thanks for the new disclosure. Obviously there is going to be some questions about the bookings number. When I look at it, it looks super strong, up 50% and you guys talked about it not exactly translating the revenue. Can you just help us think about how it will translate to revenue because I know noticed organic growth kicked down a point in the fourth quarter from the third quarter and then the revenue growth rate looks about the same or similar growth rates as the fourth quarter yet the bookings number looks so strong?

So Bryan, let me start off by saying that the translation of bookings to revenue in -- that following bookings is a very complex equation because bookings is total contract value. And as you know 75% plus of our business is annuity long-term contracts. All those contracts have a ramp. And then we have consulting; reengineering; IT; and analytics, some of that are projects and they start and stop. And they are shorter term and shorter cycle deals. So, when you put all of that together, and then put together the fact that total booking numbers in 2014 follows a year in 2013 where bookings were flat compared to 2012. And the reason for that I think we articulated over many earnings calls where we said that our pipeline is now getting populated by larger deals that we are bringing in more and more as we craft them with our clients and those take longer to close. They started closing in 2014, so you can almost count part of the 50% as a catch-up; part of the 50% as following two years of flat bookings to each other. Of course there was productivity that we got into the sales team because we realigned them to the areas of focus. And I wouldn’t read more than all of that. We are very, very pleased with the booking momentum. I said that on the call. We’d like to continue the journey. 50% growth would not be expected going forward. Medium to long-term, the modeling that we would expect unless many of these variables change as booking will be a nice good leading indicator for medium term revenue growth. And we would not like to look at bookings as a single annual number.

If I just add to that what I would say is coming into the year, Tiger and me talk about having visibility to about 75% of sales based upon what we have in orders in-house starting the year and we feel pretty -- the level for this year is consistent with what we’ve seen historically.

Okay, that’s helpful. And then just on operating margins, look like we’re thinking about flat I think year-over-year. When do we start to see some margin leverage; is that a few years down the line or does that start in ‘16? I guess maybe you can quantify the amount of investments maybe in this year as opposed to 2014. Thanks.

We’re not going to give numbers but directionally, Tiger and I have both talked about. We definitely should start to see leverage in ‘16 as the full force of investments we made in ‘14 really play out in ‘15 and then we return to more normalized levels in ‘16. So, Tiger can add. All I would say is you should expect to see leverage particularly in G&A, the sales force will ramp a bit as we go forward. Sales and marketing investment this year for ‘15 is going to be consistent with what we spent in ‘14. So, that’s not really ramping; it’s relatively flat on a percentage level but dollar wise it’s going up with the revenue growth.

The only other statement I’d add to what Ed said is while we will definitely start seeing leverage in the business on margins going into ‘16 we will have to constantly evaluate the fact that we still have an underpenetrated market that is undergoing significant transformation. And if investments continue to pay off, then we would have to evaluate the trade-off between how much of that margin do we actually allow to go through versus actually reinvesting some of that in the business. Overall, we expect some leverage to come through in ‘16.

The other piece I’d highlight is on the gross margin side we saw nice uptick this year because a lot of productivity. We signed a lot of big deals this year. As you’ve also heard us talk about big deals initially start out at lower gross margins and that’s no exception. ‘15 will start off with a bigger mix of them than we had in ‘14. So gross margins you’d expect to see a bit lower in ‘15 as we come out of the gate.

Okay, great. Thanks for the help and will see you guys at the Analyst Day.

Thanks Bryan.

The next question comes from the line of Ashwin Shirvaikar of Citibank. Please proceed.

Thanks. Hey Tiger, Hi Ed. Good results here.

Thanks Ashwin. Hi.

Hi. So, I guess I was wondering within the year, for the quarter, and I know you guys tend not to get into specific quarterly type guidance but can you help us with the cadence of how revenues might flow through and how margins might go up and down with regards to specific investment timing and things like that.

So, I think I’ve talked about the margin portfolio because we had visibility to this. Last quarter I talked about the margins will be somewhat of the inverse of this year. And then in other words, ‘14, we started off higher and went lower as the selling and marketing ramped. Next year selling and marketing will start higher as our sales increased and the selling and marketing cost will not be increasing like they did last year. So, our margins should increase for sure in the second half of the year versus first half and likely as we go throughout each quarter. So, I’d say the ramp will be below the 15%, first half of the year will be above the second half of the year roughly. On the year-over-year growth by quarter, I won’t guide you too specifically because we can have movement between the quarters other than to say they all should be roughly aligned with the overall growth that we told you. I think the range is 8% to 9.5%, the 2.46 to 2.5. So, use that. But as you think about modeling, remember that the Pharmalink acquisition came in at the second half of the year, so growth might look a little better total company wise first half of the year, as a result of that.

So Ashwin, the final statement I’ll add to that is on revenues, except for what an acquisition does, I would think about the revenue portfolio and the distribution of revenue quarter-by-quarter to be broadly similar to the way it’s been in our business actually for many years now. It hasn’t changed that much. You would find as you would expect in our business, quarter one always stops lower than the earlier quarter. I mean that’s happened in our business every year that I think happened now nine years or eight years in succession.

Right. I guess one question I had was on the GE contract. Now you’ve got -- the guidance is what it is and GE as a company does tend to ask, put a lot of productivity to slowdown to them. But in terms of how you think of that relationship, are there parts of what you have historically done at GE that you are now beginning to deemphasize or are parts becoming far more competitive than they use to? In other words, this is a big chunk; I mean how long should we continue to look for modestly down type of a trend?

Ashwin it’s a great question. I’d start by saying that our relationship with GE and the characterization of our relationship with GE and the work we do with GE hasn’t changed in its color and character over many years. And what I mean by that is the IT businesses have always been competitive. And on the business process and analytics side of the house, our mandate has always been to drive value, to drive productivity to bring in new technology and new ways of doing things. And we have done that systematically over many, many years and we continue to do that. What that does mean is the work we do with GE constantly changes and constantly evolves. We’ve said this again many times. GE continues to always be at the forefront of innovation, so we often try new things with GE because GE tries new things and then we expand it to many other clients. So, if you look at our portfolio of the work we do with GE, a lot of it is new staff. Risk and regulatory affairs is a great example in the financial services space. And you know how much of that is needed across the banking world these days. To some extent, and again we’ve said this before, our business with GE and GE Capital is a function also of the way GE and GE Capital performs in terms of their balance sheet size, where they are taking the GE Capital balance sheet, acquisitions that they do and the speed at which they integrate them, the growth that they experience et cetera. And I think we are as always very well aligned and as always continue to find ways to drive productivity for them.

Okay. That’s good to hear. I look forward to seeing you in next few weeks here.

Thanks Ashwin.

The next question comes from the line of Tien-Tsin Huang. Please proceed.

Hey, good afternoon. Thank you. I guess just digging to the bookings a little bit more. I’m glad it’s just -- it sounds like it’s just new work that’s what you are describing. So, I guess as we’re trying to think about this formulaically, how does revenue retention look on annualized basis? I heard the 75% comment but if we just look at revenue retention, what does that typically look like?

It’s a good question Tien-Tsin. And thanks for joining the call. It is only new work. So that’s the first statement. And to some extent therefore it’s a pure definition of bookings. Renewals accounted only to the extent that there is new scope added in that renewal. A lot of our BPM contracts tend to go through renewal cycles and as long as we continue to deliver value, they get renewed. That renewal rate in the industry and it’s not just about us, in the industry has historically been 90% plus for many years now. There always be pockets where it’s different but broadly 90% plus is an expectation that a lot of us would have. And then you have the IT and projects and consulting side of the house where you have start and stop. And once it stops, you’ve got to go back and re-win another set of businesses. That’s the way. And that’s the 75% that Ed referred. You start the year with 75% visibility; you then have to win more business to reach the 100% mark.

Okay. So, I guess when we mix all that together and we think about the only other piece let’s say maybe is duration, so I don’t expect you to give a precise answer. But as we look at bookings, I mean is there a rule of thumb around duration or even as we look year-by-year, maybe book to bill; is there -- I know it’s going to be lumpy but is there a metric we should be looking for to better…

It’s the right way to think about it Tien-Tsin. So, if you look at two broad sides of our house, on the BPM side, those are annuity contracts. You know that they typically tend to be five years, a few of them beyond five years, sometimes a few of them under five years, three years. And then on the IT end and consulting side of the house, I mean those tend to be anywhere from three months, six months, nine months, a year et cetera. So, if you look at our business, those are the two things that get mixed together and determine the overall relationship of total contract value to annual revenue. Given the large deals that we won in 2014 and a lot of them were BPM annuity deals, the mix of the business shifted a little bit to more BPM annuity contracts. And that obviously helps the overall annuity side of the house for us which we like. Of course it had a lot of bundling of technology and analytics more and more we are doing that. So, I would say that that’s important mix to keep watching. And depending on a year-to-year basis, as that mix changes, booking number would change, which is why it’s important not to look at booking numbers on an annual basis.

If they average tenure stays the same, our guidance going forward, we’d expect the bookings number and growth there should correlate pretty closely to the revenue growth.

Yes, makes sense. Just two quick clarifications and I’ll jump off, I promise. Revenue per employee, the trend there, given what you’re talking about automation, how should that evolve? And then just definition of large deal, can you remind us what that is? Thank you. That’s all I had.

Yes, good. So, Tien-Tsin, the evolution of revenue per employee has to be only in one direction; it has to go up for a variety of reasons, automation; robotics; higher value added work; more complex work; work that is more distributed across the globe, you name it. All of those drive revenue per employee up over many years and I think it will continue in that direction. And the second one which was around -- what was the second question?

Definition of large deals. Thank you.

Oh! Large deals. For us, a large deal is $50 million TCV plus.

Operator, can you queue the next question?

The next question comes from the line of Joseph Foresi of Janney Montgomery Scott. Please proceed.

Hi. So, I was wondering with sort of the fluctuation of the business in the bookings, how do you think about industry growth rates at this point and where you fit at particular spectrum?

Great question, Joe. I would say if we look at our business and I’m calling that out as distinct from some of our competitors when they have a much, much larger IT business. For our kind of a business, I would say 2015 numbers and the plans that we have take us to clearly at the Global Clients growth rate level, above industry growth rates. If you look at 2014, obviously we were below industry growth rates. And that was a trajectory that we had expected, that was a trajectory that our investment plan had laid out. So that’s the way I would think about our business.

Okay. And we’ve fallen into I think a trap maybe three years ago where there was a large amount of large deals that were out there in the pipeline that you’re trying to convert. Is this large deal cycle obviously different from that? It sounds like it is. If so, how? And have you approached large deals in any different kind of manner to try to get the revenues across the goal line?

So, about two years back we started to talk about large deals entering the pipeline; I don’t know if you’re referring to that. And basically, over six to eight quarters, we had said that those large deals were making slow progress because they are complex and take a long time to decide. That characterization of large deals hasn’t changed. What has changed is that now there is a steady flow those large deals because they now populate all stages of our pipeline. So, I don’t think there is a difference between the characterization of large deals those days versus now. We just have more large deals that we go to our clients and create. They are many more sole sourced; they are more complex; they often start with design and consulting rather than just plain vanilla outsourcing; they often have much more new technology and analytical and insights components built into it. And now we have in our client facing teams; in our domain expert teams as well in the kind of solutions that we have started building for the specific industry verticals we’re focused on, I think the ability to create those deals better and then win a fair share of them, which we are. And those win rates, as I described had gone up and had gone up in 2014 and we expect those to continue.

Okay. Last question for me. We saw the bookings and they look obviously impressive, but you’re cautioning us not to maybe think of it as -- or put any kind of conversion rate on it. Is there anything you’re doing internally to measure either the sales force or change in their composition to try to get those revenues in the door at a quicker pace? I’m just trying to not get ahead of myself, given where the bookings numbers are looking.

Yes. So, Joe, as you can imagine, a typical sales person’s role in our business would be to generate new bookings. So, that is the single most important metric for a number of the sales people; for a number of the business leaders. And that is logical in our business. And obviously, some of them will manage client relationships would also have metrics in managing those relationships making sure that promises are kept; delivery and partnership with the operating team is great; net promoter score which is so important for us is high. So bookings is an important metric. And making sure that those continue to move forward as we go through 2015 is important.

Thank you.

Thanks Joe.

The next question comes from the line of Anil Doradla with William Blair. Please proceed.

Hey guys, this is Matt Farrell [ph] on for Anil. First, congratulations on the quarter. My first question deals about large deals. And are those large deals that you signed in 2014, are they ramping as you expected? And then can you kind of update us on the pricing trends that you’re seeing in these large deals or you happen to give up on some pricing to keep the bookings number kind of going up? Thank you.

It’s a great question, Matt. So, one, all the large deals that we signed are progressing well. Some of them, as you can imagine, two of them got signed the last quarter, so it’s very early days; a couple of them got signed in the third quarter, so only a quarter plus since we signed but they are progressing on plan. They are complex, they are global, they are multi-tar and they require a lot of change management in partnership with a number of pipelines but so far progressing well across the board.

And on the margin front, are we seeing any margins…?

So, interestingly and we’ve talked about this in a couple of earlier calls as well. Large deals, the clients’ needs in large deals are actually different. What they are really looking for is value; they’re really looking for big bottom-line impact; risk mitigation; change management; take me to best-in-class; allow me to become a disruptor in my market space, in my competitive landscape because I want to leverage disruptive technologies; disruptive designs or processes; disruptive robotics et cetera. So, in that landscape, price is not often the number one reason why any client chooses any partner. And the other context that I’d give is that these large deals therefore have large global competitors who participate in them. Not everyone has all the capabilities lined up to participate in them. So, as a result, pricing is competitive but it is not irrational. And there is no reason to believe that large deals means lower price and lower margin.

I think what I’d add here Matt is on these large deals, you saw some of the impact and in the year initially they start out because of the upfront cost, a little bit large than we ran; it also drove some upfront cash related to investments that we make and affected to cash flow in ‘14, as you heard me talk about, so just two added points there.

Okay, thanks for that. And then are there any updates on the capital allocation strategy? I know you guys touched on it earlier but any more specifics that you guys could dive into? Thanks.

We definitely plan to come back to you with some more details at the February 27th meeting here in New York. So, stay tuned for that. But as we’ve said before, our priority really is driving profitable growth as we look at that capital expenditure to support the growth and then from there attractive M&A in our targeted verticals; tuck-in nature; right economics to those. Then from there, the return of capital is the piece that we’ll come back to you on 27th of February.

The next question comes from the line of George Tong with Piper Jaffray. Please proceed.

Hi. Thanks for taking my questions. Tiger, can you give us a sense for how much growth you’re seeing in the pipeline? And if you look at growth in new bookings on an annualized basis instead of total contract value basis, how much growth you’re seeing there?

So again, the mathematics there would involve not just the conversion of total contract value to contract value but it also involves change in mix of long-term contract deals versus shorter term technology or consulting type deals. So, I think the math is very complicated just to do a simple conversion. We are seeing continued momentum of new deal flow into our pipeline, both in terms of regular deal flow as well as in terms of new deals that are getting created in order for our clients to be able to drive new value. And some of that as I said clearly is a reflection of the alignment of our resources to chosen areas. Obviously when you do that you can go deeper, you can go with more domains, addition of new people will have deeper experience and bringing that to the table, and new solutions that we are going in with. So, when you think about the combination of those, we like the addition of new deals to our pipeline; we like the -- there is no change in the velocity of those deals. Large deals take longer; regular deals take a certain time. And then our win rates in 2014 were up.

Very helpful. And with regard to the two large deals that you signed this quarter, can you give us a sense for when you expect these to be ramped and if there’ll be significant start-up costs?

They would take time to ramp as one would expect large deals to take. So, typically one would expect in our business what those types of deals anywhere from a 12 to 24-month ramp depending on which part of the world and how many countries are involved et cetera. So, I would have expectation of both these deals. And that’s the way you should think about it. And then in terms of upfront, no.

Not a significant factor.

Not a material, significant in terms of anything upfront.

Got it. And then last for me. Could you provide us with the progress report on your -- the incremental sales and marketing investments you’re making and then comment on sales force productivity trends and how these are measured?

So, our total investments for the year in terms of total cost as a percentage of revenue was 6.7% and that was broadly in line with what we had said we’d like to reach. And we obviously did those investments in a combination of specific industry verticals, the services against those verticals and in the geographic markets that we have chosen. We feel very good about the way those people have undertaken the journey of getting integrated. Given the fact that that ramp happened through 2014, there is obviously a whole set of people who joined in Q3 and Q4. They are still going through the process of getting emerged and working with clients and creating new conversations and those are progressing well. We track productivity by individual; we track productivity by cohort; we track productivity by vintage of having spent time in the company; we track productivity by hunters versus people who mine. And overall sales productivity is up. There are segments obviously that do better than the others. We do our typical root cause analysis and then we intervene and run new training programs; add new skills and tools. I think all of that’s going very well.

Thanks very much.

Thanks George.

The next question comes from the line of Keith Bachman with Bank of Montreal. Please proceed.

Hi guys. Thank you. Your ITO business was down in Q4 after a couple quarters of growth. What’s causing that? And more specifically, implicit within your ‘15 guidance, what should we be assuming for BPO versus ITO?

So, I’d start by saying that quarter-by-quarter in our business, it’s not something that we focus too much energy around. Fourth quarter typically tends to have IT budgets winding down. Those IT budgets in our business would have -- would broadly be three buckets, there is the IT business that we do with GE; there is the capital markets IT business; and there is the business that we have with Global Clients that cut across the range of our verticals. Typically quarter four tends to be ones where some of those projects end. So, I wouldn’t read too much into just the quarter four numbers. More and more we are really looking at our business as industry verticals where our objective is to serve clients in those industry verticals and additional competitive advantage to them. And when we do that, it’s never ever in the context of BPO versus IT versus something else; it’s always in the context of solutions that solve big problems that they are facing. Know your customer and capital markets; regulatory affairs in a pharma vertical; managing claims better in a property and casualty insurance company. So, I think really the industry that we are in is moving more and more towards consolidated solutions rather than segregation of BO and IT.

Okay. Well that raises other questions about whether the categorization between BPO and ITO is appropriate going forward. But perhaps we’ll leave that for your Analyst Day.

And Keith, you’re right. And we will tee it up at the Analyst Day, not about ourselves but about the whole industry because the whole industry is categorized that way. So, obviously we also report the same way.

Let’s transition; I want to go back to bookings for a second. The growth was impressive. If we go to a normal industry -- or not normal, but traditional industry characterization, the book-to-bill was below one. You are not including renewals that don’t have variance on size. If we did include renewals where there wasn’t an increase in scope, I would assume the book-to-bill would be greater than one. But, just trying to tee that out a little bit?

Don’t know Keith but the simple answer to you will be it ought to be; it will be because obviously we do a lot of renewals every year. And if there is no change in scope, we don’t count it. So, you’re right. But I don’t have the number and we don’t expect to add that to our booking number.

The focus as you’d imagine is going to be on growth and that’s why we talk about bookings, that’s why…

Yes. And so then, rather than focus on the book-to-bill, we’ll focus on the growth of that bookings number relative to the expected growth on revenues then that’s the translation?

That’s right. And we’ll try to triangulate for you on if this disconnects to what we’re coming out with but for sure we’re using that bookings number and visibility to give you the guidance for the coming years.

Okay. Just the last one I’ll sneak in on seasonality. Currently Street consensus estimates have EPS increasing in the March quarter, at least the information we have versus December quarter. I wonder if you’d care to make any comments on whether that is appropriate.

Yes. We wouldn’t comment to that other than to what you heard me talk about before as far as in general year-over-year growth and the profitability kind of the inverse of what you saw in ‘14, you’ll see in ‘15. We’re going to start out low, below the 15% that we guided to Q1 and then ramp from there.

Okay. That’s it for me. Thank you.

Thanks Keith.

The next question comes from the line of Dave Koning with Baird. Please proceed.

Yes. Hey guys, nice job.

Thanks.

Yes. I just wanted to talk just I guess briefly about a comment you made about bookings and how it was a great year but then there is the ramp time to kind of have that all flow into revenue as you just ramp the contracts. Does that mean that this year -- while good like you said, it won’t have major acceleration, but then should we really expect a lot of that bookings to really hit kind of in year two and three and so, do we get back to that 10% to 13% growth you used to routinely do; is it kind of that ‘16, ‘17 timeframe that we can expect that?

So, the expectation that we had, as we started our investment journey, if you remember, was to start the investment in 2014, focus the business on the chose areas, build the capabilities at the teams and bring new business in. And that will allow us to start accelerating growth into ‘15 and then further on into ‘16. With the medium-term objective of getting global client growth rate closer to mid-teens that was the vision we that we had laid out. So, you’re absolutely right. As long as we continue to drive the momentum that we now have in the business, we are on that path.

Okay, great. And then, I guess as we look longer term on margins, I think you’ve said in the past 15.5 to 16.5 if I remember that right. Are we kind of on that pathway that really the leverage comes in 2016 to get towards that level again?

So, all I would say Dave is that I think there will be leverage in ‘16. The extent of that leverage is just too early to quantify specifically. We’ll obviously -- as we get towards the end of the year and beginning of next year, we’ll have much better visibility ourselves and also a clear view on what are we going to direct towards investments and what is going to be the margin line. And we’ll talk about it at that time.

Okay, great. Thank you.

Thanks Dave.

The next question comes from the line of Edward Caso with Wells Fargo. Please proceed.

Hi, thanks. Congrats on doing what you said you would do.

Thanks.

Just one more on the bookings here. If you took the six deals out of this year and you took how you define large deals out of last year, what would that percentage be? I guess I’m trying to figure out is, how dominating are these six transactions to the number. So how sensitive will you be to large deals in the next year number?

So, Ed, I’m not going to be able to give you that number. But let me tell you, and this is again, we’ve said in many, many call before. As any business and as our business continues to become bigger, the law of large numbers, starts playing out obviously. So, we will need large deals in order to continue to drive growth. That’s the nature of any business and that’s the nature of our business. So, I mean that’s the way I would answer the question.

And the last one, the technical one for Ed, the other line above operating income, I think it’s something to do with shared services, was particularly favorable this quarter. Can you put some color on that?

Yes. I’m not sure which line it is. I’ll have to get back to you on that, Ed. I’m not sure which line you’re referring to.

Okay, thanks.

Thanks Ed.

The next question comes from the line of SK Prasad Borra with Goldman Sachs. Please proceed.

Thanks for taking my questions, a couple if I may. First on bookings, I’m sorry to labor the point. But is it -- just from a very simplistic point of view, the 50% growth in bookings you mentioned, should we see that as providing some visibility into 25% of the revenues which are non-recurring? And the second question is you mentioned the win rates have been up, can you name any competitors whom you’re winning these deals against and is there particular parts of your portfolio where you seem to be doing well compared to others?

So, I’ll answer the second question Prasad. I haven’t fully understood the first question, so I’ll come back to you. Second question, our competitor set is pretty much the way we’ve seen it over the last two or three years. It’s a set of global competitors; it’s a set of large technology players. A lot of them are focused on specific verticals, specific services where they have strength and we see the competitive set in each of those; depends on what type of deal it is and which industry vertical it belongs. And the names are all the usual names. And having said that the one other point I would make is repeat the point that in a number of these situations, given the fact that we were working with the client in order to create a new solution and a new way of thinking, it’s often sole sourced.

Okay, that’s clear. Probably on the question around the bookings, I guess I’m connecting back to one of the statements you made, which is close to 75% of your revenues is more or less recurring long-term contracts. And the definition around new bookings, which you mentioned is more about new business you’re getting of change of scope. So, I’m saying the 50% growth in bookings you’re referring to, should that be a better indicator for that 25% of the revenues which are more or less non-recurring?

No, I think you’re mixing up two different concepts, Prasad. So, the way I would think about the 75% visibility is that for the balance 25%, we don’t have bookings. And our objective like every year would be to get bookings this year in order to fill that for this year. And that’s a typical visibility we enter every year with.

Okay, that’s clearly. Thank you.

And to get back to your question on other income expense, I’ll look at the P&L, but I know there is pluses and minuses in that every quarter. I don’t remember anything unusual this quarter that was out of the ordinary. I know there was a gain on some land but there is some pluses and minuses there. But there is nothing material to speak to. Next question?

The next question comes from the line of Jason Kupferberg with Jefferies. Please proceed.

Thanks, guys. Just wanted to start with a question on your thought process around horizontal BPO relative to vertical BPO right now? I know historically the focus has probably been a bit more horizontal but clearly you’re building a lot of domain expertise in your chosen verticals. So, just thoughts over time what sort of mix shift might we see in your revenue between those two or just where you see the markets, demand patterns evolving relative to the two?

So Jason, interestingly in our business, and I’m going back to five plus years back, we’ve always had almost half our business as industry vertical focused, industry vertical processes. Given our heritage of coming out of GE Capital and GE, so as a result, only half our business one would have characterized as horizontal financial accounting that cuts across verticals; technology that cuts across verticals et cetera and a bunch of other things that we did. Whether it was a insurance claims processing; mortgage back office; credit card back office; building pricing models for commercial lending and so on and so forth, all of those are very industry specific focus. So, we’ve always had that 50-50. And as we’ve gone through the last couple of years, I think that mix is broadly the same. So, we’re continuing to build the deep domain in our chosen verticals in that half of the business. And the other half of the business we’re building capabilities and domain around the horizontals. And what is interesting is that when we build capabilities that are deep in a horizontal like a finance and accounting, it actually becomes deep in finance and accounting for the pharma industry; deep in finance and accounting for the insurance industry because that’s when you get really deep.

Okay, that makes sense. And for the outlook on bookings for 2015, I think it sounds like we’re saying is a “normal year”, bookings growth would approximate revenue growth but obviously in 2015, you’ve got a very difficult year-over-year comparison. So, just to have people’s expectations calibrated properly, is it fair to assume that that bookings growth will be less than revenue growth in 2015? I realize you probably can’t put a firm number on it, but just directionally?

No, we’re not putting a firm number on bookings for 2015; there is no outlook for bookings for 2015. Jason, I just want t clarify that. I want to re-clarify that bookings for a specific year starting Jan 1 to December 31st is a very difficult specific number to put because you could have overflow, you could have all kinds of things. So, directionally, over many years, let’s say two years, you should find that bookings growth should start mirroring and start actually be a leading indicator of revenue growth. So, we don’t have an outlook for 2015 bookings.

And just last question, if we think about the sales and marketing investments for 2015, I know you said it should be similar as a percent of revenue as 2014 but the composition of those investments, any notable changes we should be thinking about?

No. But the first statement I would make is that since we’re going to keep the overall percentage of revenue constant, the extent of incremental spend and investments is far more muted in 2015 as new spend versus what we did in ‘14; what is happening in ‘15 is actually a flow through and a full year impact of ‘14 that will be felt in ‘15. That’s a bigger impact. So, I think we’ve done set of investments in ‘14 that will flow through in to ‘15. We’ll do a little bit more but substantially muted as compared to ‘14.

Okay, understood. Thank you.

Thanks Jason.

There are no further questions in the queue. I’d now like to turn the call back over to Bharani Bobba.

Thank you everyone for joining us on the call today. And again, we look forward to seeing everyone at our February 27th Analyst and Investor Day. Thanks. Bye.

Thank you.