Good day, ladies and gentlemen. Welcome to the 2021 Fourth Quarter Genpact Limited Earnings Conference Call. My name is Catherine, and I will be your conference moderator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this call. As a reminder, this call is being recorded for replay purposes. The replay of the call will be archived and made available on the IR section of Genpact's website. I would now like to turn the call over to Roger Sachs, Head of Investor Relations at Genpact. Please proceed.

Thank you, Catherine. And good morning, everyone, and welcome to our earnings call to discuss results for the fourth quarter and full year ended December 31, 2021. We hope you had a chance to review our earnings release, which was posted to the IR section of our website, genpact.com. Speakers on today's call are Tiger Tyagarajan, our President and CEO; and Mike Weiner, our Chief Financial Officer. Today's agenda will be as follows. Tiger will provide an overview of our results and an update on our strategic initiatives. Mike will then walk you through our financial performance in greater detail and provide our outlook for 2022. Tiger will then come back for some closing comments, and then we'll take your questions. We expect our call to last roughly an hour. Some of the matters we will discuss in today's call are forward looking and 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 addition, during our call today, we will refer to certain non-GAAP financial measures that we believe provide additional information to enhance the understanding of the way management views the operating performance of our business. You can find a reconciliation of these measures to GAAP in today's earnings release posted to the IR section of our website. And with that, let me turn the call over to Tiger.

Thank you, Roger. Good afternoon, everyone. And thank you for joining us today for our fourth quarter and year end 2021 earnings call. We are very pleased with our full year 2021 financial results, with revenue, adjusted diluted EPS and cash flow ahead of our expectations. We continue to strategically invest for long-term growth, while meaningfully expanding our adjusted operating income margin. For the fourth consecutive year, our analytics, digital and consulting businesses, which make up Transformation Services, led our Global Client growth. As we look at 2022 and beyond, we see further expansion into multiple buying centers of our clients with cloud, SaaS, and data analytics-led solutions driving even greater value for them. For the fourth quarter 2021, we delivered total revenues of $1.1 billion, up 13% on a constant currency basis, Global Client revenue of $979 million, up 16% on a constant currency basis, adjusted operating income margin of 14.4%, and adjusted diluted earnings per share of $0.54. For the full year 2021, we delivered total revenue of $4 billion, up 7% on a constant currency basis, Global Client revenue of $3.6 billion, up 11% on a constant currency basis, adjusted operating income margin of 16.5%, expanding 60 basis points year-over-year, and adjusted diluted earnings per share of $2.45, up 16% year-over-year. Our Global Client revenue was up 11% for the year. This performance was primarily driven by Transformation Services that grew 33%, including the impact from the Enquero acquisition, up from 21% in 2020 and represents now 36% of total Global Client revenue, up from 30% in 2020. Intelligent Operations grew 3% and represented 64% of total Global Client revenue. We saw double-digit growth across most of our verticals, including consumables and retail, life sciences and health care, high-tech and manufacturing and services. As we mentioned last…

Thank you, Tiger. And good morning, everyone. Today, I'll review our fourth quarter results and then discuss highlights of our full year performance and provide you with our outlook for 2022. Beginning with fourth quarter results. Total revenue was $1.1 billion, up 13% year-over-year, both as reported and on a constant currency basis. Global Client revenue, which represents 91% of total revenue, increased 16% year-over-year, both as reported and on a constant currency basis. This was primarily driven by ongoing movement in our Transformation Services that grew ahead of expectations of more than 45%. Total Global Client revenue growth in the quarter included approximately one point contribution from revenue related to certain divested GE businesses that we began including in Global Client portfolio as of January 1, 2021. During the quarter, we continue to expand the size of our global client relationships. For example, during the 12 month period ending December 31, 2021, we grew the number of Global Client relationships with annual revenue over $5 million from 129 to 144. This includes clients of more than $25 million in annual revenue increasing from 23 to 32, with 11 of those over $50 million in annual revenue, same as last year. Revenue from GE businesses declined 14% year-over-year, above our expectations, primarily due to short-cycle project work in the quarter. Excluding the effect of revenue related to divested businesses, revenue from GE businesses would have declined 6% during the quarter. As expected, adjusted operating income margin declined sequentially to 14.4%, primarily driven by higher investment activity in sales and marketing and research and development, increased travel expense and a higher level of transaction costs related to recent deal wins and a notable increase in wage inflation during the latter part of the fourth quarter. Gross margins in the quarter declined…

Thank you, Mike. Summing up the world we are in. The pandemic continues to linger, digital dominates CxO [ph] and Board agendas, analytics has taken center stage, and the war for talent has intensified. Given that backdrop, it is no surprise that we are seeing traction in our inflows, pipeline and bookings in the following five areas. One, end-to-end supply chain transformation and consumer books, semiconductor industries and the broad industrial manufacturing industry. Two, financial clients, regulatory compliance and transaction monitoring. Not only in banks and financial institutions, but also new-age fintech, payments and e-commerce platforms. Number three, experience and analytics-driven transformation of sales and commercial in our B2B clients, particularly leveraging new digital and data-driven marketing capabilities. Four, moving data to the cloud and orchestrating that data with technologies to generate predictive actionable insights using analytics to deliver better outcomes. And finally, driving value and transformation as large enterprises across the globe undertake portfolio actions that lead to spin-offs, divestitures, M&A and IPOs. We believe we are well positioned to grow in these areas as we continue to leverage our deep industry and process knowledge, expertise in data and analytics and digital capabilities to drive value for our clients beyond just cost and productivity. Despite the inflationary environment, we continue to invest in the capabilities we need to fuel growth and margin expansion in the long term. In an increasingly complex environment, helping our clients navigate challenges today and build resilience for the future deepens our long-term client relationships. Similarly, ensuring we continue to have the best talent to enable those relationships, especially in this tight talent market, is a critical differentiator. We continue to evolve our talent management practices, including areas like employee engagement, training and development, and building a more inclusive environment for our employees and tribes.…

Great. Thank you, Tiger. We'd now like to open up our call for your questions. Catherine, can you please provide the instructions?

Thank you. [Operator Instructions] Our first question comes from Tien-Tsin Huang with JPMorgan. Your line is open.

Thanks so much. Good morning, everyone. Good bookings results here. I was curious, given your prepared remarks, Tiger, just with this inflationary market, obviously everyone's theme for this earnings season. Is that good for Genpact? And I would imagine that the selling environment that should actually bode well for Genpact. I'd love your thoughts in general. And do you see a shift beyond the secular between short term projects as well as longer-term, bigger projects, given what's happening with inflation?

No, Tien-Tsin, thank you. And great question, by the way. And it's something that we have thought through deeply as well as watch the environment. So one, in this environment, it's very clear that every one of our clients is facing the same challenge that everyone else is facing, which is a need for talent, a need for talent to drive all the transformation agenda that they have on the table, probably an acceleration of that agenda and therefore an even more need for talent. So there is no question that, that provides what one could call a tailwind to partner with people like us both on Transformation Services as well as on Intelligent Operations. The other thing that we are seeing is some of our most recent wins at the end - at the back end of the fourth quarter had cycle times that were shorter than before and, more importantly, a ramp-up from our clients that is much faster than we've seen before. And I think that's a reflection of the kind of environment we are in. So I believe that this environment does provide that opportunity, particularly to digitize operations, to automate operations, to use better forecasting using data in a volatile environment, all of those play out.

Yes. No, that's great. That's a very complete answer. Thank you. Just my quick follow-up. Just recognizing the gross margin commentary and your pricing, just how about the back book on pricing? Do you feel like there's an opportunity to change the back book from a pricing standpoint? I understand the front book comments that you made?

Just to clarify do you mean back book...

Just I mean basically - yeah, your existing book of business, excuse me.

Yes. As you know, Tien-Tsin, we have in our Intelligent Operations business, which is 65% plus of our business, 65% of all of our business, it's long-term contracts. Those contracts typically have inflation adjusters in them. And those, in any case, we contractually, at regular periods, depending on the contract, would get, and those continue to come through. This environment is different from what those contracts have assumed. So we have started talking to clients. And the fact that this is an environment that everyone is facing means that it's a sit down conversation. And at the end of the day, it's going to be a combination of what incremental value can we drive, how much more can we digitize and automate together, and that should end up being a win-win. So back to your question on the back book. The back book is something that we are systematically going through and we believe that we will systemically go through. But as you can imagine, this takes time and there is a lag, which is one of the reasons why I think Mike, in his prepared remarks, talked about inflationary pressures coming in, and then pricing being a longer-term discussion that actually plays out through the year.

That's great…

Yes, I'd just like to add. We've had some early successes in this. And again, early Today is February 11, right? So we continue to have a very active dialogue with our clients about this.

Understood. Thank you.

Thank you. Our next question comes from Keith Bachman with BMO. Your line is open.

Yes, thanks you. I wanted to follow on that. If you could just talk about - you mentioned the margin context for 2022, it's a wider range and obviously some pressure there. Are there other forces at work or is this - is the variance, you think, really driven by the wage pressure in terms of the 16% to 16.5%?

Sure. So it's really - that's correct. It's really all driven by the wage pressure, right? Which is also we're estimating our mitigation against that wage pressure, why the range is so high, with increased pricing that we're getting on; existing agreements that we have, right, normal COLA-based adjustments, right, that are indexed at some frequency, as well as what we call - what we just talked about a minute or so ago, existing agreements and trying to get rate there. So it's a combination of all those things. But again, the sole driver of all this is this hyperinflationary environment that we're in right now. One note is that since we all talked, and as Tiger alluded to in early November, things have changed very, very rapidly in terms of, as you've heard from many, many companies in our industry and others, with regard to inflationary pressures. And when we thought about our guidance for this particular year, right? We're looking not just at information as of the end of December 31, we're looking at information again as of early February, we're seeing in our daily hirings. And we're extrapolating that on a go-forward basis. So that's why the range is as large as it is for us, based on historical patterns.

Okay. Well, my follow-up relates to that. Then other companies that, granted, have a different business model, such as Infy [ph] or Cognizant or even Accenture, have talked about wage inflation, and I think we all - it's quite visible, so it's no surprise. You seem to have a better ability to absorb it. Is that driven by, you think, a different business model? Or do you think you just have more up-to-date data? I mean, keep in mind that Cognizant just reported two weeks ago as well. So I'm just trying to understand why Genpact is incorporating the wage inflation more so than some of the other broader IT service providers in its margin targets for CY '22. That's it for me. Thank you.

Yes. So I can't really talk about other competitors, right? Some of the competitor information that you need is really related to information that potentially could be out of date, right, so as you mentioned is there. But fundamentally, some of those competitors have different operating models than we have, right? And if you look at the average life of a contract. So I don't know, Tiger, if you want to add on to that.

No. And what we are assuming, Keith, is that this is the environment. We are not making any assumptions about any change as to when this inflationary environment is going to go down. I think - I mean, we are not in a position to be able to make that call. So we've taken that current environment as the basis of our view on 2022, and our actions that we laid out both in terms of our own cost structure, as well as discussions with clients moving up to higher value-added services that we continue to do with analytics and all of those into account, and - in order to come up with our view of where we think the range of margin is going to be. As you can imagine, in the past, recent past, we've always given a point margin view of the year. This is after many years that we're giving a range. And that is a reflection of the world we are in.

Okay. Thank you, Tiger.

Thank you.

Thank you. Our next question comes from Dave Koning with Baird. Your line is open.

Yeah. Hey, guys. Thanks. Nice Q4.

Thank you, Dave.

Yeah, you're welcome. I guess my question, when we think about - you were talking all through kind of last year and even before getting back to 10% plus Global Client, and it's a little splitting hairs. You're talking about 9% to 11% this year. But I guess it's a little below. And I know Hoodoo, I think, maybe 0.5% or so of the Global Client revenue growth, maybe the ability to reprice a little bit in a demand environment that seems probably better than normal. Maybe talk a little bit about why revenue growth isn't a little better?

No, great question. And the apple-to-apple comparison would basically say that our organic growth is stepping up. On a constant currency basis, we are saying our Global Client growth will be 9% to 12%. And you are right, Hoodoo is small, so it doesn't contribute that much into total growth, so most of that is organic. And we believe that, that's a good step-up from what organic growth for 2021 has been. And as we described, that total growth for Global Clients in 2021, where we had said at the beginning of the year, that maybe by the fourth quarter, we'll get to double digits, we actually got to double digits much earlier. We are in a long-cycle business, as you know. And we actually feel really good that we are - this takes us closer and closer. What we've always said is our long-term trajectory, which is Global Client growth of double digit to low teens, and this gets in that zip code. So I think this is - we feel really, really good about this, as well as the fact that we've had strength in our Global Client bookings that we called out.

Yes. And maybe just a quick follow-up on - I think did you make a comment about 16.5% adjusted margin as sort of the base to grow from into the out years? So is it - did I catch that right?

Yes, you did. Yes, you did. Well, basically, the way to think about it is that the world is going through a pretty unique, let's call it, a three decades or four decades first time inflationary environment. And it takes time for the world to adjust to that and for us to adjust to that. And we are - we have the firm believers in our secular margin trajectory. I think our actions around value-based pricing, our actions around digital and analytics businesses growing so much faster than the total company, all the new service lines that add so much more value to the client, again, leveraging data and analytics, I think all of that gives us the confidence that we'll continue to be on that long-term secular trajectory within the normal course. And we have talked about it in the last earnings call, we would assume a base of 16.5%. It's just that there's an aberration that we are calling out for 2022, and we'll be back to the same trajectory.

Got you. Thank you, guys.

Thank you, Dave.

Thank you. Our next question comes from Maggie Nolan with William Blair. Your line is open.

Hey. This is Ted on for Maggie. Thanks for taking our question. It sounds like you guys have been making some investments in the sales force, so I'm just going to dig into that. I mean, how large is the sales force today? How does that compare to pre-pandemic levels? And I guess, how has the profile of the sales force changed against the investments you're making there?

So a great question. Overall, our sales force continues to keep pace with the way the company has been growing, if you take the total cost base of our front-end teams. I think the more important question is the one that you asked around, what is the composition of those people? So there is a combination of people who manage large client relationships. Then you have the global relationship managers who manage the next level of relationships. We have people who open up new relationship, recall the 97 accounts that we opened, let's call them hunters. And then we have a pretty significant team, now part of Transformation Services, who are much more consultative, who are much more Transformation Services, what is the change that the customer is trying to drive and how do we participate in helping the client drive that change? So it is a much broader ecosystem, which is a combination of our sales team globally as well as our consulting lead partner. And it's a combination that works a lot with our clients and focused on the top line.

All right, great. That's helpful. For my follow-up question, I just wanted to ask about the higher-value services that you highlighted, Tiger, around supply chain, financial crime, et cetera. As looking at the bookings, what - can you give us kind of just sort of framework to think about kind of the percentage of bookings or the business that is in those higher-value services, and where do you think that could go longer term?

So talk - I'll talk about some of the metrics we already shared in the prepared remarks. 50% of our bookings or 45% of our bookings is Transformation Services. A significant portion of that is what gets captured in the new service lines that I talked about, which we've been focused on, by the way, for three plus years now, and all of them are analytics and digital heavy. If you think about financial planning and analysis, if you think about supply chain, sales and commercial, financial crimes and risk, those four service lines, very heavy analytics and very heavy digital embedded in them. And those are growing at the rate that we called out both in terms of bookings, as well as in terms of revenue. And we – I also talked about the fact that the total addressable market of those 4 service lines well exceeds two times the market that you think about in finance and accounting, which has been our strategic focus area for now 20 years. So all of that bodes very well for our growth trajectory. And then the last thing I'll say is a number of these are very interconnected. So think about financial planning and analysis, which is an extension into the CFO's office. And from there, using data and analytics, you extend into the kind of improvements that sales and commercial can drive, supply chain can drive, order fulfillment can drive. And that's one of the strengths that we have as we expand into a client once we start working with a client and add value for them.

Got it. Thank you very much.

Thank you.

Thank you. Our next question comes from Bryan Bergin with Cowen. Your line is open.

Hi, good morning. Thank you. Tiger, I wanted to dig in first the expansion into new buying centers that you talked about. Can you dig in a little bit, first, the revenue scale of finance and accounting for you relative to these other areas, like sales and commercial and others that you had mentioned? And then do you have to do things differently in the go-to-market in those new areas given they might not be as mature in outsourcing versus finance and accounting?

Yeah, it's a great question, Bryan. So first of all, we don't have specific numbers that we share on finance and accounting as a specific service line, but it is 30% plus of our overall business and of our overall book. And continues to grow at, obviously a much lower clip than Transformation Services, but continues to grow. The more important question that you asked is, what is the nature of the way we start engaging in those new buying centers? And you rightly pointed out that many of those are less mature, they are less penetrated and therefore often starts with Transformation Services, starts with can we design a new operating model, starts with, the example of the aerospace company that we talked about, help improve receivables. And in order to do that, need a technology SaaS platform that gets executed, where their salespeople have to change the way they engage with their customers. And that's an improvement not just for DSOs, but also for the way they manage their own time and release sales capacity. So a lot of it then boils down to much more data-intensive selling, much more analytics-intensive selling and solution, much more digital-intensive selling and solution, which is why a lot of that overlaps a lot with Transformation Services.

Okay. Helpful. And then just trying to unpack growth here a little bit, can you remind us what the asset management client headwind was in '21? How much is that still a partial growth headwind in '22? And then just to be clear on the '22 outlook. Inorganic contribution, just say anything around that?

So specifically...

The first one a little bit, Mike. Mike, do you want to take both?

Yeah. So in terms of what its - we're going to roll them out. The vast majority of that, it will be rolling off in the first quarter of this year. I don't know what the historical impact was in this year. I think it was about 2% or 3% of our global clients. But again, it will be pretty much worked through us in the first quarter. As far as what's assumed in that growth rate, it's pretty much all organic. We have some earnings associated with Hoodoo, but that's going to be a very small number. So when we talk about that 9% to 12%, think about it from an organic perspective.

Okay. Thank you.

Thank you, Bryan.

Thank you. Our next question comes from Moshe Katri with Wedbush Securities. Your line is open.

Thanks. Just a couple of kind of clarifications here. The 20% booking growth that you mentioned for the year, is that all from new logos? Or does that include also renewals?

A lot of that is from existing clients here, Moshe, because that's the nature of our business. If you look at the 97 accounts that we talked about that we opened and where I said that the average entry is about $3 million total contract value, it clearly shows that a bulk of our bookings in any particular year tends to be existing clients that we may have entered the previous year or a couple of years back with either another deal or in Intelligent Operations, or we could have entered with Transformation Services. So for us, it's all been incredibly important to start a relationship in one area of a client and, just through delivery of excellence and value, expand over multiple services, multiple buying centers. And more and more, these are interconnected with data flows and digital cloud flows.

That's helpful. So if we wanted to get actually just the expansion or scope expansion piece of that 20% growth, is there a way to kind of isolate that? Just because, obviously, we're trying to figure out what's driving, I mean, the booking numbers look great, but you're guiding for about half of that growth for this year. So trying to figure out maybe the scope expansion piece in terms of growth rates on a year-over-year basis is there a way to kind of get that color?

Yes, I'm sure we can. Now we don't have the numbers here and we haven't shared that before. But I think it's a good question to answer. Mike, any response?

No, we can work on bifurcating that. And when we think about it, I just want to flag that when we talk about bookings, these don't include renewals. So while there's existing clients, it is net new.

And the one other metric that I would point to is the one that Mike shared in his prepared remarks, where we talk about the growth in number of clients at various revenue cohorts. So number of clients above $50 million, number of clients above $25 million. And the number that we share constantly shows a growing number of clients in each of those cohorts.

All right. That's fair. And then you're guiding - as my second question. You're guiding for a significant ramp in margins during the second half of the year. So you mentioned productivity, you mentioned pricing. Is there any way to kind of gauge what sort of blended pricing increases you're expecting to see during the second half of the year that's going to offset the impact of increasing costs? I think obviously, it's inflation, investments, ramp-up, et cetera?

Yes. So I don't know if we have an exact percentage for you, right? But we're getting those rate increases above notable historical levels. We again have the COLA adjustments that some of them have been scheduled to move in earlier in part of the year, and those will ramp up accordingly, right. But unfortunately, we have that inflation pressure right now as we're committed to delivering for those clients. So I think we'd probably go back to, if you look at some historical patterns in terms of how our margins pre-COVID, it's probably a good basis to kind of model out the year, if that's where you're going.

Okay. And then final point on attrition, I don't know if you've mentioned that during the call. Is it up? Is it kind of stable? What's the kind of number at this point?

Yes, so a few things. Our attrition rate, I think, is approximately 33%, and it was flat sequentially from the third quarter, which is a good sign in terms of stabilization. And keeping note that our attrition rate, right, is really based from day one. There isn't - we just - that's how we do our calculations. So I think there's some confusion out there regarding it. So it's a pretty good number, and it's relatively flat from 3Q.

Thank you.

Thank you. [Operator Instructions] Our next question comes from Ashwin Shirvaikar from Citi. Your line is open.

Thank you. Hi, Tiger and Mike.

Hi, Ashwin.

I guess my first question is just a clarification, if you are not able to get adequate adjustments in pricing, can you still be at the lower end of the range? And what sort of pricing adjustments are incorporated in the upper part of the range? And I guess, mathematically, you will need to be, I guess, above range margins in one of the later quarters to be at a reasonable point there? And the corollary to the question is, I know you guys are always adding tools and automation for your clients. But given the current environment, are there non-linear growth opportunities you are or should be considering?

Sure. Let me kick that - let me kick it off, and then I'll flip over the denominator question back to Tiger. The answer is it's a complete - it's a complicated algorithm with a lot of puts and takes as opposed to just pricing and labor costs, right? So as I talked about earlier, labor cost inflationary pressure is hitting us now as we've been meeting the needs of our clients, and we're trying to be as realistic as possible. We'll manage our spend accordingly. There are a number of levers that we have at our discretion. But again, we're committed to investing in our franchise in sales and marketing and from an R&D perspective. So we still feel good about that 16% to 16.5%. And again, we don't know, ultimately, if this will - we're assuming this inflationary pressure is going to continue for the remaining part of the year, right? We continue to manage our bench, our internal hirings and our skill set allocation of folks. So there is a number of puts and takes there that will allow us to work within that. In addition to it, don't forget, it's just the business historically has been nonlinear, right? And it's going to be even more exacerbated this year, and it kind of manifests itself with Tiger's comment at the end, that he feels good about that 16.5% just over a longer period of time as all these actions are going to take place ramping up through the year and into next year, quite frankly.

Yes. And Ashwin, just to add to what Mike said. We haven't made - rightfully so, we haven't made any assumptions that, across the board, we expect price increases, et cetera. These are very specific conversations. They are dependent on, at what stage of the relationship and what is the specific actions, together, we and our clients, can take so that actually it becomes a win-win? And it can take all kinds of forms. It can take the form of much more aggressive automation journeys on both sides, much more value creation journey on both sides that then generates value for both of us to share. It can be an expansion of scope that then leads to better leverage of overall cost and price. So tough to actually say that there is a one cookie-cutter solution. And that's why - and the early days of that, that we started this, it's showing that, done the right way, it can really be a win-win in what is obviously a situation that everyone else is dealing with.

One word comes to my mind, it's partnership, right? We keep using the word clients. And if anything in the last few weeks have shown us, is how integrated we are when we have partnerships with these clients. Sorry to cut you off, I apologize.

No, no, I was just going to say, it seems like you guys are being appropriately thoughtful, particularly this being your first full year of outlook, Mike. Is it safe to assume, given your deep relationship with GE, that you are or will be the lead partner to help them break into multiple entities? So as the year progresses, would you expect to, again, pick up that, I guess, fairly significant work needed to create three F&A departments instead of what you're doing now?

No question on that, we are absolutely the leader in F&A. There's no debate on that at all. But that also applies as a pretty significant player in technology, where we have a pretty significant long-term GE relationship, as well as things like supply chain, aftermarket services, sourcing and procurement. So we are not the only lead player. But in the topics where we are lead, you are absolutely right. And our relationships are at the right level with the right people in all the businesses that have - GE has called out as part of their spin-off journey.

Understood. Thank you.

Thank you, Ashwin.

Thank you. Our next question comes from Surinder Thind with Jefferies. Your line is open.

Thank you. A question for you, Mike. So when you were putting together your guidance forecast, your revenue forecast, are there other considerations here that we should think about when the markets get volatile and there's the increased economic uncertainty? When I think back to the first question that was asked, it sounded like an inflationary environment might be a somewhat positive consideration. But can you talk about the push-pull and maybe the confidence in this guide versus maybe previous guidance?

Yeah. So it's hard for me to articulate exactly how confident we were in previous. I can talk to you about this one, right? So I think what's kind of unique as a newcomer to the space is, really, when we think about it, we've seen no deterioration, using information as of yesterday, on people pulling back or anything. We actually think the current - we use the word inflationary environment, but it's the - it's much broader than that in terms of the volatility of the - with the markets and the verticals that we operate in, that there's enhanced opportunities against that as companies are continuing to digitize, particularly post pre-COVID and post-COVID. So we think of it as a net positive for us. Did we perfectly bake that into our forecast? It's kind of hard to say. Our forecast is really based on a bottoms-up approach of looking at our pipeline, looking at our bookings and looking at what we're targeting. As far as the day-by-day macro environment that changes, we think that is a nice tailwind for our business on a go-forward basis.

That's helpful. And then in terms of - it sounded like you're generally able to, as you negotiate new contracts, pass on the bulk of the cost increases that you're seeing. How should we think about that in terms of how much of a tailwind that potentially is on the new contracts versus where they might have been if we weren't in this environment? And then how does this impact something like an outcomes oriented strategy here. Meaning, that in your existing contracts, there's - like the COLA numbers are fixed. So do you go to more variable metrics, such as benchmarking gains like a CPI or something like that? How does that - the negotiations change, because if you're entering into 3, 4, 5 year contracts, but it's hard to predict what inflation and so forth is going to be even a year out from now?

Yeah. So every contract is a little different, right? Some of our contracts, the COLA is based on an index, whatever that index might be, of inflation. So it's hard to talk about it in generalities. The vast majority of about all of them have that in there. In addition to it, I think one thing you alluded to in your first comment was it's not just on new agreements, right, it's on existing agreements, right, as well as new agreements we're baking in this [indiscernible] The way to think about it is, I don't want people to think about the inflationary adjustments we're getting as a margin enhancement tool, right? Ultimately, there's productivity commitments and other things against that as we work with our clients. But the way we continue to want you to think about it is that - and I'm thinking about Tiger's last comment about - it's just going to be a longer ramp-up than we anticipated between the inflationary cost pressures we're dealing with today, that pricing kind of catching up to it. And that's why we continue to think at that 2023 rate getting back to that 16.5% expanding trajectory on a go-forward basis.

Thank you.

And Surinder, quick couple of more items of color to what Mike just described. The COLA contracts do have, in some cases, indexation, but in some other cases, they don't. And those are all driven by the particular client methodology that they use, the competitive environment in that particular situation when the contract was signed. What we are doing is systematically figure out what can we do to make it a win-win. And there are various ways of doing that, as I described. And then you have new contracts. New contracts, obviously, the discussion starts with a new base, a new pricing, a new cost base; as well as Transformation Services, which also starts with a new base and new pricing in a new competitive environment. The thing that is interesting about the discussion on this topic in today's world is that it's global, so there is really no part of the world that's not impacted by similar inflationary pressures. So that applies to our clients irrespective of where they are. And it applies to competitive environment irrespective of where the delivery comes from. That makes it a little bit of a level playing field for everyone. And then the question is, how do we create value, using technology, using data, using analytics, and then embed that into the contract?

Okay, thank you.

Thank you, Surinder.

Thank you. And I'm showing no further questions. I would like to turn the call back to management for closing remarks.

Thanks, everybody, for joining us today and look forward to speaking with you next quarter. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.