Good day, ladies and gentlemen, and welcome to Genpact's Fourth Quarter and Full Year 2017 Earnings Conference Call. My name is Carmen 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 conference call. We will expect the call to conclude in an hour. As a reminder, 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, sir.

Thank you, Carmen. Good afternoon, everybody, and welcome to Genpact's fourth quarter earnings call to discuss our results for the fourth quarter and full year ended December 31, 2017. We hope you had a chance to review our earnings release which was posted to 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 for today is as follows: Tiger will provide a high level overview of our results, and update you on some of our strategic initiatives; and Ed will then discuss our financial performance in greater detail and provide our outlook for 2018. Tiger will then come back for some closing comments and then we will take your questions. As Carmen just mentioned, we expect the call to last about an hour. Please note, the year-over-year growth rates discussed today include the impact of the reclassifications of the divested GE Capital businesses to Global Client revenue as if these transactions occurred on January 1, 2016. This was done to provide a consistent view of the underlying growth trends of our business, the actual results without these adjustments are included in our earnings release. 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 addition, during 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 these measures to GAAP in our earnings release in 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 2017 fourth quarter and year-end earnings call. We are very pleased with our full year 2017 results. We grew Global Client BPO revenues 14% on a constant currency basis and generated double-digit adjusted EPS growth. The strategic investments we are making in digital, domain and talent drove 25% growth in transformation services revenue from our Global Clients. We will remain sharply focused on a specific set of industry verticals and service lines and continue to use the increasing power of our Genpact Cora platform to unleash opportunities for our clients. Specifically during 2017 in constant currency, total revenues increased 7%, Global Client revenues increased 11%, and Global Client BPO revenues increased 14%. In addition, adjusted operating income margin grew 20 basis points to 15.7%, adjusted EPS was $1.62, up 11%; and bookings for the full year were $2.8 billion, up 6% on a constant currency basis from $2.65 billion in 2016. Global Client revenue growth was balanced across most of our chosen verticals, including insurance, CPG, banking, manufacturing, life sciences and high tech; this led to a strong 14% year-over-year constant currency growth in Global Client BPO revenue. During the latter part of the year, we also began to see new momentum in our capital markets vertical driven by risk services, robotic process automation and AI driven digital consulting engagements, all of which are very exciting. Growth in our service lines was led by transformational services that grew at 25% during the year, driven by demand for our digitally-led solutions and digitally-embedded intelligent operations. Core industry vertical operations and finance and accounting were also strong contributors to our Global Client BPO growth while Global Client ITO declined 2% on a constant-currency basis. GE revenues declined…

Thank you, Tiger; and good afternoon, everyone. Today, I'll review our fourth quarter and 2017 full year results followed by key balance sheet and cash flow highlights. I will also provide our financial outlook for 2018. Let me begin with a review of our fourth quarter results. We generated total revenues of $734 million, an increase of 8% year-over-year or 7% on a constant-currency basis. During the business, overall business process outsourcing revenues which represents 84% of our total revenues increased 11% year-over-year. Our total IT services revenue declined 6%. Revenues from global clients which represent 91% of our global revenue increased 11% year-over-year, both as reported and on a constant-currency basis. Within Global Clients, business process outsourcing revenues grew 15% year-over-year, both as reported and on a constant currency basis. Our Global Client IT services revenue declined 8% due in part to the recent divestiture of the European legacy IT business we discussed with you last quarter. GE revenues, which represent 9% of our total revenue, decreased 20% primarily due to the impact from the GE capital divestitures. Adjusted income from operations for the quarter totaled $115 million, with a corresponding margin of 15.7%, down 100 basis points from the fourth quarter of 2016. The year-over-year decline was largely due to lower gross margin levels due to a higher onshore mix, as well as productivity commitments related to additional ITO work we won earlier in the year that was part of GE's vendor consolidation initiative. SG&A expenses totaled $189 million compared to $171 million in the fourth quarter of last year. Our sales and marketing expense, as a percentage of revenue this quarter was 6.8%, largely in line with the 7.1% in the same quarter last year. Total G&A expense increased year-over-year from $122 million to $139 million, due…

Thank you, Ed. Overall, 2017 was a great year for us along many fronts and we feel very good about our business. More and more CXO's are company boards are coming to the realization that digital is real and being used to drive revenue change customer experiences, lower costs and completely changed business models. Company leaders need to stay ahead of the curve and either become disruptors in their industries or risk getting disrupted. Our investments in digital, domain and talent have set us up as initiators or change to create thoughtful digital experiences that reimagined our clients business models. This has led to significant growth in our transformation services revenues and with the increasing power of our Genpact Cora platform to unleash opportunities for our clients, we believe we are well positioned for sustainable profitable growth. Before signing off, my team and I look forward to seeing many of you next month in New York City for our Investor Day. Through interactive experiences and presentations we will show you how organizations are blending advanced digital technologies with real world expertise. We will also discuss our growth strategy and financial performance and provide networking opportunities with members of our broader leadership team including a number of our newer members. With that, let me turn the call back over to Roger.

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

[Operator Instructions] And our first question is from the line of Ashwin [ph] with Citi. Your line is open.

My first question is, the growth of transformation services and digital in your portfolio -- can you comment on what the impact is on margins, longer term? In other words, as transformation inevitably grows, are you seeing that beneficial to margins, not or neutral and kind of give an explanation for it?

So I start by saying Ashwin that longer term it will be beneficial to margins and we see that -- we see a roadmap and a path to that very clearly, because clearly whether it is digital or it's analytics, or it's consulting and all of those put together is a lot of these digital transformation services that we have in our client engagements tend to be higher margin. We are in a ramp up phase in all of these, we are in a phase where as you ramp up in a typical consulting and digital type of engagement, you've got to invest upfront as you go through that ramp up but as we look at pricing and overall margins it will have a longer term positive impact on margins.

So the 10 basis points improvement in margins as opposed to kind of what you might have historically done is slightly better than that. That has more to do with the event [ph], is there anything one-time going on there? And then a separate question, I might have mixed it; if you can comment on sort of long-term impact of tax reforms and what tax it should be modeling?

I think we've always said since we were talking about transformation services that we do expect that to be a tail-wind on gross profit and which would naturally flow down to operating margins as well but there is a lot of puts and takes in all of that, both in gross margins and in the other; that's we haven't guided to gross profit margins well ahead off or more ahead than just a year because a lot of things can happen. So a lot will impact gross profits but transformation service as a good news is that nice margins, we expect of that growth, it should help us. But in any particular year, you may have other things that happen like the rupee, like we talked about can impact for some near-term period or certain onshore mix can impact that as well but the long review is, that's a very good thing for us and we call it a tail-wind and we expect it to be a tail-wind. And I'd say at the operating margin level, we've said we're going to be deliberate. So to the extent that even gross profit margins do go up, even if it's a 100 basis points in the year, Tiger said, look, this is -- there is an engine that we need to continue to fuel for the top line growth and we're going to do that through investing in capabilities. So you've seen us do that consistently, even with big-ins and outs in a particular period or quarter we're going to look at that and say we need to redeploy our resources or increase our resources to ensure investing in capabilities. So that's why you've seen that very deliberate increase in operating margins from -- I think we are 15-1 or 2 [ph],…

Our next question comes from the line of Dave Koning with Baird. Your line is open.

I know the momentum is really good, it looks though like in Q3 I think you drew about 10% constant currency and then Q4, about 7% constant currency, tail-wind. I'm just wondering if anything happens sequentially, it doesn't sound like demand fell-off at all but if there is a little lumpiness somewhere in the revenue stream?

It goes back to something that we've talked about pretty consistently over many, many years in our business. Our business is not a quarter-by-quarter business, it has very long cycles attached to it from a sales cycle followed by a booking cycle, followed by a revenue ramp cycle; and when you put all three cycles together, it is actually a much more longer cycle business. Looking at it, potentially year-over-year is a good way to think about it and look at it, so there is nothing between Q3 and Q4 that we would call out, our momentum has been good through the year and as I mentioned in my prepared remarks, we've got a great significant pipeline increase as we enter 2018.

Secondly, it looks like the momentum is really good with revenue growth, the way you're guiding us for acceleration in '18 and part of that I know is just GE getting smaller but is that something that where the pipeline is today that not only this momentum go into '18 but you have a pretty good line of sight, even into '19 based on the recurring nature?

No, I don't think we really could model this out beyond '18, we do obviously a significant detailed modeling into the year as we begin the year. Our visibility for the year is actually pretty consistent as we look at '18 versus the prior year, so we feel good about '18, same visibility as the prior years. I can't really comment right now on '19 but again, I go back to earlier statement, long cycle nature of the business; so all of that is good.

On Q4 too I think, Global Client BPO growth was in the same range, I think 15%. So I think it was more lumpiness in IT, little bit of GE, right; so the good news is as we look at '18 for GE we talked about -- we think a lot of that -- what we saw throughout '17, that will be the impact on '18 but we've kind of had a pretty good run rate at this point with GE with them completing a lot of the divestitures that we've talked about. So that's good, Q4 just sum in a lumpiness in IT as well as with GE but Global Client BPO on the same trajectory as you might expect.

Our next question comes from the line of Joseph Foresi with Cantor Fitzgerald. Your line is open.

This is Mike [ph] on for Joe, appreciate you taking the question. I was just wondering if you could talk a little bit about -- if there is any further color detail on how the integration of TandemSeven is going and a little detail there?

TandemSeven integration couldn't be going better, it's probably the best way to describe it. And I think it's a confluence of three factors; I mean let's be clear, the world is moving towards using design thinking, using customer journeys to reimagine in this new world of digital and AI and analytics how to really change the way some of these customer journeys happen and that's in the banking industry, to the insurance industry, to the consumer product industry, for the lifesciences industry; in every one of the industry that we are focused on, that's a big change that's happening with our clients. TandemSeven is perfectly positioned with amazing examples to be able to take that to market and to combine with our teams and bring that capability and take it to our clients and the speed at which we manage to do that -- I mean, I would say has been pretty amazing. And the third, is the UX360 platform that they have built, that allows those customer journeys to be put on the cloud to then be managed by large enterprises, that many of these journeys has allowed us to take that platform and integrate it with Genpact Cora. So now we have Genpact Cora UX360 which further reinforces the one platform, the modular aspect of that platform, the ability to bring that together. So altogether a great integration, the teams are working really well together, the leadership team of that group has very well integrated with our teams and actually the business is performing better than our expectations.

Is there anything that you would call out that could impact the regular seasonality in the top line at the margin front this year?

So as you look at 2018 in comparison to '17, I'd say '17 -- the word is maybe lumpy the way the growth happened, little bit low in the first quarter and then there wasn't any kind of path throughout the year. For '18 it seemed a little bit more evenly spread throughout the quarters, a little bit lower in the first half, a little bit higher in the second half is what I'd say, so a little below the overall total, first half a little above the second half. And I'd say margin is something similar as well, I think margins last year was pretty lumpy because of some of the timings, certain costs and subsidies that we had in the second quarter is a bit higher than we would have expected but for '18 we think that should be more evenly spread, a little bit lower than the full year forecast than the beginning first half, a little bit higher in the second half roughly.

Our next question comes from the line of Hans Huang [ph] with JP Morgan. Your line is open.

I guess on timeliness of backlog conversion, I know Tiger you mentioned -- you're bringing about some bigger accounts in the backlog or in the bookings, how do you feel about the timing of conversion, the visibility of conversion because we've heard some cases here this earning season of delays?

I would say cycle times on deals are pretty consistent, we had this period in the late second half of 2016 and early part of '17 when broad cycle times on deals and decision making are a little delayed. I would attribute that to Class 8 [ph] once in four years election cycle and so on. All of that came back into later part of '17 and it's now consistent, and it's a tale of two cities. On one hand large complex digital transformation combined with managed services deals that are typically large deals, by definition because of the complexity do take longer than normal and have been taking longer than normal but that is to be expected. But it is a tale of two cities because the other half -- not half, the other portion of the business which is transformation services tends to be shorter cycle, decisions are faster, you start in one place, you land and then you expand, and the combination -- overall cycle time I would say at the aggregate is pretty steady and good and that's how we see 2018 playing out, borrowing any macro event.

I know you talked a lot about digital transformation and I'm curious with that and intelligent automation -- are clients starting to go with the same vendor or are they still doing sort of best of breed? Are you seeing some signs of sort of bundling of those two areas?

I clearly see best of breed as the part that's being taken when it comes to specific domain areas. So best of breed in finance versus best of breed in HR versus best of breed in mortgage operations, our best of breed in supply chain; I think that's still the way the world is growing. Best of breed in industry and specific industry verticals that we are focused on versus not being focused on, if your question is in the world of digital ERPs and core technology getting combined with all the managed services; on top of it we don't see that happening any differently than it has been over the last five or six years. What we do see happening is that in managed services, we have to have digital technologies and digital solutions as part of the intelligent operations that you're going to run which means you've got to find a way to bring alive AI and machine learning and robotic automation and workflow on the cloud from just being technology and algorithms to actually bringing it alive in the specific solution from the specific problem in the specific vertical and our view is that it's in that translation of digital technologies to specificity is where the battle has won or lost which is why domain expertise becomes that important.

Our next question comes from the line of Maggie Nolan with William Blair. Your line is open.

I was hoping you could talk about the talent supply and competitive dynamics for account acquisition, especially as your transformation services are growing so well and you're going to need additional talent in those areas? Any color there would be great.

I think the first statement would not surprise you. I mean, this is a space where talent is critical and where the war for talent is real. And therefore the two ways we've always thought about it is how do you attract the right talent into the company at two levels, at the leadership -- team leadership and domain expertise level and at initial -- joining the company at the entry levels; and then creating a program where you can grow the talent through large university tried training programs, we've always been really outstanding at doing that given our GE and post-GE heritage. We've now brought that learning, I'm having done that with Lean and Six Sigma and domain expertise and process expertise into the world of digital. So which is why we have a number of certification program etcetera around building talent inside the company and we continue to attract talent from the outside. When you have repositioned brand that resonates in the marketplace, when you have is around experimentation. Now some of that experimentation, either in an industry or in a specific client or in the ecosystem itself has demonstrably worked and then people start scaling that but in many other cases those experiments are still going on. I think we had probably in the second innings of this journey and I'm not talking about Genpact, I'm talking about the world of leveraging digital is in the second at best or maybe the third innings of a nine innings journey; so there is a lot more to be done. And interestingly enough it's actually got a lot to do with the culture of the firm and their ability to drive change and their willingness to embrace change and sometimes their willingness to disrupt themselves which is where we are finding big differences between client 1 and client 2.

And our last question comes from the line of Moushe Katri [ph] with Wedbush Securities. Your line is open.

We know what the backlog or the booking number looked like for the quarter, is there anything to call out in terms of the mix of the new business that has -- I don't know whether it's analytics embedded in it versus where we were a year ago; some of it is maybe outcome based in terms of how it's structured. Is there anything that's kind of relevant that you can talk about here?

I think you actually called out a couple that directionally is where I think the world is going and we going.

And I'd say you also asked about visibility so really no change there even with this move, it still feels pretty good, 70% or 75% visibility coming into the year which is pretty consistent with what we've seen, so that's good news.

And ladies and gentlemen, this concludes our Q&A for today. I would like to turn the call back to Roger Sachs for his final remarks.

Thank you Carmen and thanks everyone for joining us on the call today. We hope to see you in New York City next month and look forward to speaking with you again next quarter.

And with that, ladies and gentlemen, we thank you for participating in today's conference. This concludes the program and you may all disconnect. Have a wonderful evening.