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ExlService receives notice of termination from Travelers

ExlService (EXLS) disclosed in a regulatory filing that on November 1, ExlService Holdings received a notice of termination from The Travelers (TRV) pursuant to Section 19.2 of the Professional Services Agreement, dated as of March 7, 2006, between the company and Travelers. Travelers represented 9.6% of the company’s total revenues for the three months ended September 30, 2013. The company expects that this termination will not have a material impact on calendar year 2013 revenues and estimates a reduction in 2014 revenues of $14M to $28M, although transition plans have not been discussed by the parties. Under the Agreement, the company must provide, for up 18 months from the termination date, certain disentanglement services at the company’s expense. The company is confident of its ability to redeploy the employee resources and physical infrastructure based on its expected growth and expansion. As such, the company does not expect any employee layoffs due to the termination. Travelers’ stated basis for the termination was that the company had failed to comply with certain provisions of the Agreement regarding the handling of Travelers’ information. The termination arose from an incident where company employees, who have since been terminated, shared a procedural document externally in violation of the company’s strict client confidentiality policies. The company and Travelers sought an amendment to the existing agreement but were unable to reach terms mutually acceptable to the parties.