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Syntel's CEO Discusses Q4 2011 Results - Earnings Call Transcript

As disclosed in our 8-K filed this past Monday, we have entered an amended and restated shareholder's agreement with one of our large clients. The amended and restated shareholder's agreement modifies the right of the client to purchase Syntel's interest in our joint venture with that client. As we modified, the client has the right to purchase Syntel's interest in the joint venture during the 90-day period immediately preceding the expiration of initial term, which is February 2017 of an amended and restated Master Service Agreement, or if the MSA is extended beyond this initial term during the 90-day period immediately preceding the renewal term, which is February 2018.

Fourth quarter gross margin expanded approximately 240 basis points as compared to the third quarter levels, coming in at 42.1%. The depreciation in Indian rupee aided reported gross margins, as well as operating margins, as Arvind will elaborate later.

We continue to grow our organization based on our hiring plans, maintaining a focus on top campus hiring and we grew net headcount by 1,191 in the fourth quarter, a rise of 7% sequentially. This advanced hiring is an integral part of the investment necessary to support the long-term vision we have articulated for our company. However, as a result of this, offshore utilization for IT fell to 64% in Q4 from 70% in Q3 on a period-end basis, and to 67% from 68% on average. We expect these levels to improve as 2012 progresses.

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