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EXL loses key client over breach of confidential data [Software & Services] [Times of India]
[November 07, 2013]

EXL loses key client over breach of confidential data [Software & Services] [Times of India]


(Times of India Via Acquire Media NewsEdge) NEW DELHI: Nasdaq-listed outsourcing firm EXL Services has lost a key client due to breach of confidential client data by a few of its employees, a development that will impact its revenues and raise larger questions on data security. EXL, which competes with the likes of Genpact, WNS and Firstsource and gets more half of its revenues from the healthcare and insurance space, told investors that it received a termination notice from The Travelers Indemnity Company on November 1, 2013, scrapping a deal that was signed in 2006.



American insurer Travelers accounted for 9.6% of the company's total revenue for the quarter ended September 2013 and the termination is likely impact 2014 revenues by $14 million ( Rs 86 crore) to $28 million ( Rs 172 crore).

EXL further said that Travelers was ending the contract because it failed to comply with the provisions of the agreement in handling client 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," the filing said.

Under its agreement with Travelers, EXL also needs to provide transition-related services for 18 months from the termination date, at its own cost.

An EXL spokesperson ET NOW spoke to declined to give further details and said the management wasn't immediately available for comment. Analysts tracking the IT and BPO space said this wasn't the first instance of a contract getting scrapped because of a breach of client confidentiality but that it's unlikely to be viewed as a wider industry concern.

"Indian IT and BPO firms have been handling data pertaining to credit cards, financial information for years now and they have strong processes," an analyst tracking IT in a multinational brokerage house said on condition of anonymity.

EXL's loss also comes at a time when the BPO firm is looking to strengthen its presence in the healthcare vertical by acquiring more companies in the US.EXL CEO Rohit Kapoor recently told ET in an interview that his firm is targeting the healthcare industry as insurance companies are looking to outsource more to cut costs and comply with the new law -- Obamacare. Kapoor further said healthcare along with data analytics are the fastest-growing areas for the company.

(c) 2013 Bennett, Coleman & Company Limited

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