What changed in this filing

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Item 1. Business

2022-02-23 compared with 2021-02-24 · 173 added, 155 removed, 229 unchanged (59% of the section changed)

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As one of the largest business process services companies in the world, we deliver mission-critical services and solutions on behalf of businesses and governments – creating exceptional outcomes for our clients and the millions of people who count on them.

Through people, process, expertise in transaction-intensive processing and technology such as analytics and automation, our services and solutions create value by improving efficiencies, reducing costs and enabling revenue growth.

A majority of Fortune 100 companies and over 500 government entities depend on us every day to manage their business processes and essential interactions with their end-users.

Through people, process, expertise in transaction-intensive processing and technology such as analytics and automation, our services and solutions create value by improving customer experience, increasing efficiencies, reducing costs and enabling revenue growth.

Eighty percent of Fortune 100 companies and over 500 government entities depend on us every day as their trusted partner to manage their business processes and essential interactions with their end-users.

With roots as one of the original pioneers in global business process outsourcing, we bring deep and diversified expertise across a broad range of industry segments.

Our commercial portfolio includes leading solutions in attractive markets such as end-user customer experience management, transaction processing services, healthcare and human resource and learning services.

Our commercial portfolio includes leading solutions in attractive markets such as customer experience management, transaction processing services, healthcare and human resource and learning services.

For example, we are a leading provider of medical bill review.

In 2020, we administered bill review for 50% of the workers compensation medical claims in the U.S resulting in $16 billion of savings on behalf of our clients.

We serve a vast range of the public sector including market leading transportation and government solutions including payments and eligibility.

For example, our systems process over 55% of Supplemental Nutrition Assistance Program (SNAP) payments on behalf of government entities.

We create value for our clients through efficient global service delivery combined with a personalized and seamless experience for the end-user.

In 2021, we administered bill review for and repricing on approximately 28 million medical bills for over 3 million workers compensation claims in the U.S resulting in $18 billion of total bill reductions on behalf of our clients.

In addition, across our commercial and government businesses, we handled approximately 1.3 billion customer service interactions in 2021.

We serve a vast range of the public sector including market leading transportation and government solutions.

Our transportation portfolio includes Roadway Charging, Transit, Curbside Management and Public Safety solutions where we process nearly nine million tolling transactions every day.

Our government portfolio includes payments, healthcare and eligibility solutions where our systems process over 45% of Supplemental Nutrition Assistance Program (SNAP) payments on behalf of government entities.

We create value for our clients through efficient global service delivery combined with technology-enabled solutions and a personalized and seamless experience for the end-user.

We apply our expertise, technology and innovation to continually modernize our offerings for improved customer and constituent satisfaction and loyalty, increased process efficiency and rapid response to changing market dynamics.

With approximately 63,000 associates globally as of December 31, 2020, we provide differentiated services to medium and large businesses and governments around the world.

With approximately 60,000 dedicated associates globally as of December 31, 2021, we focus on our clients' success across medium and large businesses and governments around the world.

Of our global team, 42% is in North America with the remainder located primarily in our delivery centers in Asia Pacific, Latin America and the Caribbean, and Europe.

We have received numerous recognitions over the past year for our culture and diversity/inclusion practices.

Conduent is a New York corporation, organized in 2016.

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In December 2019, Conduent changed the listing of its publicly traded common stock from the New York Stock Exchange to the NASDAQ Global Select Market (NASDAQ), where it remains listed under the ticker "CNDT".

CNDT 2021 Annual Report

Our Strategic Focus

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Growth, Efficiency and Quality.

Our strategy is designed to deliver value by creating profitable growth, expanding operating margins, focusing on process efficiencies, and deploying a disciplined capital allocation strategy.

Our strategy is designed to deliver shareholder value by creating profitable growth, expanding operating margins, focusing on process efficiencies, and deploying a disciplined capital allocation strategy.

We have identified specific execution strategies across Growth, Efficiency and Quality.

Our opportunity for growth comes from understanding our clients’ businesses, strengthening our relationships, and driving valuable outcomes for our clients that enable them to reduce costs, improve efficiencies and grow their businesses.

To capitalize on the growth opportunities, we are focused on the following strategies:

• Sales Performance Optimization :

In 2019, we centralized sales activities under a Chief Revenue Officer and have been making steady investments in sales training and process improvements.

We continue to

CNDT 2020 Annual Report

improve client responsiveness and increase sales coverage, including in international markets.

The significant progress and investments in sales training and process improvements during the last couple of years, together with the foundational improvements in operational performance, have resulted in more selling opportunities for us to support the strategies of our existing clients with our portfolio of market-leading services and solutions.

In 2021 our add-on sales grew by 44% compared to 2020.

We continue to improve client responsiveness and increase sales coverage, including in international markets.

We are providing our sales team with regular training tailored for their roles, streamlined processes, and implemented systems to equip them with modern tools that enable them to perform their jobs more efficiently and effectively.

In 2020, we began efforts to enhance our delivery by bringing standardization in core services, creating efficiencies through automation and optimizing our cost structure by shifting to a shared services model.

The dedication and expertise of our employees have resulted in Conduent serving a majority of Fortune 100 companies, including:

• 17 of top 20 health plans,

• 6 of top 10 pharma companies,

• 6 of top 10 automakers, and

• 9 of top 10 U.S.

• Cross-Sell and Bundling Opportunities :

Our sales organization is seeking to exploit cross-selling opportunities across our roster of clients, leveraging our portfolio of market-leading services and solutions, including customer care, finance and accounting services and human resources and learning services.

Specific sales enablement training, marketing campaigns and sales incentive structures are being created to enable this initiative.

The dedication and expertise of our employees have resulted in Conduent serving 47 states and a majority of Fortune 100 companies, including:

• 17 of the top 20 U.S.

health insurers;

• 7 of the top 10 pharma companies;

• 4 of the top 5 automakers;

• 8 of the top 10 U.S.

• Offering Development :

We have augmented our portfolio of services and solutions with innovative technology capabilities, including data analytics, robotic process automation (RPA) tools and machine learning capabilities, to create differentiated, high-value services for our clients and penetrate attractive market segments.

As we improved our quality and efficiency, our clients have renewed contracts with us and given us more work in adjacent service lines, and we’ve gained new clients who have put their trust in us.

We have also had a significant improvement in our client Net Promotor scores for the second year in a row.

Driving our clients’ success has fueled our success.

As we continued to improve our quality and efficiency in 2021, our clients have renewed contracts with us and given us more business in adjacent service lines, and we’ve gained new clients.

We are measuring more immediate success in “Growth” through revenue retention and new business signings, among other metrics.

These changes have already started bearing fruit with new business signings increasing by 94% in 2020 compared to 2019.

We continue to find ways to reduce costs and deliver more effectively via increased efficiencies.

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• Automation :

We will continue to invest in embedding automation capabilities into operations, including document processing and intelligent virtual assistant customer care tools.

We will continue to invest in embedding intelligent process automation capabilities into operations, including document processing and intelligent virtual assistant customer care tools.

Artificial intelligence and machine learning algorithms will complement RPA tools by improving processes through pattern recognition.

Additionally, we are exploiting synergies from sharing and coordinating automation capabilities across our various lines of business.

Additionally, we are exploiting synergies from sharing and coordinating automation capabilities across our enterprise.

• Technology Consolidation :

We are identifying and rationalizing duplicative technology systems across our lines of business.

Centralizing technology systems will drive economies of scale, amplify the impact of investments, and will create consistent, resilient service delivery.

We have identified and are rationalizing duplicative technology systems across our lines of business.

Centralizing technology systems will drive economies of scale, amplify the impact of investments, and will continue to strengthen consistent, resilient service delivery.

CNDT 2021 Annual Report

• Delivery Optimization :

We are exploring several delivery optimization opportunities such as identifying common activities across our businesses and delivering them via shared service models, exploiting new staffing models including work for home and flexible “gig worker” models, and optimizing our geographic footprint.

We responded with agility to clients’ shifting needs and received positive client feedback for our services and proactivity throughout the COVID-19 pandemic.

We are continuing to drive efficiencies by delivering common processes with a shared services model that enables economies of scale.

We are driving progress in every process through process improvement methodologies and exploiting new staffing models including work from home and flexible “gig worker” models, and optimizing our geographic footprint.

We continue to respond with agility to clients’ shifting needs and have received positive client feedback for our services and proactivity throughout the COVID-19 pandemic.

We are measuring success in “Efficiency” by associate retention and improved adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) margin, among other metrics.

CNDT 2020 Annual Report

Our clients count on consistent, high-quality service delivery.

We have made significant progress in reducing incidents, improving operational stability, and significantly boosting client confidence and satisfaction by focusing on the following strategies:

We continue to drive progress in increasing uptime, improving operational stability, and significantly boosting client confidence and satisfaction by focusing on the following strategies:

• Proactive, Real time Monitoring of Applications and Service Performance :

We are investing in artificial intelligence and machine learning technologies to proactively monitor and prevent incidents.

In 2020, we opened a state-of-the-art global IT command center in Sandy, UT to deliver more seamless and reliable service to our global clients.

We have a state-of-the-art global IT command center in Sandy, UT to deliver more seamless and reliable service to our global clients and continued to increase uptime in 2021.

• Data Center Optimization :

We are standardizing our technology footprint to improve performance and lower costs.

As part of this, we have launched a data center optimization program to consolidate our multiple data centers into a select few.

We continue to standardize our technology footprint to improve performance and lower costs.

As part of this, we have made significant progress in our data center optimization program to consolidate our multiple data centers into a select few.

For example, in 2021 we closed two of our largest facilities in the US, completing these highly complex closures that in turn drove a significant increase in service availability for our clients.

• Improve End User Experience :

We are improving user interface/user experience across our offerings by introducing self-service tools, launching mobile apps and leveraging analytics to create deeper insights.

We are improving user interface/user experience across our offerings by expanding self-service tools, launching mobile apps and leveraging analytics to create deeper insights.

Our focus on quality is leading to improved client confidence and satisfaction.

The quality of our services is being recognized by clients including receiving the GM Supplier of the Year Award and the Toyota Financial Services Supplier Excellence Award.

We are measuring success in “Quality” by indicators such as service level agreement performance, technology incident rates, and client satisfaction.

Investments Strategy :

To achieve our business goals, we will invest in a disciplined manner, focused on allocating capital and investing to meet the needs of our clients and support our pivot to growth.

To achieve our business goals, we will invest in a disciplined manner, focused on allocating capital and investing to meet the needs of our clients and supporting our growth strategies.

Our balanced investment approach falls into three broad categories:

• Opportunities to optimize, where we have significant scale and where we believe that with process improvements, automation, and an investment into the current offerings, we can improve the end-user experience, reduce our cost of delivery, expand our margins, and further capture additional “share”.

Examples such as high-volume outbound print and mail services and contact center services fit in this category.

An example is high-volume outbound contact center services.

• Opportunities to enhance, where we have strong client relationships and a long history of servicing the markets we operate in, legacy technology that needs to be refreshed or modernized.

Examples such as benefit management services in the government sector for healthcare, unemployment insurance and child support fit into this category.

• Opportunities to expand, where we believe we have the permission to play and win, and we see the payback as more significant than the other businesses.

These businesses, augmented with new capabilities, perhaps supplemented by modest acquisitions, will address market dynamics, and provide additional growth opportunities.

• Opportunities to expand, where we believe we can play and win, and we see the payback as more significant than the other businesses.

These businesses, augmented with new capabilities, and with the opportunity to be supplemented by modest acquisitions, will address market dynamics, and provide additional growth opportunities.

Our Healthcare and Transportation businesses are expansion opportunities.

Our Market Opportunity

We are exposed to compelling growth across several end markets, including Healthcare, Transportation and Customer Experience Management.

We estimate our addressable market size in the global business process service industry to be over $200 billion in 2021, according to third-party industry reports.

We consider ourselves to be a leader across several segments of this large, diverse and growing market by providing business process services spanning many industries.

Ongoing competitive pressures and increasing demand for further productivity gains have motivated businesses and government organizations to outsource elements of their day-to-day operations to accelerate performance and innovation.

Many industry analysts and advisors place us as a leader across several segments in this large, diverse and growing market.

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As a result, our clients have become more focused on their core businesses and the range of outsourced activities has expanded.

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Business process services that streamline operational processes have the potential to meaningfully enhance productivity for businesses and governments and improve satisfaction for their customers and constituents.

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We have developed a strong leadership position in the markets that we operate in, with increased recognition across multiple stakeholders, as demonstrated by recognition from industry resources.

• Industry Analyst Accolades:

• A leader in Healthcare:

• A leader in HR and Learning Services:

ISG, Everest Group, Brandon Hall Group;

• A leader in Customer Experience Services:

ISG, Gartner.

• Market Position:

• Everest Group Top 50 BPS Providers, #7

• Gartner Market Share Analysis:

BPO, Worldwide, #10

• ISG’s Top 15 Sourcing Index Standouts – Managed Services, Global Market - The Building 15

We organize, manage and report our business through three reportable segments:

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Across the Commercial Industries segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and better experiences for their consumers and employees.

Our Commercial Industries segment is our largest segment, with segment revenue for 2020 of $2.2 billion, representing 52% of our total revenues.

Our Commercial Industries segment is our largest segment, with segment revenue for 2021 of $2,076 million, representing 50% of our total revenues.

Government Services:

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Our solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations.

Government Services segment revenue for 2020 was $1.3 billion, representing 31% of our total revenues.

Government Services segment revenue for 2021 was $1,318 million, representing 32% of our total revenues.

Transportation:

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We present segment financial information in Note 3 – Segment Reporting to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, which is incorporated herein by reference.

CNDT 2021 Annual Report

Our Service Offerings

Commercial Industries

Our solutions and services include Customer Experience Management (CXM), Business Operations Solutions (BOS), Commercial Healthcare Solutions and Human Resources & Learning Services (HRLS).

Our solutions and services include Customer Experience Management (CXM), Business Operations Solutions (BOS), Commercial Healthcare Solutions and Human Resources and Learning Services (HRLS).

• Customer Experience Management

◦ We deliver a full range of customer contact services, including customer care, technical support, loyalty management, and outbound and inbound sales.

Through multi-channel communications, automation, and analytics, and labor efficiencies, we help our clients to reduce costs, enable scale and drive revenue growth and efficiencies.

We serve marquee clients across multiple sectors including financial services, health & life sciences, manufacturing & automotive, aerospace & defense, consumer goods, retail, technology & telecom, travel, transportation, and hospitality sectors.

In 2020, we handled 196 million contact center interactions.

• We deliver a full range of omni-channel customer contact services, including customer care, technical support, loyalty management, and outbound and inbound sales.

We create better experiences across the customer lifecycle through a variety of channels including social media, chat, email, voice and virtual agent to help customers where and how they want to engage.

Through omni-channel communications, automation, and analytics, and labor efficiencies, we help our clients to reduce costs, enable scale and drive revenue growth and efficiencies.

We serve marquee clients across multiple sectors including financial services, health and life sciences, manufacturing and automotive, aerospace and defense, consumer goods, retail, technology and telecom, travel, transportation, and hospitality sectors.

The CXM business generally generates income on a per call, per call center employee, or per percentage of sales made basis.

• Business Operations Solutions

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◦ In our BOS business, we help our clients to transform business processes by automating and streamlining mission-critical operations through our deep industry experience and the latest technology solutions, to drive efficiencies, improve security and enable revenue growth, while enhancing the end-user experience.

Our solutions span customer communications, document & data management, payments processing, and finance, accounting, and procurement.

We generate revenue in a variety of ways within this business.

Within the customer communication solution, our print and mail service fee is a blended rate per impression or itemized as a service and supplies rate.

We also charge to create and send electronic forms of communication, or for postage services, hosting web portals, and for data storage for future retrieval for compliance reasons.

Within the document & data management solution we generally generate revenue based on number of transactions completed.

A transaction can be the handling of an envelope, a document, a page, or a piece of paper or can be billed based on time spent working on behalf of our clients.

Within the Finance, Accounting, and Procurement (FAP) solution, we generate revenue by charging clients for Finance, Accounting & Procurement services rendered based on various methods including fixed price per employee, fixed price for all services rendered, variable price based on transactions processed, outcome based pricing based on achieving specific targeted performance and a hybrid of these pricing methods.

◦ In the BOS business, we also offer a range of Banking Operations solutions including lockbox management, check processing, and loan processing.

For these services, we generate revenue by collections charges per productive hour of employees time, licensing fees for our Loan Manager platform, charges by the number of loans received on the Blitzdocs platform (mortgage processing) and by charging a fee for each check processed, among others .

• In our BOS business, we help our clients to transform business processes and drive efficiency, automation and scale across essential business functions.

We streamline mission-critical operations through our deep industry experience, understanding of our clients’ operations and the latest technology solutions, to reduce costs, improve security and enable revenue growth, while enhancing the end-user experience.

Our solutions span customer communications, automated document and data management, payments processing, and finance, accounting, and procurement.

We generate revenue in a variety of ways within this business, including per item handled, time and materials, and per service such as postage, web portal hosting or data storage.

Our pricing can also be based on achieving specific outcomes for services rendered.

• Commercial Healthcare Solutions

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Our solutions span:

trials, sales, access, and adherence to pharmaceutical clients;

trials, sales, access, and adherence for pharmaceutical clients;

case management, performance management and patient safety for hospital clients;

medical bill review, claims processing, care integration, subrogation and payment integrity solutions to managed care companies;

and workers compensation medical bill review, mailroom/data capture and medical management services to claims payers and third-party administrators.

medical bill review, claims processing, care integration, subrogation and payment integrity solutions for managed care companies;

and workers compensation medical bill review, mailroom/data capture and medical management services for claims payers and third-party administrators.

Through our solutions provided to pharmaceutical clients, we generate revenue either based on a per employee, per transaction basis or a per resource per hour basis.

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• We provide services to help our clients support their employees at all stages of employment from on-boarding through retirement.

Our solutions span Health Savings Account Solutions, Benefits Solutions, HR & Payroll Solutions, and Learning Solutions.

Our solutions span Health Savings Account Solutions, Benefits Solutions, Human Resources (HR) and Payroll Solutions, and Learning Solutions.

On behalf of global organizations and governments, we deliver mission-critical, technology-enabled HR services and solutions that improve business processes across the employee journey to maximize business performance, while increasing employee satisfaction, engagement and overall well-being.

These solutions span health, benefits, payroll, onboarding and learning administration, annual enrollment, wealth & retirement, HR, talent, and workforce management.

These solutions span health, benefits, payroll, onboarding and learning administration, annual enrollment, wealth and retirement, HR, talent, and workforce management.

Depending on the solution, we generate revenue in a variety of ways.

For our Health Savings Account (HSA) Solutions business, we generate revenue via account fees, interchange fees on debit cards, and interest-related revenues as a result of balance fees from depository banks who hold cash deposited into the Savings Account business.

◦ As of December 31, 2020, we managed approximately 1 million active HSAs with $2.7 billion of assets under management.

In addition to managing HSAs, we manage Flexible Savings Accounts and other Notional Accounts on behalf of corporations providing incremental benefits to their employees.

Within our Benefits Solutions, we principally generate revenue based on the number of employees and retirees we support, as well as, by transaction-based pricing for transactions such as qualified domestic relations orders, Consolidated Omnibus Budget Reconciliation Act (COBRA) and Affordable Care Act

For our Health Savings Account (HSA) Solutions business, we generate revenue via account fees, interchange fees on debit cards, and interest-related revenues as a result of balance fees from depository banks that hold cash deposited into the Savings Account business.

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(ACA) administration.

Within our HR & Payroll Solutions, we generate revenue principally per client’s employee per period (month / year) pricing, with banding to address periodic variations in client employee headcount.

• As of December 31, 2021, we managed approximately 900,000 active HSAs with $2.7 billion of assets under management.

In addition to managing HSAs, we manage Flexible Savings Accounts and other Notional Accounts on behalf of corporations providing incremental benefits to their employees.

Within our Benefits Solutions, we principally generate revenue based on the number of employees and retirees we support, as well as transactions generated by client life events such as qualified domestic relations orders, Consolidated Omnibus Budget Reconciliation Act (COBRA) and Affordable Care Act (ACA) administration, which are charged on a per transaction basis.

Within our HR and Payroll Solutions, we generate revenue principally per client’s employee per period (month / year) pricing, with banding to address periodic variations in client employee headcount.

Within our Learning Solutions, we generate revenue principally by transaction-based pricing per unit of production along with fixed monthly governance fees.

Government Services

Our Government solutions and services include Government Healthcare Solutions and Government Service Solutions.

Our Government solutions and services include Government Healthcare Solutions and Government Service Solutions to streamline delivery of government services to constituents and families in need.

• Government Healthcare Solutions

◦ We provide medical management and fiscal agent care management services, eligibility and enrollment services and support to Medicaid programs and federally funded U.S.

government healthcare programs in 29 states and the District of Columbia.

Seven of these states receive eligibility and enrollment services only.

Our services include a range of innovative solutions such as Medicaid management, provider services, Medicaid business intelligence, pharmacy benefits management, eligibility and enrollment support, contact center services, application processing, premium billing, disease surveillance and outbreak management, and case management solutions.

• We provide mission-critical program administration solutions for State Medicaid and federally-funded healthcare programs in 31 states, the District of Columbia and Puerto Rico and a federal program (US Dept of Labor), which includes nearly 49 million Medicaid recipients supported.

Our case management solutions provide disease surveillance and outbreak management to make it easy to process and access large volumes of digital data.

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These services help states, counties, and countries optimize their costs by streamlining access to care and improving patient health outcomes through population health management, while helping families in need, by improving beneficiary support.

Within the Government Healthcare Solutions business, our revenue is primarily fixed fee or variable price based on a per call or per interaction basis.

Within the Government Healthcare Solutions business, our revenue is primarily fixed fee or variable price based on a per call, per interaction or per member basis.

• Government Service Solutions

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Within our UI payment solution, we generate revenue based on interchange fees and spending on cards as a percentage of transactions.

Given the increased unemployment rates in the U.S.

in 2020 as well as the federal stimulus supplemental benefits, this solution saw significantly increased activity in 2020.

Given the increased unemployment rates in the United States earlier in the pandemic as well as the federal stimulus supplemental benefits, this solution saw significantly increased activity in 2020 and 2021.

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• We also offer a broad set of child support services predominately to State Disbursement Units (SDUs), including processing and distributing payment, child support payment cards, childcare credentialing and case management, among others, to help states comply with federal standards.

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• Our electronic tolling, urban congestion management and mileage-based user solutions help clients keep up with an ever-changing environment and get more travelers where they need to go while generating revenue for much-needed infrastructure improvements.

Our solutions include vehicle passenger detection systems, electronic toll collection, automated license plate recognition and

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congestion management solutions.

Our solutions include vehicle passenger detection systems, electronic toll collection, automated license plate recognition and congestion management solutions.

We generate revenue based on a combination of fixed fee and transaction-based pricing.

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Our curbside solutions include citation and permit administration, parking enforcement, and curbside demand management.

In 2020, we processed over 6.3 million payments and collected over $525 million annually for citations and delinquent revenue collections.

In 2021, we processed over 8.2 million payments and collected over $700 million for citations and delinquent revenue collections.

We generate revenue based on violations issued, payment processing transactions, collections activities or a fixed fee for our service.

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• Although a small part of our transportation business, we provide computer-aided dispatch/automatic vehicle location technology to help customers manage their fleet operations.

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Our Competitive Strengths

We possess certain competitive strengths that distinguish us from our competitors, including:

Leadership in attractive growth markets – We are a large player in business process services delivering exceptional outcomes for our clients at an unparalleled scale.

Leadership in attractive growth markets – We are a leading player in business process services delivering exceptional outcomes for our clients at an unparalleled scale.

Our clients continue to outsource key business processes to improve efficiencies and to accelerate performance and digital transformation.

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• Healthcare – U.S.

healthcare spending is expected to rise from 17.7% of GDP in 2019 to 19.7% of GDP by 2028 and is projected to grow at an average rate of 5.4% per year for 2019-2028.

As one of the most regulated industries, healthcare providers must balance increased utilization with heightened complexity and new financial pressures such as government budget challenges to significantly reduce reimbursements, reimbursement penalties for hospital readmissions and shift from fee-for-service to “value-based” population health management.

healthcare spending is expected to rise from 17.7% of GDP in 2019 to 19.7% of GDP by 2028 and is projected to grow at an average rate of 5.4% per year between 2019-2028.

As one of the most regulated industries, healthcare providers must balance increased utilization with heightened complexity and new financial pressures such as government budget challenges to significantly reduce reimbursements, reimbursement penalties for hospital readmissions and the shift from fee-for-service to “value-based” population health management.

We are widely recognized by industry analysts as a leader in healthcare payer operations, serving 17 of the top 20 U.S.

managed healthcare plans and providing administrative and care management solutions to Medicaid programs and federally funded U.S.

government healthcare programs in 29 states and the District of Columbia.

health plans and providing administrative and care management solutions to Medicaid programs and federally funded U.S.

government healthcare programs in 31 states, the District of Columbia and Puerto Rico.

Three out of every four U.S.

insured patients are touched by Conduent.

Conduent’s healthcare capabilities have been recognized by NelsonHall, HfS Research, KLAS and Everest Group.

insured lives are served by Conduent.

Conduent’s healthcare capabilities have been recognized by NelsonHall, HfS Research and Everest Group.

• Transportation – Traffic congestion continues to increase as urbanization and changing demographics take hold globally.

As a result, optimized transportation systems are becoming critical to increase efficiency while

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maintaining strict safety requirements.

As a result, optimized transportation systems are becoming critical to increase efficiency while maintaining strict safety requirements.

Electronic toll collection, public transit and parking all represent key growth drivers as governments at all levels increasingly focus on transportation infrastructure.

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Global delivery expertise – Our scale and global delivery network enables us to deliver our proprietary technology, differentiated service offerings and service capabilities expertly to clients around the world.

We have operations in 22 countries including India, Philippines, Jamaica, Guatemala, Mexico, Romania, Dominican Republic and several locations within the United States, giving our customers the option for "onshore", "nearshore" or "offshore" outsourced business process services.

We have operations in 24 countries including India, the Philippines, Jamaica, Guatemala, Mexico, Romania, the United Kingdom and several locations within the United States, providing our customers the option for "onshore", "nearshore" or "offshore" outsourced business process services.

This global delivery model enables us to leverage lower-cost production locations, consistent methodologies and processes, time zone advantages and business continuity plans.

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Differentiated suite of multi-industry service offerings at scale – We manage transaction-intensive processes and work directly with end-users to meet their needs often in real-time.

We are unique in our ability to offer our clients these business process services on a large scale and with high quality.

Additionally, we are able to leverage our cross-industry services to bring the same scale and quality to our portfolio of industry-specific service offerings, such as healthcare claims management, employee benefits management and public transit fare collection.

Recurring revenue model supported by a loyal, diverse client base – We have a broad and diverse base of clients in countries across geographies and industries, including a majority of the Fortune 100, many Fortune 1,000 companies and midsize businesses and many governmental entities.

We believe we are unique in our ability to offer our clients these business process services on a large scale and with high quality.

Additionally, we can leverage our cross-industry services to bring the same scale and quality to our portfolio of industry-specific service offerings, such as healthcare claims management, employee benefits management and public transit fare collection.

Recurring revenue model supported by a loyal, diverse client base – We have a broad and diverse base of clients in countries across geographies and industries, including 80% of the Fortune 100, many Fortune 1,000 companies, midsize businesses and governmental entities.

Our close client relationships and successful client execution support our stable recurring revenue model and high renewal rates.

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Although we encounter competition in all areas of our portfolio, we are a leader in many categories.

We compete on the basis of technology, performance, quality, reliability, reputation, price, and customer service and support.

We compete based on technology, performance, quality, reliability, reputation, price, and customer service and support.

We consider our "onshore", “near shore” and “offshore” delivery capabilities to be a competitive advantage.

Our competitors range from large international companies to relatively small firms.

Our competitors range from large international companies to relatively small firms, and many of our competitors specialize in certain areas but none compete across all the same segments in total – for example, 73 of our top 100 commercial clients buy multiple service offerings.

Our competitors include:

• Large multinational service providers such as Accenture, Aon Hewitt, Cognizant, Hewlett-Packard Enterprise, TTEC and Teleperformance;

• Traditional business process outsourcing companies such as Genpact, EXL Services and Exela

• Human resource, payroll processing and human capital management providers such as ADP, Paychex, Alight and Willis Towers Watson;

• Healthcare-focused IT and service solutions providers such as Cerner, Optum and Maximus;

• HSA administrators such as Health Equity, HSA Bank and WexHealth;

Federal focused government services such as CACI International and DXC Technology;

• Transportation multi-nationals such as Roper/TransCore, Cubic, Kapsch and Verra Mobility;

• Large multinational service providers such as Accenture, Cognizant, TTEC and Teleperformance;

• Traditional business process outsourcing companies such as Genpact and EXL Services;

• Human resource, payroll processing and human capital management providers such as Alight and Willis Towers Watson;

• Healthcare-focused IT and service solutions providers such as Gainwell, Optum and Maximus;

• HSA administrators such as Health Equity;

Federal-focused government services providers such as Leidos;

• Transportation multi-nationals such as TransCore, Thales, Cubic and Verra Mobility;

• Smaller niche business processing service providers and in-house departments that perform functions that could be outsourced.

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We leverage our broad portfolio of offerings and dedicated team of associates to package solutions that exactly meet clients’ needs, while taking a disciplined approach to pricing and contracting.

Our sales efforts typically involve

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extended selling cycles where our deep domain and industry expertise is critical to winning new business.

Our sales efforts typically involve extended selling cycles where our deep domain and industry expertise is critical to winning new business.

We maintain strong relationships with our clients from initial engagement to implementation and on-going service delivery.

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Our general policy is to seek patent protection for those inventions likely to be incorporated into our products and services or where obtaining such proprietary rights will improve our competitive position.

We own approximately 1,020 patents and pending applications.

As of December 31, 2021, we own approximately 589 patents and have 59 pending applications.

Our patent portfolio evolves as new patents are awarded to us and as older patents expire.

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We vigorously enforce and protect our trademarks.

CNDT 2021 Annual Report

People and Culture

We draw on the skills, expertise, and experience of our talented and diverse global workforce to deliver mission-critical services and solutions that drive exceptional client outcomes.

We have approximately 63,000 associates in 22 countries working towards a common vision and purpose, with 45% located in North America and the remainder located primarily in our delivery centers in Asia Pacific, Latin America and Caribbean, and Europe.

Our three reportable segments, Commercial Industries, Government Services and Transportation house the majority of our associates with approximately 45,000, 6,000 and 3,000 associates, respectively.

The skills, expertise, and experience of our talented and diverse global workforce allow us to deliver mission-critical services and solutions that drive exceptional client outcomes.

As of December 31, 2021, we have approximately 60,000 associates in 24 countries working towards a common vision and purpose, with 42% located in North America and the remainder located primarily in Asia Pacific, Latin America and the Caribbean, and Europe.

Our three reportable segments, Commercial Industries, Government Services and Transportation, house most of our associates with approximately 42,300, 6,000 and 4,000 associates, respectively.

Conduent Diversity & Inclusion (D&I)

We draw strength from the diversity of our global workforce and we believe that creating an inclusive culture where all associates can bring their authentic selves to work creates value for all our stakeholders.

Conduent’s diversity and inclusion efforts are central in creating an engaging culture for all associates, providing a competitive advantage in serving our clients, and growing our business.

We furthered our commitment to D&I in several ways over the past year including naming a Global Head of Diversity and Inclusion, Walter Frye, reporting directly to our Chief Executive Officer.

Frye, who in partnership with leaders and functions across our global locations, will lead our efforts to launch new strategies that will enhance D&I practices and capabilities.

We also relaunched seven Employee Impact Groups to engage our associates, and live our core value of being open and inclusive.

As of December 31, 2020, the percentage of females in our global workforce exceeds gender parity.

Employee Learning & Development

As a services company, we believe our people are our most important asset, which is why we invest in associate growth and development programs.

Our Employee Impact Groups (EIG) are at the heart of our efforts to develop an inclusive workplace.

In 2021, we added an eighth EIG that connects associates across generational and tenure segments, while growing overall EIG membership by over 100%.

Our EIGs curated over 80 hours of cultural activities to engage our associates and promote our core value of being open and inclusive.

Our EIGs have membership in every region wherein we have operations.

In addition, they deployed over 20 hours of professional development activities to respond specifically to the needs of our diverse workforce.

In addition, we identified leaders across the business to serve on our inaugural Global Diversity and Inclusion Council (GDIC).

The newly formed GDIC has been charged with working with functional business leaders to shape the deployment of the Enterprise Diversity and Inclusion Plan.

We are proud to have received several global workplace diversity awards, including our first designation as a “Best Places to Work for LGBTQ+ Equality” for 2022 by the Human Rights Campaign Foundation’s Corporate Equality Index in both the United States and its equivalent in Mexico, HRC Equidad MX.

Employee Learning and Development

As a services company, we believe our associates are our most important asset, which is why we invest in associate growth and development programs.

We are focused on building a workplace where our people can do their best work and have access to the learning tools and resources they need to excel in their role, stay competitive and grow their skill set.

We offer our associates modern, digital world-class learning platforms that help them learn anywhere, anytime on a wide range of topics including technology, professional and business-related.

As a result, we have been successful in building a culture of continuous learning, with employees taking charge of their learning & development.

In addition to our digital platforms, employees are also provided job-specific technical training when they are onboarded and during the course of their professional journey as required.

Our learning platforms have wide adoption with about 2.47 million learning assets completed in 2020 with strong learning effectiveness scores

We continue to invest in new, cutting-edge learning platforms to elevate their learning experience.

As a result, we have been successful in building a culture of continuous learning, with employees taking charge of their learning and development.

In addition to our digital platforms, employees are also provided job-specific technical training when they are onboarded and during their professional journey as required.

Our learning platforms are widely utilized with about 2.5 million learning assets completed in 2021 and have great learning effectiveness scores for satisfaction, skill improvement and application of learning on the job.

We also ensure that our associates complete regulatory and compliance training on topics required based on their role and geography.

Associate Engagement

We continuously seek and encourage feedback from our associates to inform our talent strategy and further strengthen our employee value proposition.

In 2021, we sustained a high-level of engagement despite a challenging pandemic year, as indicated by our Associate Experience Survey.

We saw a significant increase in overall engagement with our senior leaders across all survey categories, with 'clarity of direction' about our company and 'resources and support' to work effectively being amongst our highest scoring categories for all associates.

COVID-19 Pandemic (COVID)

As we continued to navigate the uncertainty of the pandemic in 2021, protecting the health and safety of our associates remained our top priority.

Our COVID case management tracking and reporting enabled us to monitor the impacts of COVID on our workforce and workplace and protect business continuity.

A small percentage of our essential workforce returned to onsite work with stringent safety protocols in place.

We continued to demonstrate resiliency, agility and prudence, enabling many of our associates to shift between onsite and remote work depending on local conditions.

We have continued taking steps to connect our associates with resources that support their health and well-being, including hosting several mental health webinars and extending our 2020 time-off plans to give our associates more

CNDT 2021 Annual Report

for satisfaction, skill improvement and application of learning on the job.

We also ensure that our employees complete regulatory and compliance training on topics required based on their role and geography.

Throughout the Coronavirus (or COVID-19) pandemic, the Conduent team has continued to provide critical and best-in-class services to our clients and their end users, while ensuring the health and safety of our greatest asset, our associates.

We have been extremely focused on creating the safest possible working environments for our associates.

We demonstrated our resiliency by quickly enabling approximately 75% of our employees to work from home through improved digital solutions.

We implemented stringent safety protocols at all our operational sites, including frequently and thoroughly cleaning all facilities, modifying our workspaces to allow for physical distancing, mandating face coverings, providing personal protective equipment (PPE) to associates, requiring pre-entry daily health screening, and leveraging Maven, our proprietary platform, for case management and contact tracing.

We have continued taking steps to connect our associates with resources that support their health and well-being.

Conduent associates have access to several mental health and well-being resources, including free monthly webinars through our benefits provider.

We also revised our time off policies to provide our associates more options to take time off for COVID-19 related sickness or hardships.

The feedback from our associates throughout the pandemic has been very positive, especially in terms of our efforts to provide a safe work environment.

options to take time off for COVID-related sickness/hardships.

Effective and constant communication regarding the state of the pandemic, local protocols and vaccine regulations has been a key element of our efforts to create the safest possible working environments for our associates.

We also instituted vaccine attestation in the majority of the global geographies where we operate enabling us to understand vulnerabilities in our workforce and workplace to minimize risks during COVID spikes.

The feedback from our associates continues to be positive, especially in terms of the Company’s efforts to provide a safe work environment.

Awards and Recognition

During 2021, Conduent has been honored to receive several prestigious awards related to our human capital management practices, including:

• Being named to Comparably’s 2021:

◦ Best Company for Working Women list;

◦ Best Company for Global Culture list;

◦ Best Company in New York list;

◦ Best Company for Diversity list;

◦ Best CEOs for Diversity list.

• Being named to Forbes’ 2021 Best Employers for Diversity list

• Being designated as a “Best Places to Work for LGBTQ+ Equality” for 2022 by the Human Rights Campaign Foundation’s (HRC) Corporate Equality Index in both the United States and in Mexico (through its HRC Equidad MX program).

Corporate Ethics

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Our revenues can be affected by various factors such as our clients’ demand patterns for our services, which includes peak windows for benefit enrollment, new product launches by clients, and busy retail and travel seasons.

CNDT 2021 Annual Report

Availability of Company Information

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We make these documents available free of charge as soon as we can after we have filed them with, or furnished them to, the SEC.

CNDT 2020 Annual Report

Our Corporate Social Responsibility Report can also be found in the Investor Information section of our Internet website.

The SEC maintains an internet address (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

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Name Age Present Position Year Appointed to Present Position Conduent Officer Since

Clifford Skelton* 65 Chief Executive Officer 2019 2019

Mark Brewer 56 Executive Vice President, Transportation & Head of Enterprise Accounts 2020 2019

Clifford Skelton* 66 President and Chief Executive Officer 2019 2019

Mark Brewer 57 Executive Vice President, Transportation 2020 2019

Louis Keyes 54 Executive Vice President, Chief Revenue Officer 2020 2020

Michael Krawitz 51 Executive Vice President, General Counsel & Secretary 2019 2019

Michael Krawitz 52 Executive Vice President, General Counsel and Secretary 2019 2019

Mark Prout 58 Executive Vice President, Chief Information Officer 2019 2020

Webb-Walsh 45 Executive Vice President & Chief Financial Officer 2017 2017

Stephen Wood 54 Vice President, Corporate Controller 2020 2020

Stephen Wood 55 Executive Vice President & Chief Financial Officer 2021 2020

_____________________________

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As of February 23, 2022, there are no family relationships among any of the executive officers named above and any of our directors.

Skelton was appointed Chief Operating Officer of Conduent in June 2019 and Chief Executive Officer of Conduent in August 2019.

Skelton was appointed Chief Operating Officer of Conduent in June 2019, Chief Executive Officer of Conduent in August 2019 and President of Conduent in May 2021.

He served as President of Fiserv Output Solutions from March 2017 to June 2019.

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Skelton is a former Navy fighter pilot and served in the Navy for over 20 years.

CNDT 2020 Annual Report

Brewer joined Conduent as Chief Operating Officer Transportation in June 2019 and was appointed Executive Vice President and Global Head of Public Sector in November 2019.

He became Executive Vice President, Transportation & Head of Enterprise Accounts in October 2020.

He became Executive Vice President, Transportation & Head of Enterprise Accounts in October 2020, and currently serves as Executive Vice President, Transportation.

Prior to joining Conduent, he served as Senior Vice President and Managing Director of Diebold Nixdorf from 2018 to 2019.

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Keyes has also held senior executive leadership roles at Hewlett-Packard Enterprise Services and Electronic Data Systems Corporation.

Michael Krawitz has served as Executive Vice President, General Counsel and Secretary since November 2019.

CNDT 2021 Annual Report

Krawitz has served as Executive Vice President, General Counsel and Secretary since November 2019.

Prior to joining Conduent, from June 2015 to November 2019, Mr.

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Prout has also held various leadership positions at United Parcel Service.

Webb-Walsh has served as the Chief Financial Officer of Conduent since 2017.

He served as the Chief Financial Officer of Xerox Services between January 2016 and December 2016.

Prior to this, Mr.

Webb-Walsh was Senior Vice President of Finance for the Government Healthcare Group and the Platform Development and Systems Integration Group of Xerox Services.

Webb-Walsh joined Xerox Corporation in 1997 and held a variety of leadership positions there.

Wood has served in his current role as the Company’s Corporate Controller since August 2020 and was designated as its Principal Accounting Officer effective December 2020.

Prior to joining the Company, Mr.

Wood has served as the Chief Financial Officer of Conduent since June 2021.

He served in his previous role as the Company’s Corporate Controller from August 2020 until June 2021 and was designated as its Principal Accounting Officer effective December 2020.

Prior to joining Conduent, Mr.

Wood spent 15 years at Fiserv in finance and accounting leadership positions.

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Wood served as Vice President & Chief Financial Officer of Fiserv Output Solutions, from March 2009 to December 2016, Mr.

Wood served as Vice President & Controller over a number of different operating groups and from January 2005 to March 2009 Mr.

Wood served as Vice President & Controller over several different operating groups and from January 2005 to March 2009, Mr.

Wood led International Finance & Accounting operations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business