What changed in this filing

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Item 1A. Risk Factors

2025-02-19 compared with 2024-02-21 · 58 added, 39 removed, 294 unchanged (25% of the section changed)

33 unchanged sentences

Our employees and customers in a particular country or region in the world may be impacted as a result of a variety of diversions, including:

geopolitical events and increasing geopolitical tensions, such as war, the threat of war, or terrorist activity;

geopolitical events and increasing geopolitical tensions, such as war, the threat of war, or terrorist activity (including the war in the Ukraine and the conflict in the Middle East);

macroeconomic conditions, such as the level of inflation, economic activity and interest rates;

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For our business to grow, we must successfully manage the provision of services under our contracts.

If a client is not satisfied with the quality of work performed by us or a subcontractor, or with the type of services or solutions delivered, or if we or our subcontractors

If a client is not satisfied with the quality of work

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fail to perform in accordance with contract requirements, then we could incur additional costs to address the situation, the profitability of that work might be impaired and the client’s dissatisfaction with our services could damage our ability to obtain additional work from that client or obtain new work from other potential clients.

performed by us or a subcontractor, or with the type of services or solutions delivered, or if we or our subcontractors fail to perform in accordance with contract requirements, then we could incur additional costs to address the situation, the profitability of that work might be impaired and the client’s dissatisfaction with our services could damage our ability to obtain additional work from that client or obtain new work from other potential clients.

Many of our contracts with non-government clients may be terminated by the client, without cause, upon specified advance notice.

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These contracts carry potential financial penalties or could result in financial damages or exposures if we fail to properly perform those obligations and have in the past resulted in and in the future could result in our results of operations and financial condition being materially adversely affected.

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The loss of key senior management or the failure to attract and retain necessary technical personnel and qualified subcontractors could materially adversely affect our results of operations and financial condition.

Our success depends, in part, upon key managerial and technical personnel, including our ability to attract and retain additional qualified personnel, as well as qualified subcontractors.

The loss of certain key personnel, such as

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our Chief Executive Officer ("CEO"), members of our executive team and other highly skilled employees, could materially adversely affect our results of operations and financial condition.

The loss of certain key personnel, such as our Chief Executive Officer ("CEO"), members of our executive team and other highly skilled employees, could materially adversely affect our results of operations and financial condition.

There is no assurance that we can retain our key managerial personnel, or that we can attract similar employees, in the future.

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There is a risk, however, that our modernization efforts and data center consolidations could materially and adversely disrupt our operations and our service delivery to customers, could result in contractual penalties or damage claims from customers, could occur over a period longer than planned, and could require greater than expected investment and other internal and external resources.

It may also take longer to realize the intended favorable benefits from an enhanced technology infrastructure than we expected, or that disruptions may continue to occur while we enhance this infrastructure.

Future service disruptions could hinder our ability to attract new customers, cause us to incur legal liability, contractual penalties or issue service credits to our customers and cause us to lose current customers, each of which could have a material adverse effect on our business, results of operations and financial condition.

It may also take longer to realize the intended favorable benefits from an enhanced technology infrastructure than we expected, or disruptions may continue to occur while we enhance this infrastructure.

Future service disruptions could hinder

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our ability to attract new customers, cause us to incur legal liability, contractual penalties or issue service credits to our customers and cause us to lose current customers, each of which could have a material adverse effect on our business, results of operations and financial condition.

Expectations relating to environmental, social and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.

Many governments, regulators, investors, associates, clients and other stakeholders are increasingly focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human rights, and diversity, equity and inclusion.

Although there has been a recent shift in U.S.

federal policy under the new presidential administration, many governments, regulators, investors, associates, clients and other stakeholders have been and/or remain focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human rights, and diversity, equity and inclusion.

In addition, the Company makes statements about its environmental, social and governance goals and initiatives through its corporate social responsibility report, its other non-financial reports, information provided on its website, press releases and other communications.

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Any failure, or perceived failure, by the Company to achieve its goals, further its initiatives, adhere to its public statements, comply with federal, state or international environmental, social and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against the Company and could materially adversely affect the Company’s business, ability to recruit and retain associates, reputation, results of operations, financial condition and stock price.

We cannot guarantee that our stock repurchase program will be utilized to the full value approved or that it will enhance long-term stockholder value.

Repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance.

We cannot guarantee that our stock repurchase program, although fully utilized to the full value approved, will enhance long-term stockholder value.

Repurchases could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance.

In May 2023, our Board of Directors authorized a three-year stock repurchase program for up to $75 million of our common stock.

Under the repurchase program, repurchases can be made from time to time using open market transactions, and may include Rule 10b5-1 trading plans, all in accordance with the rules of the SEC and other applicable legal requirements.

The specific timing, price and size of the purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations consistent with our capital allocation strategy.

This program was completed in September 2024.

Stock repurchases could have an impact on our common stock trading prices, increase the volatility of the price of our common stock, or reduce our available cash balance such that we will be required to seek financing to support our operations.

The repurchase program does not obligate us to acquire a particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion, which may result in a decrease in the trading prices of our common stock.

Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value.

There is no guarantee that the repurchase program, even though fully utilized, will enhance long-term stockholder value.

Our use of artificial intelligence involves risks such as potential liability, regulatory issues, competition, and reputational damage.

Artificial intelligence (“AI”) technologies create specific risks that require tailored governance and review.

Insufficient oversight could lead to legal liability, financial loss, and reputational harm.

We use AI to sort, organize, analyze, and generate data for business purposes.

AI encompasses machine learning, generative AI, and other data processing techniques.

The utilization of AI, whether implemented directly by us or in collaboration with third parties, will necessitate ongoing investment in governance and security resources to help ensure our responsible use of AI and to safeguard against potential risks and vulnerabilities.

As these technologies evolve, some services and tasks currently performed by our associates may be replaced by automation, including AI-enabled solutions, which could lead to reduced demand for our services and/or reduce the required headcount for us to provide services.

The use of AI carries considerable risks, and we cannot guarantee the achievement of intended outcomes.

While we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise.

As an evolving technology, AI may occasionally produce incomplete or misleading results.

Despite training and risk management efforts, there is a possibility that employees might misuse AI, either intentionally or unintentionally.

Should our AI generate suboptimal or contentious outcomes, or if public perception of AI shifts negatively due to perceived risks, we may encounter operational challenges, competitive disadvantages, legal liabilities, reputational harm, or other business impacts.

AI-related legal and regulatory frameworks are evolving due to concerns about bias, discrimination, transparency, and security.

The use of AI technologies involves issues associated with intellectual property, data privacy, consumer protection, competition, and equal opportunity, with potential for new regulations.

Several jurisdictions where we operate are considering or have proposed or enacted legislation and policies regulating AI and non-personal data,

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such as the European Union’s AI Act and the U.S.’s Executive Order on AI, and the recent elections may influence the regulatory landscape in the United States.

New or expanded AI laws could raise compliance costs and pose unpredictable risks, which could materially adversely affect our results of operations and financial condition.

Legal, Compliance and Data Security Risks

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For example, the GDPR and the invalidation of the U.S.-EU Safe Harbor regime have required us to implement alternative mechanisms for some of our data flows from Europe to the United States to comply with applicable law.

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restrictions on our ability to obtain and process information and allegations by our customers and clients that we have not performed our contractual obligations, any of which could materially adversely affect our results of operations and financial condition.

Changes to existing laws, the introduction of new laws in this area or our failure to comply with existing laws that are applicable to us may subject us to, among other things, additional costs or changes to our business practices, liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to obtain and process information and allegations by our customers and clients that we have not performed our contractual obligations, any of which could materially adversely affect our results of operations and financial condition.

We are subject to laws of the United States and foreign jurisdictions relating to processing certain financial transactions, including payment card transactions and debit or credit card transactions, and failure to comply with those laws, whether or not inadvertent, could subject us to legal actions and materially adversely affect our results of operations and financial condition.

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Any of these could materially adversely affect our results of operations and financial condition.

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Our data systems, information systems and network infrastructure may be subject to hacking or other cybersecurity threats and other service interruptions, which could expose us to liability, impair our reputation or temporarily render us unable to fulfill our service obligations under our contracts.

As a leader in business process solutions, we leverage cloud computing, artificial intelligence, machine learning and advanced analytics.

As a leader in business process solutions, we leverage cloud computing, AI, machine learning and advanced analytics.

We act as a trusted business partner in both front-office and back-office platforms, providing interactions on a substantial scale with our customers and other third-parties.

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As a result of these and other business process solutions, the integrity, security, accuracy and non-interruption of our systems and information technology and that of our third-party providers and our interfaces with our customers are extremely important to our business, operating results, growth, prospects and reputation.

We are susceptible to breach of security systems which may result in unauthorized access to our facilities and those of our customers and/or the information we and our customers are trying to protect.

Cybersecurity failure might be caused by computer hacking, malware, computer viruses, worms and other destructive software, “cyber-attacks” and other malicious activity, as well as natural disasters, power outages, terrorist attacks and similar events.

We have in the past been, and remain, susceptible to breach of security systems which may result and has resulted in unauthorized access to our facilities and those of our customers and/or the information we and our customers are trying to protect.

Cybersecurity failure might be caused by computer hacking, compromised credentials, malware, computer viruses, worms, trojans, ransomware and other destructive software, “cyber-attacks” and other malicious activity, as well as natural disasters, power outages, terrorist attacks and similar events.

Operational or business delays may also result from the disruption of network or information systems and subsequent remediation activities.

Because the techniques used to obtain unauthorized access are constantly changing and becoming increasingly more sophisticated and often are not recognized until launched against a target, we or our third-party service providers may be unable to anticipate these techniques or implement sufficient preventative measures.

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malware, phishing, viruses and other “cyber-attacks” have become more prevalent, have occurred in our systems in the past, and may occur in our systems in the future.

Unauthorized access, hacking, malware, phishing, viruses, worms, trojans, ransomware and other “cyber-attacks” have become more prevalent, have occurred in our systems in the past, and may occur in our systems in the future.

Our cyber practices and cybersecurity systems may prove to be inadequate and result in the disruption, failure, misappropriation or corruption of our network and information systems and it may not be possible for us to fully or timely know if or when such incidents arise, or the full business impact of any cybersecurity breach.

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In addition, the increased use of employee-owned devices for communications as well as work-from-home arrangements, present additional operational risks to our information technology systems, including, but not limited to, increased risks of cyber-attacks.

If unauthorized parties gain physical access to one of our or one of our third-party service providers’ facilities or gain electronic access to our or one of our third-party service providers’ information systems, such access could result in, among other things, unfavorable publicity and significant damage to our brand, governmental inquiry, oversight and possible regulatory action, difficulty in marketing our services, loss of existing and potential customers, allegations by our customers that we have not performed our contractual obligations, litigation by affected parties and possible financial obligations for substantial damages related to the theft or misuse of such information, any of which could materially adversely affect our results of operations and financial condition.

We have in the past experienced, and in the future could experience, an unauthorized party gaining physical access to one of our or one of our third-party service providers’ facilities or gain electronic access to our or one of our third-party service providers’ information systems.

Such access could result in, among other things, unfavorable publicity and significant damage to our brand, governmental inquiry, oversight and possible regulatory action, difficulty in marketing our services, loss of existing and potential customers, allegations by our customers that we have not performed our contractual obligations, litigation by affected parties and possible financial obligations for substantial damages related to the theft or misuse of such information, any of which could materially adversely affect our results of operations and financial condition.

Similar consequences may arise if sensitive or confidential information is misdirected, lost or stolen during transmission or transport, or is stolen or misused.

Moreover, a security breach could require us to devote significant management resources to address the problems created by the security breach and to expend significant additional resources to upgrade further the security measures that we employ to guard such personal information against "cyber-attacks" and to maintain various systems and data centers for our customers.

Moreover, security breaches have and could require us to devote significant management resources to address the problems created by the security breach and to expend significant additional resources to upgrade further the security measures that we employ to guard such personal information against "cyber-attacks" and to maintain various systems and data

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centers for our customers.

Often these systems and data centers must be maintained worldwide and on a 24/7 basis.

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To the extent any such disruptions were to occur, our business, operating results and financial condition could be materially adversely affected.

In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to security incidents, cyberattacks and other related incidents.

In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us, or the carrier may decline to cover us, against claims related to security incidents, cyberattacks and other related incidents.

If we fail to meet industry data security standards, our ability to meet contractual obligations may be impaired and result in contractual damage or contract breach claims.

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Any failure to comply fully or materially with PCI DSS, HITRUST and other applicable industry standards now or at any point in the future may provide customers the right to terminate contracts with us or to enforce provisions obligating us to reimburse them for any penalties or costs incurred by them as a result of our non-compliance, or subject us to other fines, penalties, damages or civil liability, each of which could have a material adverse effect on our business, financial condition and results of operations.

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Our results of operations and financial condition could be materially adversely affected by legal and regulatory matters.

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Our insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable.

Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if they prevail, the amount of our recovery.

Even if we believe a claim is covered by insurance, insurers may dispute our

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entitlement to recovery for a variety of potential reasons, which may affect the timing and, if they prevail, the amount of our recovery.

We have made and may continue to make divestitures, as well as acquisitions, investments and joint ventures, all of which involve numerous risks and uncertainties.

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Divestitures may result in losses on disposal or continued financial involvement in the divested business, including through indemnification, guarantee or other financial arrangements, for a period of time following the transaction, which would adversely affect our financial results.

Refer to Note 4 – Assets/Liabilities Held for Sale and Divestitures to our Consolidated Financial Statements for additional information about our divestitures.

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Refer to Note 4 – Divestitures and Assets/Liabilities Held for Sale to our Consolidated Financial Statements for additional information about our divestitures.

Additionally, we may selectively pursue strategic acquisitions, investments and joint ventures.

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As of December 31, 2024, our goodwill balance was $609 million, which represented 23.4% of total consolidated assets.

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Refer to Note 7 – Goodwill and Intangible Assets, Net to our Consolidated Financial Statements for additional information about our goodwill impairments.

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• make investments or acquisitions;

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• sell, transfer or otherwise dispose of certain assets;

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A breach of any of the restrictive covenants, if applicable, could result in an event of default under the terms of this indebtedness.

If an event of default occurs, the lenders would have the right to accelerate the repayment of such debt and the event of default or acceleration may result in the acceleration of the repayment of any other of our debt to which a cross-default or cross-acceleration provision applies.

If an event of default occurs, the lenders would have the right to accelerate the repayment of such

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debt and the event of default or acceleration may result in the acceleration of the repayment of any other of our debt to which a cross-default or cross-acceleration provision applies.

Furthermore, under this indebtedness we have pledged our assets as collateral as security for our repayment obligations.

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In addition, our contracts are increasingly requiring tighter timelines for implementation as well as more stringent service level metrics.

This makes the bidding process for new

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contracts much more difficult and requires us to adequately consider these requirements in the pricing of our services.

This makes the bidding process for new contracts much more difficult and requires us to adequately consider these requirements in the pricing of our services.

To meet the service requirements of our customers, which often includes 24/7 service, and to optimize our employee cost base, including our back-office support, we often locate our delivery service and back-office support centers in lower-cost locations, including several developing countries.

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If any of these factors adversely materialize or if we are unable to achieve and maintain productivity improvements through restructuring actions or information technology initiatives, our ability to offset labor cost inflation and competitive price pressures would be impaired, each of which could materially adversely affect our results of operations and financial condition.

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If we are unable to collect our receivables for billed or unbilled services, our results of operations and financial condition could be materially adversely affected.

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Economic and political conditions could affect our clients’ businesses and the markets they serve.

The loss of significant clients or a significant reduction in volume from our significant clients as a result of these or other reasons would materially adversely affect our results of operations and financial condition.

We have non-recurring revenue, which subjects us to a risk that our revenues and cash flows from operations may fluctuate from period to period.

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There is less predictability and certainty in the timing and amount of revenues generated by our non-recurring services and, accordingly, our results of operations and financial condition could be materially adversely affected by the timing and amount of revenues generated from our non-recurring services.

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Increases in the cost of voice and data services or significant interruptions in such services could materially adversely affect our results of operations and financial condition.

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In addition, a number of our facilities are located in jurisdictions outside of the United States where the provision of utility services, including electricity and water, may not be consistently reliable, and an extended outage of utility or network services could materially adversely affect our results of operations and financial condition.

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We are a holding company and, therefore, may not be able to receive dividends or other payments in needed amounts from our subsidiaries.

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In addition, we are subject to the examination of our income tax returns by the United States Internal Revenue Service and other tax authorities around the world.

The company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

There can be no assurance that the outcomes from these examinations will not have an adverse effect on the company’s provision for income taxes and cash tax liability.

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We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

There can be no assurance that the outcomes from these examinations will not have an adverse effect on our provision for income taxes and cash tax liability.

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 1A. Risk Factors