|WNS (HOLDINGS) LTD filed this Form 20-F on 05/16/2018|
The increase in cost of revenue was primarily due to higher employee cost on account of higher headcount (including headcount of businesses acquired during fiscal 2017), wage inflation, an increase in share-based compensation expense; higher facilities costs; increase in subcontracting costs; and higher depreciation costs. These increases were partially offset by lower repair payments; and lower legal and professional costs. Further, the depreciation of the Indian rupee and South African rand against the US dollar by an average of 2.6% and 2.3%, respectively, in fiscal 2017, as compared to the average exchange rate in fiscal 2016, resulted in a decrease of approximately $6.0 million in the cost of revenue.
The following table sets forth our gross profit for the periods indicated:
Gross profit as a percentage of revenue and revenue less repair payments (non-GAAP) decreased primarily due to higher cost of revenue as discussed above. Cost of revenue was higher notwithstanding the depreciation of the Indian rupee and South African rand against the US dollar by an average of 2.6% and 2.3%, respectively, in fiscal 2017, as compared to the average exchange rate for fiscal 2016. This increase in cost of revenue was partially offset by higher revenue, and an increase in hedging gain on our revenue by $0.4 million to $6.8 million in fiscal 2017 from $6.4 million in fiscal 2016.
During fiscal 2017, our built up seats increased by 6.1% from 26,407 as at the end of fiscal 2016 to 28,008 as at the end of fiscal 2017 as we expanded our existing facility in Gurgaon, India, and added new facilities in South Africa. Our expansion of the facility in Gurgaon was part of our strategy to expand our delivery capabilities, including in the SEZ in India. Further, we added new facilities in Pune and Noida, India, Turkey and the US due to our acquisitions of Value Edge, Denali and HealthHelp during fiscal 2017. Our total headcount increased by 6.7% from 32,388 to 34,547 during the same period, resulting in an increase in our seat utilization rate from 1.21 in fiscal 2016 to 1.23 in fiscal 2017. This 0.02 increase in our seat utilization rate increased our gross profit as a percentage of revenue by approximately 0.21% and increased our gross profit as a percentage of revenue less repair payments (non-GAAP) by approximately 0.22%.
Selling and Marketing Expenses
The following table sets forth the composition of our selling and marketing expenses for the periods indicated:
The increase in selling and marketing expenses was primarily due to an increase in employee costs as a result of an increase in sales headcount and wage inflation, and higher travel cost, partially offset by lower marketing costs. Further, the depreciation of the pound sterling against the US dollar by an average of 13.4% in fiscal 2017, as compared to the average exchange rate for fiscal 2016, resulted in a decrease of approximately of $1.4 million of selling and marketing expenses. Our selling and marketing expenses also increased as a result of our acquisitions during fiscal 2017.