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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission File Number: 001-33362
 
 eTelecare Global Solutions, Inc.
 (Exact name of registrant as specified in its charter)
 
 Philippines
    
    98-0467478(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 31 st Floor CyberOne Building, Eastwood City, Cyberpark
Libis, Quezon City, Philippines 1110  (Address of principal executive offices and zip code)
 63 (2) 916 5670  (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredAmerican Depositary Shares
evidenced by American Depositary
Receipts, each American
Depositary Share Representing
one Common Stock, 2 Philippine
Pesos ($0.04 U.S.) par value
per share
    
    The NASDAQ Stock Market LLC
 Securities registered pursuant to Section 12(g) of the Act: None
 
 o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   þ
    
    Smaller Reporting Company o
 o þ




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Table of Contents
 Part I.Item 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    15Item 1B. Unresolved Staff Comments
    
    
    29Item 2. Properties
    
    
    29Item 3. Legal Proceedings
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Part II.Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    30Item 6. Selected Financial Data
    
    
    32Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    33Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 8. Financial Statements and Supplemental Data
    
    
    48Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    80Item 9A(T). Controls and Procedures
    
    
    80Item 9B. Other Information
    
    
    80Part III.Item 10. Directors, Executive Officers and Corporate Governance
    
    
    81Item 11. Executive Compensation
    
    
    85Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    96Item 13. Certain Relationships and Related Transactions and Director Independence
    
    
    99Item 14. Principle Accounting Fees and Services
    
    
    99Part IV.Item 15. Exhibits and Financial Statement Schedules
    
    
    100Signatures
    
    
    103Exhibits
    
    
    105EX-10.18EX-10.19EX-10.20EX-10.21EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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This report on Form 10-K contains forward-looking statements. These statements include but are not
limited to our expectations that clients are increasingly looking for vendors that provide business
process outsourcing, or BPO, services from multiple locations, our anticipated growth in our
business, anticipated increase in our selling and administrative expenses, the potential to obtain
extensions on Philippine tax holidays, our anticipated capital expenditures in 2008, and our belief
regarding the adequacy of our capital resources over the next 12 months. Forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ materially from
those discussed in these forward-looking statements. These risks and uncertainties include, but are
not limited to, our ability to manage growth, intense competition in the industry including those
factors which may affect our cost advantage, wage increases, our ability to attract and retain
customer service associates and other highly skilled professionals, client concentration, the
underlying success of our clients and the resulting impact of any adverse developments in our
clients business including adverse litigation results. Additional risks and uncertainties include
those listed under Item 1A, Risk Factors. eTelecare Global Solutions, Inc. expressly disclaims
any obligation or undertaking to release publicly any updates or revisions to any forward-looking
statements contained in this report to conform these statements to actual results or changes in our
expectations or in events, conditions or circumstances on which any such statement is based. You
should not place undue reliance on these forward-looking statements, which apply only as of the
date hereof.
 
 Part I.
 
 Item 1. Business
 Overview
  A Different Business Model
  3




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4




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BPO Service Offering and Client Base
  Competitive Strengths
  Complex, Voice and Non-Voice Based Services Delivered from Onshore and Offshore Locations
 Voice and Non-Voice Based Services
  Complex Functions
  5




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Multi-shore Delivery Platform
   Investing to Outperform
 Human Capital Development
 Phoenix Business Journal Arizona Business Gazette
 Consulting Techniques to Optimize Outsourcing Results for Our Clients
  Metric-Driven Performance Culture
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Value Created per Dollar Spent Sales Proposition to Clients
  Our Growth Strategy
  Further Penetrate Our Existing Client Base
  Win New Client Relationships
  Expand into New Industries
  7




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Expand into New Markets and Delivery Geographies
  Acquisitions
  Continue to Invest in Human Capital Development
  Expand into New Delivery Capabilities
  Our Service Offerings
  
    
    Customer Care:Our customer care services are initiated primarily by
inbound calls from customers on a wide range of topics including
billing inquiries, account and service changes, product and service
inquiries and warranty support. Our customer care services also
include complex financial planning services that require licensing
from the NASD, such as conducting research on customers accounts,
providing information on the types of available funds or brokerage
accounts, and providing information on tax consequences and penalties
associated with various financial transactions. We also provide
customer support services for various financial products including
gift cards and travelers checks.
 8




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
    
    Technical Support:Our technical support services include handling
troubleshooting calls initiated by customers regarding hardware and
software issues with computer and other consumer electronic products.
Our more complex technical support programs require our employees to
have the Computing Technology Industry Association A+ certification or
Microsoft Desktop Technician certification.
    
    Sales:We handle inbound calls, or calls initiated by customers
purchasing products and services from our clients. The inbound sales
programs we handle include order handling, customer retention
programs, and selling products complementary to or more expensive than
the products in which a customer is originally interested in the
business-to-business and business-to-consumer markets. Customer
retention programs are programs where the customer is calling to
cancel service and our customer service associates resolve the
customers issue and attempt to convince the customer to keep their
service. In addition, we initiate sales calls, primarily to existing
customers of our clients for retention and loyalty programs, and in
some cases unsolicited calling for customer acquisition.
 Sales and Marketing
   9




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Human Capital
    Phoenix Business Journal Arizona Business Gazette
 Recruiting and Retention
   10




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Training and Development
   Workforce Management
  Quality, Performance Management and Scorecards
  Information Technology
  11




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Redundant Network Infrastructure
  IT Security
  Delivery Center Platform
  24x7 Helpdesk Support
  Competition
  12




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
    
    offshore-based customer care BPO companies with offshore delivery
center services capabilities, such as Ambergris Solutions Inc., ePLDT,
Inc., ExlService Holdings, Inc., PeopleSupport, Inc. and Wipro
Spectramind Services Private Limited;
    
    U.S. and Europe-based customer care BPO companies with onshore and
offshore delivery center services capabilities, such as APAC Customer
Services Inc., Convergys Corporation, ICT Group, Inc., Sutherland
Global Services, Inc., SITEL Corporation, Sykes Enterprises,
Incorporated, Teleperformance, TeleTech Holdings, Inc., Transcom and
West Corporation;
    
    broad-based U.S. outsourcing companies such as Accenture Ltd.,
Affiliated Computer Services, Inc., Electronic Data Systems
Corporation and IBM Global Services; and
    
    numerous smaller companies, including 24/7 Customer, SlashSupport and
Vision-X, Inc.
   Government Regulation
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Material Agreements
   Proprietary Rights
  14




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Additional Information
  
 Item 1A. Risk Factors
  Risks Related to Our Business
 If we fail to attract and retain enough sufficiently trained customer service associates and other
personnel to support our operations, our business, results of operations and financial condition
will be seriously harmed.
  A few major clients account for most of our revenue and a loss of business from these clients could
reduce our revenue and seriously harm our business.
  15




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Our operating margin will suffer if we are not able to maintain our pricing, utilize our employees
and assets efficiently or maintain and improve the current mix of services that we deliver from our
offshore locations.
   
    
    our clients perceptions of our ability to add value through our services;
    
    our ability to objectively differentiate and verify the value we offer to our clients;
    
    competition;
    
    the introduction of new services or products by us or our competitors;
    
    our ability to estimate demand for our services;
    
    our ability to control our costs and improve the efficiency of our employees; and
    
    general economic and political conditions.
  Our revenue is highly dependent on a few industries and any decrease in demand for outsourced
business processes in these industries could reduce our revenue and seriously harm our business.
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One of our major clients is Vonage, who has been and may in the future be, subject to damaging and
disruptive intellectual property litigation that could adversely affect its business and its
continued viability, which, in turn, could harm our business, results of operations and financial
condition.
  We face competition from onshore and offshore business process outsourcing companies and from
information technology companies that also offer business process outsourcing services. Our clients
may also choose to run their business processes themselves.
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We may be unable to manage our growth effectively and maintain effective internal processes, which
could harm our business, results of operations and financial condition.
   We may not succeed in identifying suitable acquisition targets or integrating any acquired business
into our operations, which could significantly harm our business, results of operations and
financial condition.
  18




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Our senior management team has worked at the Company for a limited period of time, and the failure
of our senior management team to integrate effectively could harm our business, results of
operations and financial condition.
  If our clients are not successful, the amount of business that they outsource and the prices that
they are willing to pay for our services may diminish, which could harm our business, results of
operations and financial condition.
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We normally encounter a lengthy sales cycle and may not recover the investments we must make in
order to obtain a new client.
  Once we obtain a new client, our implementation cycle is long and may require us to make
significant resource commitments.
  Our operating results may differ from period to period, which may make it difficult for us to
prepare accurate internal financial forecasts.
  
    
    client losses or program terminations;
    
    variations in the volume of business from clients resulting from changes in our clients
operations;
    
    significant changes in value of the dollar relative to foreign currencies;
    
    delays or difficulties in expanding our operational facilities and infrastructure;
    
    changes to our pricing structure or that of our competitors;
    
    inaccurate estimates of resources and time required to complete ongoing programs;
    
    our ability to successfully open new delivery centers or to expand delivery centers in a
timely fashion;
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
    
    the efficiency with which we use our operations to service our clients;
    
    the relative mix of services performed by our U.S. and Philippine operations;
    
    our sources of pre-tax income, which will impact our overall effective tax rate;
    
    ability to hire and train new employees; and
    
    seasonal changes in the operations of our clients.
   Some of our client contracts contain provisions that could reduce our anticipated revenue and harm
our business.
  We have incurred losses in the past and have a limited operating history. We may not be profitable
in the future and may not be able to secure additional business.
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We are liable to our clients for damages caused by unauthorized disclosure of sensitive and
confidential information, whether through a breach of our computer systems, our employees or
otherwise.
  Our clients may adopt technologies that decrease the demand for our services, which could harm our
business, results of operations and financial condition.
  Our business may not develop in ways that we currently anticipate due to negative public reaction
to offshore outsourcing and recently proposed legislation.
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Our failure to adhere to regulations that govern our business could hinder our ability to
effectively perform our services. Our failure to adhere to regulations that govern our clients
businesses could result in breaches of our contracts with our clients.
  The international nature of our business exposes us to several risks, such as unexpected changes in
the regulatory requirements of multiple jurisdictions.
  
    
    legal uncertainty owing to the overlap of different legal regimes, and problems in asserting
contractual or other rights across international borders;
    
    currency fluctuations, particularly since our revenues and expenses are denominated in only
two currencies;
    
    potential tariffs and other trade barriers;
    
    unexpected changes in regulatory requirements; and
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
    
    the burden and expense of complying with the laws and regulations of various jurisdictions.
   If the operations of our delivery centers are interrupted, the amount of revenue we receive under
our client contracts could decline and our results of operations and financial condition could
suffer.
  Governmental authorities may challenge our intercompany pricing policies or may change or seek to
apply their laws in a manner that could increase our effective tax rate or otherwise harm our
business.
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We will incur increased costs as a result of being a public company subject to the Philippine
Securities Regulation Code and the Sarbanes-Oxley Act of 2002, and our management faces challenges
in implementing those requirements.
  Future litigation may result in significant costs for defense purposes or for settlement purposes,
both of which may or may not be covered by our current insurance policies. Litigation may also
divert management focus from our business and could significantly impact our financial results.
  Our current tax holidays in the Philippines will expire within the next several years.
  25




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Risks Related to Doing Business in the Philippines
 We may face wage inflation in the Philippines and increased competition for our Philippine
employees, which could increase our employment costs and our attrition.
  The Philippines has experienced political and economic instability as well as civil unrest and
terrorism, which could disrupt our operations and cause our business to suffer.
  Further Strengthening of the Philippine peso relative to the U.S. dollar could increase our
expenses.
  26




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It may be difficult for you to effect service of process and enforce legal judgments against us or
our affiliates.
  Our stockholders may have more difficulty protecting their interests than they would as
stockholders of a U.S. corporation.
  Risks Related to our ADSs and Common Shares
 We listed our common shares on the Philippine Stock Exchange, which could increase the volatility
of the market price for our ADSs.
  The market price for our ADSs has been volatile.
  
    
    actual or anticipated fluctuations in our quarterly operating results;
    
    changes in financial estimates by securities research analysts;
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
    
    changes in the economic performance or market valuations of our competitors;
    
    sales or expected sales of additional common shares or ADSs; and
    
    loss of one or more significant clients.
  You may not be able to participate in rights offerings and may experience dilution of your holdings
as a result.
  Our corporate actions could be substantially influenced by officers, directors, principal
stockholders and affiliated entities.
  You may be subject to limitations on transfer of your ADSs.
  28




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  LeaseLocation
    
    Size
    
    Use
    
    ExpirationQuezon City, Metro
Manila, Philippines
    
    17,287   square feet
    
    Corporate headquarters
    
    June 2011Scottsdale, Arizona
    
    33,766   square feet
    
    Executive office
    
    July 2010Makati City, Philippines
    
    193,750   square feet
    
    Delivery center
    
    December 2009 -
August 2012Mandaluyong City
    
    138,489   square feet
    
    Delivery center
    
    June 2012-July 2012
  
 Item 3. Legal Proceedings
 James Dreyfuss vs. ETelecare Global Solutions-US,
Inc.
 
 Item 4. Submission of Matters to a Vote of Security Holders
  29




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Part II.
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Performance Graph
  
 Market Information
  30




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2007High
    
    LowFirst Quarter
    
    $
    15.70
    
    
    $
    14.80Second Quarter
    
    
    17.02
    
    
    
    14.16Third Quarter
    
    
    18.24
    
    
    
    7.46Fourth Quarter
    
    
    11.21
    
    
    
    7.77
  2007High
    
    LowFourth Quarter
    
    
    472.50
    
    
    
    350.00
 Holders
  Dividends
  Securities Authorized for Issuance under Equity Compensation Plans
  31




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Number ofSecuritiesRemainingAvailable forFuture IssuanceNumber of
    
    
    
    
    
    under EquitySecurities to be
    
    Weighted-
    
    CompensationIssued upon
    
    Average Exercise
    
    Plans (ExcludingExercise of
    
    Price of
    
    SecuritiesOutstanding
    
    Outstanding
    
    Reflected inOptions
    
    Options
    
    Column (a))Plan Category
    
    (a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders (1)
    
    
    4,968,825
    
    
    
    5.30
    
    
    
    750,074Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    4,968,825
    
    
    
    5.30
    
    
    
    750,074
 
 (1)
    
    For a description of our equity compensation plans, see Note 14 to the
Consolidated Financial Statements in Item 8. 
 Item 6. Selected Financial Data
  Year Ended December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(In thousands, except per share data)Consolidated Statements of Operations Data:Service revenue
    
    $
    259,942
    
    
    $
    195,118
    
    
    $
    152,213
    
    
    $
    97,775
    
    
    $
    32,192Income from operations
    
    $
    22,616
    
    
    $
    19,220
    
    
    $
    4,109
    
    
    $
    5,125
    
    
    $
    4,914Net income (loss)
    
    $
    23,056
    
    
    $
    12,245
    
    
    $
    (1,764
    )
    
    $
    2,442
    
    
    $
    4,424Basic net income (loss) per share
    
    $
    0.85
    
    
    $
    0.56
    
    
    $
    (0.08
    )
    
    $
    0.11
    
    
    $
    0.21Diluted net income (loss) per share
    
    $
    0.79
    
    
    $
    0.50
    
    
    $
    (0.08
    )
    
    $
    0.11
    
    
    $
    0.21
 As of December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents
    
    $
    35,129
    
    
    $
    690
    
    
    $
    1,043
    
    
    $
    3,782
    
    
    $
    1,473Working capital (deficit)
    
    $
    62,065
    
    
    $
    4,123
    
    
    $
    (2,512
    )
    
    $
    (5,971
    )
    
    $
    3,442Total assets
    
    $
    166,559
    
    
    $
    89,450
    
    
    $
    65,175
    
    
    $
    66,670
    
    
    $
    18,624Total stockholders equity
    
    $
    133,039
    
    
    $
    28,214
    
    
    $
    12,916
    
    
    $
    13,898
    
    
    $
    11,038
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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion of our financial condition and results of operations should be read in
conjunction with our Consolidated Financial Statements and the related notes included in Item 8,
Financial Statements and Supplementary Data in this Annual Report on Form 10-K . This discussion
contains forward-looking statements, which involve risk and uncertainties. Our actual results could
differ materially from those anticipated in the forward-looking statements as a result of certain
factors including, but not limited to, those discussed in Risk Factors and elsewhere in this
Annual Report on Form 10-K .
 Introduction
  
    
    Overview: a summary of our business;
    
    Critical Accounting Policies: a discussion of our critical accounting policies that
require the exercise of judgments and estimates;
    
    Results of Operations: a discussion of our operating results;
    
    Liquidity and Capital Resources: an analysis of our cash flows, sources and uses of cash
and financial position;
    
    Contractual Obligations; and
    
    Recent Accounting Pronouncements: a discussion of how we are affected by recent
pronouncements.
 Overview
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Service Revenue.
  34




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Cost of Services.
    35




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Selling and Administrative.
 Impact of Foreign Currency.
 36




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Depreciation and Amortization.
  Other Income (Expenses).
 Critical Accounting Policies
   37




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Revenue Recognition.
  Accounting for Income Taxes.
   Share-Based Compensation.
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Goodwill.
 Results of Operations
  39




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Year Ended December 31,2007
    
    2006
    
    2005Consolidated Statements of Operations Data:Service revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost and expenses:Cost of services (exclusive of depreciation shown separately below)
    
    
    71.4
    
    
    
    69.5
    
    
    
    74.9Selling and administrative expenses
    
    
    13.9
    
    
    
    15.4
    
    
    
    16.7Depreciation and amortization
    
    
    5.9
    
    
    
    5.2
    
    
    
    5.7Total cost and expenses
    
    
    91.3
    
    
    
    90.1
    
    
    
    97.3Income (loss) from operations
    
    
    8.7
    
    
    
    9.9
    
    
    
    2.7Other income (expenses):Interest expense and financing charges
    
    
    (0.7
    )
    
    
    (2.8
    )
    
    
    (3.2
    )Interest income
    
    
    0.5
    
    
    
    
    
    
    
    Foreign exchange (loss) gain
    
    
    (0.3
    )
    
    
    (0.4
    )
    
    
    (0.4
    )Other
    
    
    0.1
    
    
    
    (0.1
    )
    
    
    0.1Total other income (expenses)
    
    
    (0.5
    )
    
    
    (3.3
    )
    
    
    (3.5
    )Income (loss) before income tax provision (benefit)
    
    
    8.2
    
    
    
    6.6
    
    
    
    (0.8
    )Income tax provision (benefit)
    
    
    (0.7
    )
    
    
    0.3
    
    
    
    0.4Net income (loss)
    
    
    8.9
    %
    
    
    6.3
    %
    
    
    (1.2
    )%
 Comparison of Years Ended December 31, 2007 and 2006
 Service revenue.
 Cost of services.
  
    
    our investment in our global information technology resources;
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
    
    our site expansion in the Philippines to support our revenue growth; and
    
    the cost of services for our U.S. operations increasing as a percentage of revenue as a
result of increased labor rates and lower utilization rates of our U.S. employees.
 Selling and administrative expenses.
   Depreciation and amortization.
 Income from operations; operating margin.
  
    
    our investment in our global information technology resources;
    
    our site expansion in the Philippines to support our revenue growth;
    
    the cost of services for our U.S. operations increasing as a percentage of revenue as a
result of increased labor rates and lower utilization rates of our U.S. employees; and
    
    additional salaries, wages and benefits, consulting fees and travel expenses to support our
growth.
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Interest expense and financing charges.
 Foreign exchange (loss) gain.
 Income tax provision (benefit).
 Comparison of Years Ended December 31, 2006 and 2005
 Service revenue.
  Cost of services.
  Selling and administrative expenses.
 42




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Depreciation and amortization.
 Income from operations; operating margin.
  Interest expense and financing charges.
 Foreign exchange (loss) gain.
 Income tax provision.
 43




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Liquidity and Capital Resources
         44




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Long-term Debt and Revolving Line of Credit
    Off-Balance Sheet Arrangements
  Contractual Obligations
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Payments Due by Period (1)Less Than
    
    
    1 to 3
    
    
    3 to 5
    
    
    More Than1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years
    
    
    TotalCapital lease obligations (2)
    
    $
    148
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    148Operating lease obligations (2)
    
    
    10,111
    
    
    
    20,214
    
    
    
    13,102
    
    
    
    14,829
    
    
    
    58,256Purchase obligations
    
    
    4,917
    
    
    
    819
    
    
    
    
    
    
    
    
    
    
    
    5,736Other long-term obligations:Asset retirement obligations
    
    
    477
    
    
    
    690
    
    
    
    852
    
    
    
    
    
    
    
    2,019Total
    
    $
    15,653
    
    
    $
    21,723
    
    
    $
    13,954
    
    
    $
    14,829
    
    
    $
    66,159
 
 (1)
    
    Deferred taxes are excluded from the table above.(2)
    
    Capital and operating leases include an interest element within the commitment amount. Recent Accounting Pronouncements
  Business Combinations
 
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk
 Foreign Currency Exchange Risk
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Interest Rate Sensitivity
  Inflation Rate Sensitivity
  47




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Item 8. Financial Statements and Supplemental Data
  Report of Independent Registered Public Accounting Firm
    
    
    49Consolidated Balance Sheets
    
    
    50Consolidated Statements of Operations
    
    
    51Consolidated Statements of Comprehensive Income (Loss)
    
    
    52Consolidated Statements of Changes in Stockholders Equity
    
    
    53Consolidated Statements of Cash Flows
    
    
    54Notes to Consolidated Financial Statements
    
    
    56
 48




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     /s/ Ernst & Young LLP 
 49




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##### Table of Contents



eTelecare Global Solutions, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
 (In thousands, except share and per share data)
 December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    35,129
    
    
    $
    690Trade and other receivables, net
    
    
    47,092
    
    
    
    30,735Fair value of derivatives
    
    
    3,529
    
    
    
    Deferred offering costs
    
    
    
    
    
    
    3,187Prepaid expenses and other current assets
    
    
    5,067
    
    
    
    1,688Total current assets
    
    
    90,817
    
    
    
    36,300Non-current assets:Property and equipment, net
    
    
    55,666
    
    
    
    34,979Goodwill
    
    
    14,425
    
    
    
    13,833Other intangible assets, net
    
    
    1,139
    
    
    
    2,417Other non-current assets
    
    
    4,512
    
    
    
    1,921Total non-current assets
    
    
    75,742
    
    
    
    53,150Total assets
    
    $
    166,559
    
    
    $
    89,450LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Revolving line of credit
    
    $
    
    
    
    $
    1,565Trade accounts payable
    
    
    6,672
    
    
    
    9,335Accrued and other expenses
    
    
    21,935
    
    
    
    16,671Current portion of:Long-term debt
    
    
    
    
    
    
    4,000Obligations under capital lease
    
    
    145
    
    
    
    606Total current liabilities
    
    
    28,752
    
    
    
    32,177Non-current liabilities:Long-term debt, net of current portion
    
    
    
    
    
    
    24,500Obligations under capital lease, net of current portion
    
    
    
    
    
    
    145Asset retirement obligations
    
    
    2,019
    
    
    
    1,884Other non-current liabilities
    
    
    2,749
    
    
    
    2,530Total non-current liabilities
    
    
    4,768
    
    
    
    29,059Commitments and contingenciesStockholders equity:Capital stock, 2 Philippine Peso ($0.04 U.S.) par value,
65,000,000 shares authorized, 28,979,218 shares outstanding at
December 31, 2007 and 22,183,033 outstanding at December 31, 2006
    
    
    1,129
    
    
    
    849Additional paid-in capital
    
    
    100,702
    
    
    
    20,948Retained earnings
    
    
    29,158
    
    
    
    6,417Accumulated other comprehensive income
    
    
    2,050
    
    
    
    Total stockholders equity
    
    
    133,039
    
    
    
    28,214Total liabilities and stockholders equity
    
    $
    166,559
    
    
    $
    89,450
 See accompanying notes.
 50




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##### Table of Contents



eTelecare Global Solutions, Inc. and Subsidiaries
 
 Consolidated Statements of Operations
 (In thousands, except per share data)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Service revenue
    
    $
    259,942
    
    
    $
    195,118
    
    
    $
    152,213Cost and expenses:Cost of services (exclusive of depreciation
shown separately below)
    
    
    185,715
    
    
    
    135,709
    
    
    
    113,997Selling and administrative expenses
    
    
    36,230
    
    
    
    30,008
    
    
    
    25,498Depreciation and amortization
    
    
    15,381
    
    
    
    10,181
    
    
    
    8,609Total cost and expenses
    
    
    237,326
    
    
    
    175,898
    
    
    
    148,104Income from operations
    
    
    22,616
    
    
    
    19,220
    
    
    
    4,109Other income (expenses):Interest expense and financing charges
    
    
    (1,891
    )
    
    
    (5,571
    )
    
    
    (4,929
    )Interest income
    
    
    1,195
    
    
    
    40
    
    
    
    17Foreign exchange loss
    
    
    (843
    )
    
    
    (683
    )
    
    
    (570
    )Other
    
    
    187
    
    
    
    (159
    )
    
    
    125Total other expenses
    
    
    (1,352
    )
    
    
    (6,373
    )
    
    
    (5,357
    )Income (loss) before income tax provision (benefit)
    
    
    21,264
    
    
    
    12,847
    
    
    
    (1,248
    )Income tax provision (benefit)
    
    
    (1,792
    )
    
    
    602
    
    
    
    516Net income (loss)
    
    $
    23,056
    
    
    $
    12,245
    
    
    $
    (1,764
    )Net income (loss) per share  basic
    
    $
    0.85
    
    
    $
    0.56
    
    
    $
    (0.08
    )Weighted average shares outstanding  basic
    
    
    27,163
    
    
    
    21,795
    
    
    
    21,543Net income (loss) per share  diluted
    
    $
    0.79
    
    
    $
    0.50
    
    
    $
    (0.08
    )Weighted average shares outstanding  diluted
    
    
    29,325
    
    
    
    24,535
    
    
    
    21,543
 See accompanying notes.
 51




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eTelecare Global Solutions, Inc. and Subsidiaries
 
 Consolidated Statements of Comprehensive Income (Loss)
 (In thousands)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Net income (loss)
    
    $
    23,056
    
    
    $
    12,245
    
    
    $
    (1,764
    )Other comprehensive income:Fair values of derivatives, net of tax
    
    
    2,050
    
    
    
    
    
    
    
    Comprehensive income (loss)
    
    $
    25,106
    
    
    $
    12,245
    
    
    $
    (1,764
    )
 See accompanying notes.
 52




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eTelecare Global Solutions, Inc. and Subsidiaries
 
 Consolidated Statements of Changes in Stockholders Equity
 (In thousands, except number of shares)
 AccumulatedAdditional
    
    
    Retained
    
    
    OtherCapital Stock
    
    
    Paid-In-
    
    
    Earnings
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    (Deficit)
    
    
    Income
    
    
    TotalBalances, January 1, 2005
    
    
    21,497,146
    
    
    $
    823
    
    
    $
    17,139
    
    
    $
    (4,064
    )
    
    $
    
    
    
    $
    13,898Stock option exercises
    
    
    252,200
    
    
    
    9
    
    
    
    421
    
    
    
    
    
    
    
    
    
    
    
    430Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    352
    
    
    
    
    
    
    
    
    
    
    
    352Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,764
    )
    
    
    
    
    
    
    (1,764
    )Balances, December 31, 2005
    
    
    21,749,346
    
    
    
    832
    
    
    
    17,912
    
    
    
    (5,828
    )
    
    
    
    
    
    
    12,916Warrant exercises
    
    
    400,812
    
    
    
    16
    
    
    
    946
    
    
    
    
    
    
    
    
    
    
    
    962Stock option exercises
    
    
    32,875
    
    
    
    1
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    103Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    1,988
    
    
    
    
    
    
    
    
    
    
    
    1,988Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,245
    
    
    
    
    
    
    
    12,245Balances, December 31, 2006
    
    
    22,183,033
    
    
    
    849
    
    
    
    20,948
    
    
    
    6,417
    
    
    
    
    
    
    
    28,214Cumulative effect of adoption
of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (315
    )
    
    
    
    
    
    
    (315
    )Proceeds from initial stock
offering, net of $9,915 of
offering costs
    
    
    6,325,000
    
    
    
    262
    
    
    
    75,209
    
    
    
    
    
    
    
    
    
    
    
    75,471Stock option exercises
    
    
    471,185
    
    
    
    18
    
    
    
    1,766
    
    
    
    
    
    
    
    
    
    
    
    1,784Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    2,420
    
    
    
    
    
    
    
    
    
    
    
    2,420Tax benefit of stock option exercise
    
    
    
    
    
    
    
    
    
    
    359
    
    
    
    
    
    
    
    
    
    
    
    359Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,056
    
    
    
    
    
    
    
    23,056Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,050
    
    
    
    2,050Balances, December 31, 2007
    
    
    28,979,218
    
    
    $
    1,129
    
    
    $
    100,702
    
    
    $
    29,158
    
    
    $
    2,050
    
    
    $
    133,039
 See accompanying notes.
 53




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eTelecare Global Solutions, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 (In thousands)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Cash Flows from Operating Activities:Net income (loss)
    
    $
    23,056
    
    
    $
    12,245
    
    
    $
    (1,764
    )Adjustments for:Depreciation and amortization
    
    
    15,381
    
    
    
    10,181
    
    
    
    8,609Provisions for:Doubtful accounts
    
    
    194
    
    
    
    518
    
    
    
    134Stock compensation costs
    
    
    2,420
    
    
    
    1,988
    
    
    
    352Deferred taxes
    
    
    (2,630
    )
    
    
    507
    
    
    
    1,016Accretion of interest on asset retirement obligations
    
    
    502
    
    
    
    168
    
    
    
    217Loss on disposal of assets
    
    
    752
    
    
    
    198
    
    
    
    114Excess tax benefits from share-based payment arrangements
    
    
    (359
    )
    
    
    
    
    
    
    Change in:Trade and other receivables
    
    
    (16,352
    )
    
    
    (8,406
    )
    
    
    (3,168
    )Prepaid expenses and other current assets
    
    
    (2,165
    )
    
    
    (555
    )
    
    
    (196
    )Trade accounts payable
    
    
    (1,292
    )
    
    
    2,720
    
    
    
    (1,661
    )Accrued and other expenses
    
    
    3,464
    
    
    
    4,982
    
    
    
    1,380Other non-current assets
    
    
    319
    
    
    
    (582
    )
    
    
    363Other non-current liabilities
    
    
    (464
    )
    
    
    (1,492
    )
    
    
    192Net cash provided by operating activities
    
    
    22,826
    
    
    
    22,472
    
    
    
    5,588Cash Flows from Investing Activities:Cash paid for business, net of cash acquired
    
    
    (1,959
    )
    
    
    
    
    
    
    (1,441
    )Acquisitions of property and equipment
    
    
    (34,284
    )
    
    
    (17,577
    )
    
    
    (6,075
    )Change in:Refundable deposits
    
    
    (1,819
    )
    
    
    
    
    
    
    (182
    )Payments for asset retirement obligations
    
    
    
    
    
    
    (32
    )
    
    
    Net cash used in investing activities
    
    
    (38,062
    )
    
    
    (17,609
    )
    
    
    (7,698
    )Cash Flows from Financing Activities:Proceeds from:Revolving line of credit
    
    
    157,342
    
    
    
    191,109
    
    
    
    167,987Long-term debt
    
    
    
    
    
    
    9,950
    
    
    
    4,000Payments for:Revolving line of credit
    
    
    (158,907
    )
    
    
    (198,643
    )
    
    
    (168,803
    )Long-term debt
    
    
    (28,500
    )
    
    
    (3,700
    )
    
    
    (3,000
    )Obligations under capital lease
    
    
    (606
    )
    
    
    (1,479
    )
    
    
    (1,243
    )Offering costs
    
    
    (756
    )
    
    
    (3,187
    )
    
    
    Debt issuance costs
    
    
    (455
    )
    
    
    (331
    )
    
    
    Excess tax benefits from share-based payment arrangements
    
    
    359
    
    
    
    
    
    
    
    Proceeds from stock option and warrant exercises
    
    
    1,784
    
    
    
    1,065
    
    
    
    430Proceeds from public offering
    
    
    79,414
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    49,675
    
    
    
    (5,216
    )
    
    
    (629
    )Net increase (decrease) in cash and cash equivalents
    
    
    34,439
    
    
    
    (353
    )
    
    
    (2,739
    )Cash and cash equivalents at beginning of year
    
    
    690
    
    
    
    1,043
    
    
    
    3,782Cash and cash equivalents at end of year
    
    $
    35,129
    
    
    $
    690
    
    
    $
    1,043
 54




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eTelecare Global Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (continued)
 (In thousands)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Supplemental Cash Flow InformationCash paid (refunded) during the period for:Interest
    
    $
    2,242
    
    
    $
    5,184
    
    
    $
    4,862Income taxes
    
    
    1,168
    
    
    
    (861
    )
    
    
    1,102Supplemental information for non-cash investing activity:Accrued capital expenditures in accounts payable
    
    
    3,134
    
    
    
    4,682
    
    
    
    Asset retirement obligation recognized
    
    
    675
    
    
    
    484
    
    
    
    Supplemental information for non-cash financing activities:Property and equipment acquired under capital lease
    
    
    
    
    
    
    
    
    
    
    1,097Lease incentive obligation and deferred rent
    
    
    
    
    
    
    52
    
    
    
    970Purchase price adjustments
    
    
    
    
    
    
    
    
    
    
    885Acquisition:Fair value of assets acquired, net of cash
    
    $
    3,017Liabilities assumed
    
    
    (1,058
    )Cash paid, net of cash acquired
    
    $
    1,959
 See accompanying notes.
 55




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##### Table of Contents



eTelecare Global Solutions, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 (In thousands, except number of shares, per share data and percentages)
 1. Corporation Information
   2. Summary of Significant Accounting Policies
 Basis of Preparation
  Reclassifications
  Principles of Consolidation
  Use of Estimates
   56




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##### Table of Contents



Business Segment
 Disclosures about Segments of an Enterprise and Related Information
  
    
    the nature of products and services;
    
    the nature of the production processes;
    
    the type or class of customer for their products and services; and
    
    the methods used to distribute their products or provide their services.
  
    
    the sale of outsourced delivery center services is the only material source of revenue
for each of our operating segments;
    
    the services sold by each of our operating segments use the same standard service
model;
    
    the same type or class of customer utilize the services; and
    
    all of our services are sold through a centralized sales force.
 Concentrations of Risk
    57




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##### Table of Contents



AccountsReceivableBalance% of Revenues
    
    December 31,2007
    
    2006
    
    2005
    
    2007Customer A
    
    
    29
    %
    
    
    42
    %
    
    
    50
    %
    
    $
    5,954Customer B
    
    
    22
    %
    
    
    18
    %
    
    
    17
    %
    
    $
    2,846Customer C
    
    
    14
    %
    
    
    6
    %
    
    
    4
    %
    
    $
    9,034Customer D
    
    
    13
    %
    
    
    7
    %
    
    
    0
    %
    
    $
    1,696
  Cash and Cash Equivalents
  Allowance for Doubtful Accounts
  Property and Equipment
   58




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##### Table of Contents



Leasehold improvements
    
    3 years or the term of the lease, whichever is shorterTelecommunications and computer
equipment
    
    3-5 yearsComputer software
    
    3 yearsFurniture, fixtures and office equipment
    
    5 years
 Asset Retirement Obligations
 Accounting for Asset Retirement Obligations
  Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets
    59




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##### Table of Contents



Customer relationship
    
    4 yearsDeveloped technology
    
    5 yearsCustomer contract
    
    1 year
 Debt Issuance Costs
  Revenue Recognition
   Cost of Services
  Leases
 Accounting for
Leases
 Stock Option Plan
 Share-Based Payment
 60




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##### Table of Contents



Foreign Currency Transactions and Translation
  Advertising Costs
  Income Taxes
 Accounting for Income Taxes
 Fair Value of Financial Instruments
  Recently Issued Accounting Standards
  Business Combinations
 61




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##### Table of Contents



3. Trade and Other Receivables
  2007
    
    
    2006Trade
    
    $
    46,697
    
    
    $
    31,441Other
    
    
    1,387
    
    
    
    33248,084
    
    
    
    31,773Less allowance for doubtful accounts
    
    
    992
    
    
    
    1,038$
    47,092
    
    
    $
    30,735
  Balance at
    
    Charged toBeginning of
    
    Costs and
    
    
    
    
    
    Balance atYear
    
    Expenses
    
    Deductions (1)
    
    End of YearYears ended December 31:2007
    
    $
    1,038
    
    
    $
    194
    
    
    $
    240
    
    
    $
    9922006
    
    
    1,521
    
    
    
    518
    
    
    
    1,001
    
    
    
    1,0382005
    
    
    1,387
    
    
    
    134
    
    
    
    
    
    
    
    1,521
 
 (1)
    
    Deductions represent uncollected amounts written off, net of recoveries  4. Deferred Offering Costs
  5. Property and Equipment
  62




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2007
    
    
    2006Acquisition value:Telecommunications and computer equipment
    
    $
    49,204
    
    
    $
    31,926Leasehold improvements
    
    
    16,207
    
    
    
    10,887Computer software
    
    
    12,484
    
    
    
    7,563Furniture, fixtures and office equipment
    
    
    10,285
    
    
    
    5,46788,180
    
    
    
    55,843Less accumulated depreciation and amortization
    
    
    36,887
    
    
    
    24,33451,293
    
    
    
    31,509Add construction-in-progress
    
    
    4,373
    
    
    
    3,470$
    55,666
    
    
    $
    34,979
  2007
    
    
    2006Acquisition value
    
    $
    5,247
    
    
    $
    5,247Less accumulated amortization
    
    
    3,706
    
    
    
    2,889$
    1,541
    
    
    $
    2,358
  6. Goodwill and Other Intangible Assets
  2007
    
    
    2006Acquisition
value:Customer relationship and contract
    
    $
    3,910
    
    
    $
    3,750Developed technology
    
    
    2,300
    
    
    
    2,3006,210
    
    
    
    6,050Less accumulated amortization
    
    
    5,071
    
    
    
    3,633$
    1,139
    
    
    $
    2,417
  2008
    
    $
    9552009
    
    
    184$
    1,139
 63




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##### Table of Contents



2007
    
    
    2006Beginning balance
    
    $
    13,833
    
    
    $
    13,833Acquisition of AOL Philippines
    
    
    592
    
    
    
    Ending balance
    
    $
    14,425
    
    
    $
    13,833
 7. Accrued and Other Expenses
  2007
    
    
    2006Accruals for:Employee salaries, wages and benefits
    
    $
    12,708
    
    
    $
    9,343Deferred rent and lease incentive obligations
    
    
    1,435
    
    
    
    912Professional services
    
    
    580
    
    
    
    1,569Communication
    
    
    1,086
    
    
    
    1,562Deferred taxes
    
    
    1,104
    
    
    
    Other
    
    
    2,251
    
    
    
    1,765Withholding and other taxes payable
    
    
    2,771
    
    
    
    1,520$
    21,935
    
    
    $
    16,671
 8. Long-term Debt and Revolving Line of Credit
      64




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2007
    
    
    2006Revolving line of credit
    
    $
    
    
    
    $
    1,565Long-term debt:Term Loan B
    
    
    
    
    
    
    17,500Term Loan A
    
    
    
    
    
    
    11,000
    
    
    
    28,500Less current portion
    
    
    
    
    
    
    4,000$
    
    
    
    $
    24,500
    65




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##### Table of Contents



9. Leases
 Obligations under Capital Leases
   2008
    
    $
    148Total minimum lease payments
    
    
    148Less amount representing interest
    
    
    3Present value of net minimum lease payments
    
    
    145Less current portion of obligations under capital lease
    
    
    145Long-term portion of obligations under capital lease
    
    $
    
  Operating Leases
     2008
    
    $
    10,1112009
    
    
    10,6832010
    
    
    9,5312011
    
    
    8,4952012
    
    
    4,607Thereafter
    
    
    14,829$
    58,256
 66




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##### Table of Contents



10. Asset Retirement Obligations
 Accounting for Asset Retirement Obligations
  2007
    
    
    2006Balance at beginning of year
    
    $
    1,884
    
    
    $
    1,264Additions during the year
    
    
    675
    
    
    
    484Accretion expense
    
    
    502
    
    
    
    326Payment
    
    
    
    
    
    
    (32
    )Adjustment at retirement
    
    
    (1,042
    )
    
    
    (158
    )Balance at end of year
    
    $
    2,019
    
    
    $
    1,884
  11. Non-current Liabilities
  2007
    
    
    2006Accrued rent
    
    $
    1,157
    
    
    $
    1,198Lease incentive obligations
    
    
    623
    
    
    
    1,203Pension plan liability
    
    
    452
    
    
    
    Other
    
    
    517
    
    
    
    1,0412,749
    
    
    
    3,442Included in accrued and other expenses
    
    
    
    
    
    
    912$
    2,749
    
    
    $
    2,530
  67




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##### Table of Contents



12. Derivatives
    Local
    
    U. S.
    
    DatesCurrency
    
    Dollar
    
    Contracts areAmount
    
    Amount
    
    ThroughPhilippine Peso
    
    
    2,279,400
    
    
    $
    51,954
    
    
    Dec-08
 68




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##### Table of Contents



13. Stockholders Equity
 Initial Public Offering
  Stock Split
   69




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##### Table of Contents



14. Employee Benefits
 Share-Based Payments
     2007
    
    
    2006
    
    
    2005Weighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExercisePrice Per
    
    
    
    
    
    
    Price Per
    
    
    
    
    
    
    Price PerShares
    
    
    Share
    
    
    Shares
    
    
    Share
    
    
    Shares
    
    
    ShareOutstanding at beginning of year
    
    
    5,275,950
    
    
    $
    4.80
    
    
    
    3,690,200
    
    
    $
    1.86
    
    
    
    4,078,028
    
    
    $
    1.71Granted
    
    
    442,688
    
    
    
    10.69
    
    
    
    1,789,000
    
    
    
    3.42
    
    
    
    438,500
    
    
    
    2.49Exercised
    
    
    (471,185
    )
    
    
    3.79
    
    
    
    (32,875
    )
    
    
    1.55
    
    
    
    (252,200
    )
    
    
    0.85Expired
    
    
    (9,028
    )
    
    
    4.24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (269,600
    )
    
    
    7.24
    
    
    
    (170,375
    )
    
    
    1.68
    
    
    
    (574,128
    )
    
    
    1.62Outstanding at end of year
    
    
    4,968,825
    
    
    $
    5.30
    
    
    
    5,275,950
    
    
    $
    2.40
    
    
    
    3,690,200
    
    
    $
    1.86Exercisable at end of year
    
    
    3,456,059
    
    
    $
    4.20
    
    
    
    3,149,325
    
    
    $
    1.89
    
    
    
    2,599,950
    
    
    $
    1.81
  70




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##### Table of Contents



2007
    
    2006
    
    2005Expected volatility
    
    
    58.8
    %
    
    
    49.1
    %
    
    
    53.0
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Risk free interest rate
    
    
    4.2
    %
    
    
    5.0
    %
    
    
    4.2
    %Expected life
    
    6.25 years
    
    4.1 years
    
    5.0 years
   Options Outstanding
    
    Options ExercisableWeighted-
    
    Weighted-
    
    
    
    
    
    Weighted-Average
    
    Average
    
    
    
    
    
    AverageRemaining
    
    Exercise
    
    
    
    
    
    ExerciseRange of
    
    Shares Under
    
    Contractual
    
    Price Per
    
    Shares Under
    
    Price PerExercise Prices
    
    Option
    
    Life
    
    Share
    
    Option
    
    Share$0.50-1.25
    
    
    894,000
    
    
    
    0.71
    
    
    $
    1.21
    
    
    
    863,000
    
    
    $
    1.21$1.26-1.75
    
    
    1,135,750
    
    
    
    1.09
    
    
    
    1.44
    
    
    
    1,079,250
    
    
    
    1.43$1.76-2.75
    
    
    553,875
    
    
    
    2.68
    
    
    
    2.47
    
    
    
    347,000
    
    
    
    2.47$2.76-3.00
    
    
    891,250
    
    
    
    3.22
    
    
    
    3.00
    
    
    
    344,921
    
    
    
    3.00$3.01-5.00
    
    
    766,200
    
    
    
    1.29
    
    
    
    3.21
    
    
    
    751,200
    
    
    
    3.19$5.01-11.00
    
    
    727,750
    
    
    
    9.40
    
    
    
    7.76
    
    
    
    70,688
    
    
    
    5.504,968,825
    
    
    
    
    
    
    
    
    
    
    
    3,456,059
    71




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##### Table of Contents



Weighted-AverageGrantDate FairShares
    
    
    ValueNonvested at beginning of year
    
    
    2,126,625
    
    
    $
    0.41Granted during the year
    
    
    442,688
    
    
    
    5.48Vested during the year
    
    
    (777,919
    )
    
    
    0.71Expired during the year
    
    
    (9,028
    )
    
    
    0.19Forfeited during the year
    
    
    (269,600
    )
    
    
    1.36Nonvested at end of year
    
    
    1,512,766
    
    
    $
    2.36
  401(K) Retirement Plans
  15. Income Taxes
  2007
    
    
    2006
    
    
    2005Philippines
    
    $
    19,193
    
    
    $
    15,985
    
    
    $
    880United States
    
    
    2,071
    
    
    
    (3,138
    )
    
    
    (2,128
    )Total
    
    $
    21,264
    
    
    $
    12,847
    
    
    $
    (1,248
    )
  72




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##### Table of Contents



2007
    
    
    2006
    
    
    2005Current:U. S. federal
    
    $
    453
    
    
    $
    4
    
    
    $
    (407
    )U. S. state and local taxes
    
    
    
    
    
    
    
    
    
    
    (137
    )Philippines
    
    
    385
    
    
    
    91
    
    
    
    44Total current
    
    
    838
    
    
    
    95
    
    
    
    (500
    )Deferred:U. S. federal
    
    $
    (2,012
    )
    
    $
    452
    
    
    $
    771U. S. state and local taxes
    
    
    (644
    )
    
    
    55
    
    
    
    245Philippines
    
    
    26
    
    
    
    
    
    
    
    Total deferred
    
    
    (2,630
    )
    
    
    507
    
    
    
    1,016Total provision (benefit)
    
    $
    (1,792
    )
    
    $
    602
    
    
    $
    516
   a.
    
    Three percent (3%) to the National Government; andb.
    
    Two percent (2%) to be remitted directly by the business establishments to the
treasurers office of the municipality or city where the enterprise is located.
  73




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##### Table of Contents



Year Ended December 31,2007
    
    2006
    
    2005Philippines statutory income tax rate (benefit)
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    (32.5
    )%Income tax holiday on registered activity with
PEZA
    
    
    (31.5
    )
    
    
    (43.2
    )
    
    
    (22.9
    )United States income taxes at different rates
    
    
    2.0
    
    
    
    8.1
    
    
    
    (96.0
    )Valuation allowance
    
    
    (12.9
    )
    
    
    4.4
    
    
    
    192.7Reversal of taxes previously accrued
    
    
    (1.9
    )
    
    
    
    
    
    
    Other
    
    
    0.9
    
    
    
    0.4
    
    
    
    0.1Total expense (benefit)
    
    
    (8.4
    )%
    
    
    4.7
    %
    
    
    41.4
    %
   74




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##### Table of Contents



2007
    
    
    2006Deferred tax assets:Net operating loss and credit carryforwards
    
    $
    348
    
    
    $
    1,469Amortization of intangibles
    
    
    1,427
    
    
    
    1,043Lease incentive obligations
    
    
    355
    
    
    
    469Employee benefits
    
    
    1,467
    
    
    
    465Deferred rent
    
    
    229
    
    
    
    274Other
    
    
    274
    
    
    
    189Total deferred tax assets
    
    
    4,100
    
    
    
    3,909Valuation allowance
    
    
    (210
    )
    
    
    (2,965
    )Net deferred tax assets
    
    
    3,890
    
    
    
    944Deferred tax liabilities:Depreciation
    
    
    (863
    )
    
    
    (944
    )Amortization of goodwill
    
    
    (1,272
    )
    
    
    (901
    )Foreign exchange hedging gains
    
    
    (1,104
    )
    
    
    Total deferred tax liabilities
    
    
    (3,239
    )
    
    
    (1,845
    )Net deferred tax assets (liabilities)
    
    $
    651
    
    
    $
    (901
    )
  2007
    
    
    2006Prepaids and other current assets
    
    $
    1,151
    
    
    $
    Other non-current assets
    
    
    604
    
    
    
    Accrued and other expenses
    
    
    (1,104
    )
    
    
    Other non-current liabilities
    
    
    
    
    
    
    (901
    )$
    651
    
    
    $
    (901
    )
  75




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Balance at January 1, 2007
    
    $
    1,633Increases related to current year tax positions
    
    
    283Increases related to prior year tax positions
    
    
    98Expiration of the statute of limitations for the assessment of taxes
    
    
    (556
    )Settlements with tax authorities
    
    
    Balance at December 31, 2007
    
    $
    1,458
    76




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##### Table of Contents



16. Earnings per Share
  2007
    
    
    2006
    
    
    2005Net income (loss)
    
    $
    23,056
    
    
    $
    12,245
    
    
    $
    (1,764
    )Weighted average shares:Common shares
outstanding for
basic earnings per
share
    
    
    27,163
    
    
    
    21,795
    
    
    
    21,543Equivalent shares
issuable upon
exercise of stock
options
    
    
    2,162
    
    
    
    2,741
    
    
    
    Weighted average diluted shares
    
    
    29,325
    
    
    
    24,535
    
    
    
    21,543Basic earnings (loss) per share
    
    $
    0.85
    
    
    $
    0.56
    
    
    $
    (0.08
    )Diluted earnings (loss) per share
    
    $
    0.79
    
    
    $
    0.50
    
    
    $
    (0.08
    )
  17. Geographic Operations
  Year Ended December 31,2007
    
    
    2006
    
    
    2005Revenue:United States
    
    $
    104,837
    
    
    $
    106,183
    
    
    $
    105,242Philippines
    
    
    155,105
    
    
    
    88,935
    
    
    
    46,971Total
    
    $
    259,942
    
    
    $
    195,118
    
    
    $
    152,213Long-lived assets:United States
    
    $
    41,074
    
    
    $
    34,599
    
    
    $
    31,553Philippines
    
    
    34,668
    
    
    
    18,551
    
    
    
    8,599Total
    
    $
    75,742
    
    
    $
    53,150
    
    
    $
    40,152
 18.  Acquisition of AOL Member Services-Philippines, Inc
  77




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##### Table of Contents



Cash
    
    $
    5,626Property and equipment
    
    
    1,971Goodwill
    
    
    592Customer contract
    
    
    160Other assets
    
    
    294Trade and other payables
    
    
    (1,058
    )Net assets acquired
    
    $
    7,585
  19. Contingencies
 James Dreyfuss vs. ETelecare Global Solutions-US,
Inc.
  78




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##### Table of Contents



20. Quarterly Results of Operations (Unaudited)
 1st
    
    2nd
    
    3rd
    
    4thQuarter
    
    Quarter
    
    Quarter
    
    Quarter(In thousands, except per share data)Year Ended December 31, 2007Service revenue
    
    $
    62,110
    
    
    $
    61,426
    
    
    $
    65,362
    
    
    $
    71,044Income from operations
    
    $
    7,318
    
    
    $
    6,575
    
    
    $
    5,197
    
    
    $
    3,526Net income
    
    $
    5,213
    
    
    $
    5,974
    
    
    $
    4,842
    
    
    $
    7,027Basic net income per share
    
    $
    0.23
    
    
    $
    0.21
    
    
    $
    0.17
    
    
    $
    0.24Diluted net income per share
    
    $
    0.21
    
    
    $
    0.19
    
    
    $
    0.15
    
    
    $
    0.23Year Ended December 31, 2006Service revenue
    
    $
    41,434
    
    
    $
    42,656
    
    
    $
    52,230
    
    
    $
    58,798Income from operations
    
    $
    3,203
    
    
    $
    2,736
    
    
    $
    6,866
    
    
    $
    6,415Net income
    
    $
    1,713
    
    
    $
    1,468
    
    
    $
    4,440
    
    
    $
    4,624Basic net income per share
    
    $
    0.08
    
    
    $
    0.07
    
    
    $
    0.20
    
    
    $
    0.21Diluted net income per share
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.18
    
    
    $
    0.19
  79




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A(T). Controls and Procedures
 Evaluation of disclosure controls and procedures.
    
 Item 9B. Other Information
  80




---



##### Table of Contents



Part III.
 
 Item 10. Directors, Executive Officers and Corporate Governance
 Executive Officers and Directors
  Name
    
    Age
    
    Position(s)Gary Fernandes (1) (2) (3)
    
    
    64
    
    
    Chairman of the Board of DirectorsJohn R. Harris
    
    
    59
    
    
    President, Chief Executive Officer and
DirectorJ. Michael Dodson
    
    
    47
    
    
    Senior Vice President and Chief Financial
OfficerGlenn J. Dispenziere
    
    
    45
    
    
    Senior Vice President, Sales and MarketingDavid F. Palmer II
    
    
    39
    
    
    Senior Vice President, Global OperationsAlfredo I. Ayala
    
    
    46
    
    
    DirectorJaime G. del Rosario (1) (3)
    
    
    54
    
    
    DirectorRichard N. Hamlin (1) (2)
    
    
    60
    
    
    DirectorJohn-Paul Ho (3)
    
    
    48
    
    
    DirectorRafael Ll. Reyes (2)
    
    
    39
    
    
    Director
 
 (1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Nominating and Corporate Governance Committee Gary J. Fernandes
 John R. Harris
 81




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##### Table of Contents



J. Michael Dodson
 Glenn J. Dispenziere
 David F. Palmer II
 Alfredo I. Ayala
 Jaime G. del Rosario
 Richard N. Hamlin
 82




---



##### Table of Contents



John-Paul Ho
 Rafael Ll. Reyes
 Board of Directors
   Corporate Governance
   
    
    compliance with laws, rules and regulations;
    
    conflicts of interest;
    
    insider trading;
    
    corporate opportunities;
    
    competition and fair dealing;
    
    health and safety;
 83




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##### Table of Contents




    
    record keeping;
    
    confidentiality;
    
    protection and proper use of company assets; and
    
    payments to government personnel.
 http://www.etelecare.com
 Board Committees
 http://www.etelecare.com
 Audit Committee.
 Compensation Committee.
 Nominating and Corporate Governance Committee.
 84




---



##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance
  Director Nominations
  
 Item 11. Executive Compensation
 Compensation Discussion and Analysis
 Company Philosophy on Compensation
  
    
    to reward them for short and long term financial and operating performance and leadership
excellence;
    
    to align their interests with those of our shareholders; and
    
    to encourage them to remain with us for the long-term.
   85




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##### Table of Contents



Establishing Compensation Opportunities
    Compensation Components
  Base Salary
   86




---



##### Table of Contents




    
    Nature and responsibility of the position and, to the extent available, salaries paid to
persons in comparable positions at comparable companies;
    
    Expertise of the individual executive;
    
    Competitiveness of the market for the executives services; and
    
    Recommendations of the Chief Executive Officer, except in the case of his own compensation.
     Incentive Bonus Plan
   87




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##### Table of Contents



2007 Incentive Bonus Plan
   Portion of Award Based On:
    
    Amount Earned if TargetCompany Financial
    
    Individual
    
    Achievement CriteriaPerformance
    
    Performance
    
    MetChief
Executive Officer
    
    
    90
    %
    
    
    10
    %
    
    $
    175,807Senior Vice President
 and Chief
Financial
 Officer
    
    
    25
    
    
    
    75
    
    
    
    160,068Senior Vice President,
 Sales

and Marketing
    
    
    25
    
    
    
    75
    
    
    
    206,779Senior Vice President,
 Global
Shared Services
    
    
    30
    
    
    
    70
    
    
    
    88,307Senior Vice President,
 Global
Operations
(Current)
    
    
    30
    
    
    
    70
    
    
    
    106,250Senior Vice President,
 Global
Operations 
(Former)
    
    
    30
    
    
    
    70
    
    
    
    115,890
  88




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##### Table of Contents



2008 Incentive Plan
  Portion of Award Based On:Target Bonus as
    
    Companya Percentage of
    
    Financial
    
    IndividualPosition
    
    Base Salary
    
    Performance
    
    PerformanceChief Executive Officer
    
    
    100
    
    
    
    100
    %
    
    
    Senior Vice President
    
    
    60
    
    
    
    80
    %
    
    
    20
    %and Chief Financial
OfficerSenior Vice President,
    
    
    100
    
    
    
    50
    %
    
    
    50
    %Sales and MarketingSenior Vice President,
    
    
    60
    
    
    
    80
    %
    
    
    20
    %Global Operations
   89




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##### Table of Contents



Long-Term Equity Incentive Program
    Deferred Compensation Plans
 Post-employment/Change of Control Payments.
 90




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##### Table of Contents



Other supplemental benefits.
  2007 Summary Compensation Table
  Non-EquityStock
    
    
    Option
    
    
    Incentive Plan
    
    
    All OtherAwards ($)
    
    
    Awards ($)
    
    
    Compensation
    
    
    CompensationName and Principal Position
    
    Year
    
    
    Salary ($)
    
    
    Bonus ($)
    
    
    (1)
    
    
    (1)
    
    
    ($)
    
    
    ($)
    
    
    Total ($)John R. Harris
Chief Executive Officer & Director
    
    
    2007
    
    
    
    351,180
    
    
    
    
    
    
    
    110,211
    
    
    
    327,403
    
    
    
    119,021
    
    
    
    4,366
    (3)
    
    
    912,181J. Michael Dodson
Senior Vice President and Chief Financial
Officer
    
    
    2007
    
    
    
    264,955
    
    
    
    26,000
    
    
    
    73,474
    
    
    
    20,530
    
    
    
    88,512
    
    
    
    2,941
    (2)
    
    
    476,412Glenn J. Dispenziere
Senior Vice President, Sales and Marketing
    
    
    2007
    
    
    
    204,954
    
    
    
    
    
    
    
    
    
    
    
    73,959
    
    
    
    160,277
    
    
    
    1,569
    (2)
    
    
    440,759David F. Palmer II
Senior Vice President, Global Operations
    
    
    2007
    
    
    
    247,115
    
    
    
    
    
    
    
    
    
    
    
    212,149
    
    
    
    55,685
    
    
    
    48,561
    (3)
    
    
    563,510Vivek Padmanabhan (4)
Senior Vice President, Global Shared Services
    
    
    2007
    
    
    
    176,180
    
    
    
    17,500
    
    
    
    
    
    
    
    53,436
    
    
    
    48,678
    
    
    
    170
    (2)
    
    
    295,964Einar Seadler (5)
Senior Vice President, Global Operations
    
    
    2007
    
    
    
    158,638
    
    
    
    22,500
    
    
    
    
    
    
    
    161,505
    
    
    
    31,669
    
    
    
    152,207
    (6)
    
    
    526,519
 
 (1)
    
    Amounts listed in this column represent the compensation expense of option awards recognized by the Company, before
forfeitures, under FAS 123R for the 2007 fiscal year, rather than amounts paid to or realized by the named individual, and
includes expense recognized for awards granted prior to 2007. Please refer to Note 14 to our consolidated financial
statements for the underlying assumptions for this expense. There can be no assurance that options will be exercised (in
which case no value will be realized by the individual) or that the value on exercise will approximate the compensation
expense recognized by the Company.(2)
    
    Represents life insurance premiums paid by us.(3)
    
    Represents life insurance premiums paid by us in the amounts of $3,044 and $166 for Messrs. Harris and Palmer, respectively.
Also represents amounts reimbursed for relocation costs of $1,322 and $48,395 for Messrs. Harris and Palmer, respectively.(4)
    
    Mr. Padmanabhan resigned in January 2008. 91




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##### Table of Contents



(5)
    
    Mr. Seadler resigned in August 2007.(6)
    
    Other compensation represents severance payments of $61,129
paid in 2007 and the remainder of which will be paid in 2008. The
amount also
includes life insurance premiums paid by us of $659. Change-in-Control Arrangements
  John Harris
      J.
Michael Dodson
 Glen
Dispenziere
 92




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##### Table of Contents



David
Palmer.
 2007 Grants of Plan-Based Awards
 All Other
    
    All OtherStock
    
    Option
    
    ExerciseAwards:
    
    Awards:
    
    or Base
    
    Grant DateEstimated Future Payments under
    
    Number of
    
    Number of
    
    Price of
    
    Value ofNon-Equity Incentive Plan Awards
    
    Shares of
    
    Options
    
    Option
    
    Stock(1) (2)
    
    Stock or
    
    Underlying
    
    Awards
    
    Options andGrant
    
    Threshold
    
    Target
    
    Maximum
    
    Units
    
    Securities
    
    ($/Sh)
    
    Awards ($)Name
    
    Date
    
    ($)
    
    ($)
    
    ($)
    
    (#) (3)
    
    (#) (4)
    
    (5)
    
    (6)John R. Harris
    
    
    5/16/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,200
    
    
    
    
    
    
    
    
    
    
    
    110,21187,904
    
    
    
    175,807
    
    
    
    263,711J. Michael Dodson
    
    
    5/16/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,800
    
    
    
    
    
    
    
    
    
    
    
    73,47480,034
    
    
    
    160,068
    
    
    
    200,085Glenn J. Dispenziere
    
    
    
    
    
    
    103,390
    
    
    
    206,779
    
    
    
    413,558David F. Palmer II
    
    
    1/15/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    11.00
    
    
    
    150,0009/19/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    10.49
    
    
    
    941,57353,125
    
    
    
    106,250
    
    
    
    159,375
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vivek Padmanabhan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Einar Seadler
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    The target incentive amounts shown in this column reflect our 2007 incentive bonus awards originally
provided under the annual incentive plan for 2007 and represent the pre-established target awards as a
percentage of base salary for the 2007 fiscal year, with the potential for actual awards under the plan
to either exceed or be less than such funding target depending upon pre-determined performance
criteria. Actual award amounts are not guaranteed and are determined at the discretion of the
Compensation Committee. For additional information, please refer to the Compensation Discussion and
Analysis section.(2)
    
    The threshold illustrates the smallest payout that can be made if all of the pre-established
performance objectives are achieved at the minimum achievement level. If the threshold level of
performance is not met, no amounts will be payable under the 2007 annual incentive plan. The target is
the payout that can be made if the pre-established performance objectives have been achieved at the
target achievement level. The maximum is the greatest payout that can be made if the pre-established
maximum performance objectives are achieved or exceeded at the outperform achievement levels.(3)
    
    Restricted stock units vest as to 12.5% of the total number of shares each quarter beginning August 16,
2007.(4)
    
    Options listed vest as to 25% of the total number of shares on each anniversary date beginning one year
after the grant date. 93




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##### Table of Contents



(5)
    
    Represents the exercise price for the stock options granted, which is equal to the closing price ADSs
on the Grant Date.(6)
    
    This column shows the full Grant Date fair value we would expense in our financial statements over the
vesting period per FAS 123(R) removing the service-based vesting forfeiture assumption. The fair value
is calculated using a Black-Scholes valuation methodology according to FAS 123(R). Please refer to
footnote 14 of our financial statements contained in this report regarding valuation assumptions. 2007 Outstanding Equity Awards at Fiscal Year End
  Option AwardsNumber of
    
    Number ofSecurities
    
    Securities
    
    
    
    
    
    
    
    
    
    Stock AwardsUnderlying
    
    Underlying
    
    Option
    
    
    
    
    
    Number of
    
    Market Value ofUnexercised
    
    Unexercised
    
    Exercise
    
    
    
    
    
    Shares or Units
    
    Shares or Units ofOptions (# )
    
    Options (#)
    
    Price
    
    Option Expiration
    
    of Stock that
    
    Stock that haveName
    
    Exercisable
    
    Unexercisable
    
    ($)
    
    Date
    
    have not Vested
    
    not Vested ($) (1)John R. Harris
    
    
    323,671
    
    
    
    467,579
    (2)
    
    
    6.00
    
    
    
    3/6/2011
    
    
    
    16,650
    
    
    
    139,028
    (4)J. Michael Dodson
    
    
    45,000
    
    
    
    90,000
    (3)
    
    
    5.00
    
    
    
    12/8/2010
    
    
    
    11,100
    
    
    
    92,685
    (4)Glenn J. Dispenziere
    
    
    37,500
    
    
    
    37,500
    (3)
    
    
    5.00
    
    
    
    12/5/2010
    
    
    
    
    
    
    
    6,250
    
    
    
    18,750
    (3)
    
    
    11.00
    
    
    
    12/8/2016
    
    
    
    
    
    
    
    David F. Palmer II
    
    
    
    
    
    
    50,000
    (3)
    
    
    11.00
    
    
    
    1/15/2017
    
    
    
    
    
    
    
    
    
    
    
    150,000
    (3)
    
    
    10.49
    
    
    
    9/19/2017
    
    
    
    
    
    
    
    Vivek Padmanabhan
    
    
    7,500
    
    
    
    2,500
    (3)
    
    
    4.00
    
    
    
    1/1/2014
    
    
    
    
    
    
    
    15,000
    
    
    
    5,000
    (3)
    
    
    4.00
    
    
    
    7/1/2014
    
    
    
    
    
    
    
    5,000
    
    
    
    15,000
    (3)
    
    
    11.00
    
    
    
    12/8/2016
    
    
    
    
    
    
    
    Einar Seadler
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Market value calculated using the closing price of our ADSs on December 28, 2007.(2)
    
    Vests ratably every month until March 6, 2010, subject to the named executive officers
continued employment with us.(3)
    
    Vests ratably starting with the first anniversary of the option and each year anniversary
thereafter, subject to the named executive officers continued employment with us.(4)
    
    Vests ratably every quarter until May 16, 2009, subject to the named executive officers
continued employment with us. 2007 Option Exercises and Stock Vested
 Option Awards
    
    Stock AwardsNumber of
    
    Value
    
    Number ofShares
    
    Realized on
    
    Shares
    
    Value RealizedAcquired on
    
    Exercise ($)
    
    Acquired on
    
    on Vesting ($)Name
    
    Exercise (#)
    
    (1)
    
    Vesting (#)
    
    (2)John R. Harris
    
    
    40,000
    
    
    
    192,800
    
    
    
    5,550
    
    
    
    54,917J. Michael Dodson
    
    
    45,000
    
    
    
    261,900
    
    
    
    3,700
    
    
    
    36,612Glenn J. Dispenziere
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    David F. Palmer II
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vivek Padmanabhan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Einar Seadler
    
    
    175,000
    
    
    
    1,252,500
    
    
    
    
    
    
    
    
 94




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##### Table of Contents



(1)
    
    Represents the difference between the exercise price and the fair market value of the
common stock on the date of exercise.(2)
    
    Represents the difference between the exercise price and the fair market value of the
common stock on the date of vesting. REPORT OF COMPENSATION COMMITTEE
   .
 Respectfully submitted,/s/ Gary J. FernandesGary J. Fernandes/s/ Richard N. HamlinRichard N. Hamlin/s/ Rafael LI. ReyesRafael LI Reyes Compensation Committee Interlocks and Insider Participation
  2007 Directors Compensation Table
  95




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##### Table of Contents



FeesEarned or
    
    Stock
    
    All OtherPaid in
    
    Awards ($)
    
    Compensation ($)Name
    
    Cash (1)
    
    (2) (3)
    
    (4)
    
    Total ($)Gary Fernandes
    
    
    72,000
    
    
    
    37,692
    
    
    
    
    
    
    
    109,692Alfredo I. Ayala
    
    
    48,125
    
    
    
    37,692
    
    
    
    776
    
    
    
    86,593Jaime G. del Rosario
    
    
    4,000
    
    
    
    11,035
    
    
    
    
    
    
    
    15,035Richard N. Hamlin
    
    
    77,000
    
    
    
    37,692
    
    
    
    
    
    
    
    114,692John-Paul Ho
    
    
    39,000
    
    
    
    37,692
    
    
    
    
    
    
    
    76,692Rafael Ll. Reyes
    
    
    44,000
    
    
    
    37,692
    
    
    
    
    
    
    
    81,692
 
 (1)
    
    Directors were paid $1,000 for each board meeting and $1,000 for each committee
meeting they attended as well as an annual retainer fee.(2)
    
    Amounts listed in this column represent the compensation expense of stock awards
recognized by the Company, before forfeitures, under FAS 123R for the 2007 fiscal
year, rather than amounts paid to or realized by the named individual. Please
refer to Note 14 to our consolidated financial statements for the underlying
assumptions for this expense. As of December 31, 2007, Messrs. Fernandes, Ayala,
Hamlin, Ho and Reyes each held 3,704 of restricted stock units, of which 1,852
were vested and Mr. del Rosario held 5,010 of restricted stock units, of which
none were vested.(3)
    
    As of December 31, 2007, Mr. Fernandes held options to purchase 40,990 of shares,
which vest as to every month until January 1, 2011, Mr. Ho held options to
purchase 6,260 of shares, which are fully vested and Mr. Reyes held options to
purchase 10,000 of shares, which are fully vested.(4)
    
    Amount represents life insurance premiums paid by our Company. 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
    
    each person known to us to be the beneficial owner of more than 5% of our common shares;
    
    each of our named executive officers;
    
    each of our directors; and
    
    all of our directors and executive officers as a group.
 st
   96




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##### Table of Contents



Shares Beneficially OwnedName and Address of Beneficial Owner
    
    Number
    
    
    %5% Stockholders:ATR-Kim Eng Securities, Inc. (1)
    
    
    2,481,766
    
    
    
    8.5
    %Derek Holley (2)
    
    
    2,571,472
    
    
    
    8.6
    %Entities affiliated with American International Group (3)
    
    
    2,457,832
    
    
    
    8.5
    %Entities affiliated with Crimson (4)
    
    
    5,609,646
    
    
    
    19.3
    %James W. Franke (5)
    
    
    2,821,472
    
    
    
    9.4
    %Newbridge International Investment Ltd. (6)
    
    
    6,392,550
    
    
    
    22.0
    %Named Executive Officers and DirectorsGary Fernandes (7)
    
    
    15,264
    
    
    
    *John R. Harris (8)
    
    
    441,266
    
    
    
    1.5
    %J. Michael Dodson (9)
    
    
    95,550
    
    
    
    *Glenn J. Dispenziere (10)
    
    
    45,750
    
    
    
    *David F. Palmer II (11)
    
    
    12,750
    
    
    
    *Alfredo I. Ayala (12)
    
    
    6,825,006
    
    
    
    23.2
    %Jaime G. del Rosario (13)
    
    
    2,505
    
    
    
    *Richard N. Hamlin (14)
    
    
    11,205
    
    
    
    *John-Paul Ho (15)
    
    
    5,619,602
    
    
    
    19.3
    %Rafael LI. Reyes (16)
    
    
    13,705
    
    
    
    *All executive officers and directors as a group
(10 persons)(17)
    
    
    13,082,603
    
    
    
    43.6
    %
 
 *
    
    Represents beneficial ownership of less than 1%.(1)
    
    All shares are held by A. Soriano Corporation, a Philippine corporation. The principal
address for ATR-Kim Eng Securities, Inc. is: c/o ATR-Kim Eng Sec., Inc., 17/ F Tower One &
Exch. Plaza Ayala Triangle, Makati City. Andres Soriano III has voting and dispositive power
over these shares.(2)
    
    Includes 920,600 shares subject to options that are immediately exercisable. Also includes
1,122,722 shares held by Integrated Telecom LLC, of which Mr. Holley is a member and
manager. Mr. Holley shares beneficial ownership and voting and dispositive power over the
shares with James Franke, one of our directors. Either Mr. Franke or Mr. Holley may
represent the 1,122,722 shares registered in the name of Integrated Telecom LLC. Mr. Holley
disclaims beneficial ownership of such shares except to the extent of their pecuniary
interests therein.(3)
    
    Includes 1,966,266 shares held by AIG Asian Opportunity Fund LP and 491,566 shares held by
Philippine American Life and General Insurance Company. The principal address for Philippine
American Life and General Insurance Company is: 23rd Floor, Philiamlife Tower, 8767 Paseo de
Roxas, Makati City, Metro Manila 1226, Philippines. Jose L. Cuisia, Jr., the chief executive
officer of Philippine American Life and General Insurance Company, has voting and
dispositive power over the shares held by Philippine American Life and General Insurance
Company. Mr. Cuisia disclaims beneficial ownership over these shares except to the extent of
his pecuniary interest therein. The principal address for AIG Asian Opportunity Fund LP is:
15th 97




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##### Table of Contents



Floor, AIG Tower, 1 Connaught Road, Central, Hong Kong. Ada Tse, the chief executive
officer of AIG Opportunity Fund LP, has voting and dispositive power over the shares held by
AIG Asian Opportunity Fund LP. Ms. Tse disclaims beneficial ownership of these shares except
to the extent of her pecuniary interest therein.(4)
    
    Includes 2,499,152 shares held by Crimson Velocity Fund Ltd., 2,181,044 shares held by
Crimson Asia Capital Ltd., and 929,450 shares held by Crimson Investments Ltd. Mr. Ho, one
our directors, is the founder and a managing partner of Crimson. Mr. Ho shares voting and
dispositive power over these shares with Ian Morton, a partner with Crimson Investment Ltd.
Mr. Ho and Mr. Morton disclaim beneficial ownership of such shares except to the extent of
their pecuniary interests therein. The address for each of these entities is: c/o Crimson,
13/ F, No. 109, Min Sheng E. Road, SEC 3, Taipei 105, Taiwan, ROC.(5)
    
    Includes 778,150 shares held in trust by the James and Michelle Franke Family Trust.
Includes 1,122,722 shares held by Integrated Telecom LLC. Mr. Franke shares beneficial
ownership with Derek Holley and Messrs. Frank and Holley share voting and dispositive power
over the shares. Either Mr. Franke or Mr. Holley may represent the 1,122,722 shares
registered in the name of Integrated Telecom LLC. Mr. Franke disclaims beneficial ownership
of such shares except to the extent of their pecuniary interests therein. Also includes
920,600 shares subject to options that are immediately exercisable.(6)
    
    The principal address for Newbridge International Investment Ltd. is P.O. Box 173 Kingston
Chambers Road, Town Tortola, British Virgin Islands. Mr. Ayala, one of our directors, shares
voting and dispositive power over these shares with Renato Marzan and Ricardo Lacinto.
Messrs. Ayala, Marzan and Lacinto disclaim beneficial ownership of these shares except to
the extent of their pecuniary interest therein.(7)
    
    Includes 870 shares subject to options and 3,261 restricted
share units that are immediately exercisable and 1,740 shares
subject to options and 1,892 restricted share units that are exercisable within 60 days of February 29, 2008.(8)
    
    Includes 358,306 shares subject to options and 8,325
restricted share units that are immediately exercisable and 34,635
shares subject to options that are exercisable within 60 days of February 29, 2008.(9)
    
    Includes 45,000 shares are subject to options and 5,550 restricted share units that are immediately exercisable.(10)
    
    Includes 43,750 shares subject to options that are immediately exercisable.(11)
    
    Includes 12,500 shares subject to options that are immediately exercisable.(12)
    
    Includes 6,392,550 shares purchased and held by Ayala Corporation through Newbridge International Investment Ltd. Mr.
Ayala disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. Also
includes 428,750 shares subject to options and 2,778 restricted share
units that are immediately exercisable and 926 restricted share units that
are exercisable within 60 days of February 29, 2008.(13)
    
    Includes 1,252 restricted share units that are immediately exercisable and 1,253 restricted share units that
are exercisable within 60 days of February 29, 2008.(14)
    
    Includes 2,778 shares restricted share units that are immediately exercisable and 926 restricted share units that are
exercisable within 60 days of February 29, 2008.(15)
    
    Includes 2,499,152 shares held by Crimson Velocity Fund Ltd., 2,181,044 shares held by Crimson Asia Capital Ltd., and
929,450 shares held by Crimson Investments Ltd. Mr. Ho, a director of the Company, is the founder and a managing
partner of Crimson. Mr. Ho shares voting and dispositive power over the Crimson Investments Ltd. shares with Ian
Morton. Mr. Ho disclaims beneficial ownership of such shares except to the extent of their pecuniary interests
therein. Also includes 6,250 shares subject to options and 2,778
restricted share units that are
immediately exercisable and 926 restricted share units that are exercisable within 60 days of February 29, 2008. .(16)
    
    Includes 10,000 shares subject to options and 2,778
restricted share units that are immediately exercisable and 926 restricted share units that are
exercisable within 60 days of February 29, 2008.(17)
    
    Includes 905,426 shares subject to options and 29,500
restricted share units that are immediately exercisable and 36,375
shares subject to options and 6,849 restricted share units that
are exercisable within 60 days of February 29, 2008.   98




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions and Director Independence
 Director Independence
   
 Item 14. Principle Accountant Fees and Services
  Year ended December 31,2007
    
    
    2006Audit fees (1)
    
    $
    390,000
    
    
    $
    474,500Audit-related fees (2)
    
    
    412,806
    
    
    
    941,594Tax Services Fees (3)
    
    
    
    
    
    
    All Other Fees
    
    
    
    
    
    
    $
    802,806
    
    
    $
    1,416,094
 
 (1)
    
    Audit fees include fees billed for the audit of our annual
statements, including this Annual Report on Form 10-K
and services that are normally provided by the principal accountant
in connection with regulatory filings.(2)
    
    Audit-related fees include fees billed for reviews of our
quarterly financial statements, SEC registration
statements, including fees related to our initial public
offering of our American Depositary Shares, and fees for assurance and related services
incurred in the performance of the audit of our consolidated financial statements and not reported as audit fees.(3)
    
    Tax services fees consist of tax compliance and consultation services. Audit Committee Pre-Approval Policies and Procedures
  99




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##### Table of Contents



Part IV.
 
 Item 15. Exhibits and Financial Statement Schedules
 (a) Documents filed as part of this report:
       (b) Exhibits
 ExhibitNumber
    
    Description3 .(i)
    
    Amended Articles of Incorporation of the Company (incorporated by reference
to Exhibit 3.(i) filed with Registration Statement on Form F-1 (File No.
333-141243), declared effective on March 27, 2007).3 .(ii)
    
    Amendment to the Amended Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1(i) of the Companys Current Report
on Form 8-K filed September 7, 2007)3 .(iii)
    
    Amended By-laws of the Company (incorporated by reference to Exhibit 3.(ii)
filed with Registration Statement on Form F-1 (File No. 333-141243),
declared effective on March 27, 2007)4 .1
    
    Form of Deposit Agreement among the Company, Deutsche Bank Trust Company
Americas as Depositary, and the holders and beneficial owners of American
Depositary Shares evidenced by American Depositary Receipts issued
thereunder (incorporated by reference to Exhibit 4.1 filed with Registration
Statement on Form F-1 (File No. 333-141243), declared effective on March 27,
2007).4 .2
    
    Form of Amendment No.1 to Deposit Agreement (incorporated by reference to
Exhibit (a)(2) to the Companys Form F-6 POS filed on September 12, 2007).4 .3
    
    Form of American Depositary Receipt (included in Exhibit 4.1).4 .4
    
    Specimen Common Share Certificate (incorporated by reference to Exhibit 4.3
filed with Registration Statement on Form F-1 (File No. 333-141243),
declared effective on March 27, 2007).10 .1
    
    Amended and Restated Key Employees Stock Option Plan and form of agreements
thereunder (incorporated by reference to Exhibit 10.1 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).10 .2
    
    Amended and Restated 2006 Stock Incentive Plan and form of agreements
thereunder (incorporated by reference to Exhibit 10.2 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).
 100




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##### Table of Contents



ExhibitNumber
    
    Description10 .3
    
    Sublease Agreement by and between the Company and Pima/ Raintree Partners,
L.L.C., dated March 23, 2005 (incorporated by reference to Exhibit 10.3
filed with Registration Statement on Form F-1 (File No. 333-141243),
declared effective on March 27, 2007).10 .4
    
    Sublease Agreement by and between the Company and Social Security System
dated, June 21, 2006 (incorporated by reference to Exhibit 10.4 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).10 .5
    
    Stock Purchase Agreement by and among eTelecare International, Inc., Phase 2
Solutions, Inc., for purposes of Section 2.4, 5.7 and 8.2(b) only, and the
Shareholders of Phase 2 Solutions, Inc., dated March 31, 2004, and
amendments thereto (incorporated by reference to Exhibit 10.6 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).10 .6#
    
    Services Agreement by and between AT&T Wireless Services, Inc. and Phase 2
Solutions, Inc., dated January 2, 2004, and Statements of Work, dated
January 2, 2004 (incorporated by reference to Exhibit 10.9 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).10 .7#
    
    Master Services Agreement No. TH120103 by and between Cingular Wireless LLC
and Phase 2 Solutions, Inc. for Contracted Call Center Services, dated
February 24, 2004, and specification for Purchase Order No. 3, dated March
23, 2005 (incorporated by reference to Exhibit 10.10 filed with Registration
Statement on Form F-1 (File No. 333-141243), declared effective on March 27,
2007).10 .8#
    
    Master Service Agreement by and between eTelecare International, Inc. and
Dell Product L.P., effective as of April 1, 2002, amendments and Schedule
thereto (incorporated by reference to Exhibit 10.11 filed with Registration
Statement on Form F-1 (File No. 333-141243), declared effective on March 27,
2007).10 .9#
    
    Statement of Work Order No. 2 to the Master Services Agreement No. TH120103
between the Company and Cingular Wireless, LLC, dated November 1, 2006
(incorporated by reference to Exhibit 10.12 filed with Registration
Statement on Form F-1 (File No. 333-141243), declared effective on March 27,
2007).10 .10
    
    Credit Agreement between the Company, eTelecare Global Solutions-US, Inc.,
eTelecare Global Solutions-AZ, Inc. and Wells Fargo Bank, National
Association, dated July 23, 2007 (incorporated by reference to Exhibit 10.1
of the Companys Current Report on Form 8-K filed July 26, 2007)10 .11
    
    Revolving Line of Credit Note between eTelecare Global Solutions-US, Inc.,
eTelecare Global Solutions-AZ, Inc. and Wells Fargo Bank, National
Association, dated July 23, 2007. (incorporated by reference to Exhibit 10.2
of the Companys Current Report on Form 8-K filed July 26, 2007)10 .12
    
    Security Agreement between eTelecare Global Solutions-US, Inc., eTelecare
Global Solutions-AZ, Inc. and Wells Fargo Bank, National Association, dated
July 23, 2007. (incorporated by reference to Exhibit 10.3 of the Companys
Current Report on Form 8-K filed July 26, 2007)10 .13
    
    Continuing Guaranty between the Company and Wells Fargo Bank, National
Association, dated July 23, 2007. (incorporated by reference to Exhibit 10.4
of the Companys Current Report on Form 8-K filed July 26, 2007)10 .14
    
    Mortgage and Assignment Agreement between the Company and Wells Fargo Bank,
National Association, dated July 23, 2007. (incorporated by reference to
Exhibit 10.5 of the Companys Current Report on Form 8-K filed July 26,
2007)10 .15
    
    Stock Purchase Agreement between the Company and AOL LLC, dated September
18, 2007 (incorporated by reference to Exhibit 10.1 of the Companys Current
Report on Form 8-K filed September 24, 2007)
 101




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##### Table of Contents



ExhibitNumber
    
    Description10 .16
    
    Purchase Order 3 between the Company and AT&T Mobility LLC (f/k/a Cingular
Wireless), effective as of August 1, 2007(incorporated by reference to
Exhibit 10.7 of the Companys Quarterly Report on Form 10-Q filed November
2, 2007).10 .17
    
    Amendment to Purchase Order 3 between the Company and AT&T Mobility LLC
(f/k/a Cingular Wireless), effective as of November 1, 2007( incorporated by
reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed
December 7, 2007).10 .18*
    
    Change of Control Agreement dated September 25, 2006 between the Company
and John Harris10 .19*
    
    Change of Control Agreement dated September 25, 2006 between the Company and
J. Michael Dodson10 .20*
    
    Change of Control Agreement dated September 25, 2006 between the Company
and Glenn Dispenziere10 .21*
    
    Change of Control Agreement dated
September 14, 2007 between the Company
and David Palmer.21 .1*
    
    List of Subsidiaries.23 .1*
    
    Consent of Ernst & Young LLP, independent registered public accounting firm.24 .1*
    
    Power of Attorney (see page 103 of this Form 10-K).31 .1*
    
    Rule 13a  14(a) Certification of Chief Executive Officer.31 .2*
    
    Rule 13a  14(a) Certification of the Chief Financial Officer.32 .1**
    
    Statement of the Chief Executive Officer under Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).32 .2**
    
    Statement of the Chief Financial Officer under Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
 
 *
    
    Filed herewith**
    
    In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC
Release Nos. 33-8238 and 34-47986, Final Rule: Managements Reports on
Internal Control Over Financial Reporting and Certification of
Disclosure in Exchange Act Periodic Reports, the certifications
furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany
this Form 10-K and will not be deemed filed for purposes of Section
18 of the Exchange Act. Such certifications will not be deemed to be
incorporated by reference into any filing under the Securities Act or
the Exchange Act, except to the extent that the Company specifically
incorporates it by reference.#
    
    Confidential Treatment Requested. Confidential portions of this
agreement have been redacted and have been separately filed with the
Securities and Exchange Commission.
    
    Indicates management contract or compensatory plan or arrangement. (c) Financial Statements and Schedules:
  102




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##### Table of Contents



Signatures
   eTELECARE GLOBAL SOLUTIONS, INC.By:
    /s/ John R. HarrisJohn R. HarrisPresident, Chief Executive Officer and Director
(Principal Executive Officer) POWER OF ATTORNEY
  103




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##### Table of Contents



eTELECARE GLOBAL
SOLUTIONS, INC.By:
    /s/ John R. HarrisJohn R. HarrisPresident, Chief Executive 
Officer and Director
(Principal Executive Officer)By:
    /s/ J. Michael DodsonJ. Michael DodsonChief Financial Officer and
 Accounting
Officer
(Principal Financial Officer)By:
    /s/ Gary FernandesGary FernandesChairman of the Board of
DirectorsBy:
    /s/ Alfredo I. AyalaAlfredo I. AyalaDirectorBy:
    /s/ Jaime G. Del RosarioJaime G. Del RosarioDirectorBy:
    /s/ Richard N. HamlinRichard N. HamlinDirectorBy:
    /s/ John-Paul HoJohn-Paul HoDirectorBy:
    /s/ Rafael LI. ReyesRafael LI. ReyesDirector  104




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Description3 .(i)
    
    Amended Articles of Incorporation of the Company (incorporated by reference
to Exhibit 3.(i) filed with Registration Statement on Form F-1 (File No.
333-141243), declared effective on March 27, 2007).3 .(ii)
    
    Amendment to the Amended Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1(i) of the Companys Current Report
on Form 8-K filed September 7, 2007)3 .(iii)
    
    Amended By-laws of the Company (incorporated by reference to Exhibit 3.(ii)
filed with Registration Statement on Form F-1 (File No. 333-141243),
declared effective on March 27, 2007)4 .1
    
    Form of Deposit Agreement among the Company, Deutsche Bank Trust Company
Americas as Depositary, and the holders and beneficial owners of American
Depositary Shares evidenced by American Depositary Receipts issued
thereunder (incorporated by reference to Exhibit 4.1 filed with Registration
Statement on Form F-1 (File No. 333-141243), declared effective on March 27,
2007).4 .2
    
    Form of Amendment No.1 to Deposit Agreement (incorporated by reference to
Exhibit (a)(2) to the Companys Form F-6 POS filed on September 12, 2007).4 .3
    
    Form of American Depositary Receipt (included in Exhibit 4.1).4 .4
    
    Specimen Common Share Certificate (incorporated by reference to Exhibit 4.3
filed with Registration Statement on Form F-1 (File No. 333-141243),
declared effective on March 27, 2007).10 .1
    
    Amended and Restated Key Employees Stock Option Plan and form of agreements
thereunder (incorporated by reference to Exhibit 10.1 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).10 .2
    
    Amended and Restated 2006 Stock Incentive Plan and form of agreements
thereunder (incorporated by reference to Exhibit 10.2 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).10 .3
    
    Sublease Agreement by and between the Company and Pima/ Raintree Partners,
L.L.C., dated March 23, 2005 (incorporated by reference to Exhibit 10.3
filed with Registration Statement on Form F-1 (File No. 333-141243),
declared effective on March 27, 2007).10 .4
    
    Sublease Agreement by and between the Company and Social Security System
dated, June 21, 2006 (incorporated by reference to Exhibit 10.4 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).10 .5
    
    Stock Purchase Agreement by and among eTelecare International, Inc., Phase 2
Solutions, Inc., for purposes of Section 2.4, 5.7 and 8.2(b) only, and the
Shareholders of Phase 2 Solutions, Inc., dated March 31, 2004, and
amendments thereto (incorporated by reference to Exhibit 10.6 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).10 .6#
    
    Services Agreement by and between AT&T Wireless Services, Inc. and Phase 2
Solutions, Inc., dated January 2, 2004, and Statements of Work, dated
January 2, 2004 (incorporated by reference to Exhibit 10.9 filed with
Registration Statement on Form F-1 (File No. 333-141243), declared effective
on March 27, 2007).10 .7#
    
    Master Services Agreement No. TH120103 by and between Cingular Wireless LLC
and Phase 2 Solutions, Inc. for Contracted Call Center Services, dated
February 24,
 105




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##### Table of Contents



ExhibitNumber
    
    Description2004, and specification for Purchase Order No. 3, dated March
23, 2005 (incorporated by reference to Exhibit 10.10 filed with Registration
Statement on Form F-1 (File No. 333-141243), declared effective on March 27,
2007).10 .8#
    
    Master Service Agreement by and between eTelecare International, Inc. and
Dell Product L.P., effective as of April 1, 2002, amendments and Schedule
thereto (incorporated by reference to Exhibit 10.11 filed with Registration
Statement on Form F-1 (File No. 333-141243), declared effective on March 27,
2007).10 .9#
    
    Statement of Work Order No. 2 to the Master Services Agreement No. TH120103
between the Company and Cingular Wireless, LLC, dated November 1, 2006
(incorporated by reference to Exhibit 10.12 filed with Registration
Statement on Form F-1 (File No. 333-141243), declared effective on March 27,
2007).10 .10
    
    Credit Agreement between the Company, eTelecare Global Solutions-US, Inc.,
eTelecare Global Solutions-AZ, Inc. and Wells Fargo Bank, National
Association, dated July 23, 2007 (incorporated by reference to Exhibit 10.1
of the Companys Current Report on Form 8-K filed July 26, 2007)10 .11
    
    Revolving Line of Credit Note between eTelecare Global Solutions-US, Inc.,
eTelecare Global Solutions-AZ, Inc. and Wells Fargo Bank, National
Association, dated July 23, 2007. (incorporated by reference to Exhibit 10.2
of the Companys Current Report on Form 8-K filed July 26, 2007)10 .12
    
    Security Agreement between eTelecare Global Solutions-US, Inc., eTelecare
Global Solutions-AZ, Inc. and Wells Fargo Bank, National Association, dated
July 23, 2007. (incorporated by reference to Exhibit 10.3 of the Companys
Current Report on Form 8-K filed July 26, 2007)10 .13
    
    Continuing Guaranty between the Company and Wells Fargo Bank, National
Association, dated July 23, 2007. (incorporated by reference to Exhibit 10.4
of the Companys Current Report on Form 8-K filed July 26, 2007)10 .14
    
    Mortgage and Assignment Agreement between the Company and Wells Fargo Bank,
National Association, dated July 23, 2007. (incorporated by reference to
Exhibit 10.5 of the Companys Current Report on Form 8-K filed July 26,
2007)10 .15
    
    Stock Purchase Agreement between the Company and AOL LLC, dated September
18, 2007 (incorporated by reference to Exhibit 10.1 of the Companys Current
Report on Form 8-K filed September 24, 2007)10 .16
    
    Purchase Order 3 between the Company and AT&T Mobility LLC (f/k/a Cingular
Wireless), effective as of August 1, 2007(incorporated by reference to
Exhibit 10.7 of the Companys Quarterly Report on Form 10-Q filed November
2, 2007).10 .17
    
    Amendment to Purchase Order 3 between the Company and AT&T Mobility LLC
(f/k/a Cingular Wireless), effective as of November 1, 2007( incorporated by
reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed
December 7, 2007).10 .18*
    
    Change of Control Agreement dated September 25, 2006 between the Company
and John Harris.10 .19*
    
    Change of Control Agreement dated September 25, 2006 between the Company and
J. Michael Dodson.10 .20*
    
    Change of Control Agreement dated September 25, 2006 between the Company
and Glenn Dispenziere.10 .21*
    
    Change of Control Agreement dated
September 14, 2007 between the Company
and David Palmer.

21 .1*
    
    List of Subsidiaries.23 .1*
    
    Consent of Ernst & Young LLP, independent registered public accounting firm.24 .1*
    
    Power of Attorney (see page 103 of this Form 10-K).
 106




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##### Table of Contents



ExhibitNumber
    
    Description31 .1*
    
    Rule 13a  14(a) Certification of Chief Executive Officer.31 .2*
    
    Rule 13a  14(a) Certification of the Chief Financial Officer.32 .1**
    
    Statement of the Chief Executive Officer under Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).32 .2**
    
    Statement of the Chief Financial Officer under Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
 
 *
    
    Filed herewith**
    
    In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC
Release Nos. 33-8238 and 34-47986, Final Rule: Managements Reports on
Internal Control Over Financial Reporting and Certification of
Disclosure in Exchange Act Periodic Reports, the certifications
furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany
this Form 10-K and will not be deemed filed for purposes of Section
18 of the Exchange Act. Such certifications will not be deemed to be
incorporated by reference into any filing under the Securities Act or
the Exchange Act, except to the extent that the Company specifically
incorporates it by reference.#
    
    Confidential Treatment Requested. Confidential portions of this
agreement have been redacted and have been separately filed with the
Securities and Exchange Commission.
    
    Indicates management contract or compensatory plan or arrangement. 107