19. Income taxes

The Company determines the tax provision for interim periods using an estimate of annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

The Company’s effective tax rate in the third quarter of 2013 and for the nine months ended September 30, 2013 is 23.8% and 24.4% respectively, down from 37.7% in the third quarter of 2012 and 29.9% for the nine months ended September 30, 2012. This decrease was primarily driven by the growth of operations in low tax and tax-exempt locations, primarily in India, and the impact of certain period items in the third quarter of 2012. In the third quarter of 2012, the Company incurred recapitalization expenses which were largely non-deductible as well as withholding taxes of $2,300.

As of December 31, 2012, the Company had unrecognized tax benefits amounting to $21,024 including an amount of $20,871 that, if recognized, would impact the effective tax rate.

The following table summarizes the activities related to the Company’s unrecognized tax benefits for uncertain tax positions from January 1, 2013 to September 30, 2013:


Opening Balance at January 1, 2013	$	21,024
Increase related to prior year tax positions, including recorded against goodwill		1,503
Decrease related to prior year tax positions		(719	)
Increase related to current year tax positions		1,217
Effect of exchange rate changes		(2,036	)

Closing Balance at September 30, 2013	$	20,989

The unrecognized tax benefits as of September 30, 2013 include an amount of $20,831 that, if recognized, would impact the effective tax rate. As of December 31, 2012 and September 30, 2013, the Company has accrued approximately $3,423 and $3,841, respectively, in interest relating to unrecognized tax benefits.