Infosys held an analyst meeting on August 27, 2002 to discuss its financial performance and guidance. The summary is: 1) Infosys executed flawlessly in a challenging business environment, delivering on its promises and guidance for revenue and costs despite a general reduction in technology spending. 2) Infosys closely managed its revenues, costs, capital expenditures and liquidity to maintain predictability and de-risk its operations. It lowered fixed costs through measures like salary increases linked to performance. 3) Infosys emphasized its strong corporate governance, transparent reporting, independent board oversight and conservative accounting practices, differentiating it during a period of crisis over corporate wrongdoing.

1. Analyst Meet
August 27, 2002
“Living up to the promise”
© 2002 Infosys Technologies Limited
Living up to the promise
T.V. Mohandas Pai

2. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Agenda
■ Promises made, promises kept
■ Predictability, sustainability, de-risking
■ Corporate Governance
■ Transparency and reporting
■ Acquisitions
■ Current issues – Infosys’ response and position
■ Crisis of confidence in corporations
■ Stock option accounting

3. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
In a challenging business environment…
■ General reduction in technology spending
■ ROI based IT investments by customers
■ Greater outsourcing of technology and offshore becoming
mainstream
■ Challenging pricing environment
■ Rationalization of vendors and customers preference for
large, end-to-end players
Infosys has continued to execute, flawlessly, without
diluting the corporation’s core values…

4. Analyst Meet
August 27, 2002
“Living up to the promise”
© 2002 Infosys Technologies Limited
Promise Vs Performance

5. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Guidance vs Performance - Quarterly

6. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Guidance vs Performance - Annual

7. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
How did we do it?
■ Revenue and cost projections
■ Cost control
■ Re-calibrating Capex
■ Maintaining liquidity

8. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Revenue and cost projections
■ Relationship model gives us a good insight into our Clients’ plans /
thinking
■ Over 85% repeat business
■ Implemented a state of the art pipeline visibility system – “InPipe”
■ Senior management is in close touch with key decision makers at
important Clients
■ Added several large Fortune 1000 corporations to the Client list
■ De-risked our operations by maintaining a disciplined mix of business
■ Fixed costs budgeted on a conservative revenue assumption –
automatic “stretch” built into the system
■ Closely monitored during the course of the quarter / year, should mid-
course corrections become necessary
■ However, investments critical for long term growth are protected

9. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Cost management
■ Lowered fixed costs
■ Salary increase linked to attainment of company performance targets
(70% of total increase linked to company performance last fiscal)
■ Percentage variable component paid during last fiscal
Q1 - 100%
Q2 - 68%
Q3 - 0%
Q4 - 0%
■ Reduced costs by closely tying recruitment to business needs
■ Just in time recruitment
■ Recruitment based on business outlook
■ Net addition to employees by quarter

10. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Cost management (Continued)
■ Tight control on non-revenue related expenses
■ Reduced recruitment for support (ex-sales & marketing) departments
during the year
■ Implemented GDM for non-revenue generating activities in high-cost
economies
■ Others cost control initiatives
■ Continuous rationalization of internal policies
■ Re-negotiations with vendors and service providers
■ Rationalization of employee benefits
■ Reduction in discretionary spending
■ Vacating leased premises, etc.
■ Cost savings
■ Cost cuts during the year aggregated 2.4% of revenues (3.5% excluding
increase in personnel cost in the US)

11. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Results - the final cost structure

12. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
...recalibrated Capex spending…
0
20
40
60
80
100
120
140
160
Capex (Rs.cr) 85.84 114.01 125.16 138.34 101.73 129.76 53.05 38.2
Q101 Q2 01 Q3 01 Q4 01 Q102 Q2 02 Q3 02 Q4 02

13. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
…maintained liquidity to de-risk
an uncertain environment…

14. Analyst Meet
August 27, 2002
“Living up to the promise”
© 2002 Infosys Technologies Limited
Corporate governance

15. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Audit committee
■ Entirely comprised of independent directors
■ Have powers to recommend appointment/termination of
auditors to the shareholders
■ Discuss various accounting issues directly with the
auditors
■ Internal and external auditors have independent access
to the committee
■ The financials are discussed in detail and adopted by the
audit committee before being presented to and approved
by the full board

16. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Executive compensation
■ Promoter directors are excluded from the stock
option plans
■ Statute prohibits providing loans to directors
■ One of the lowest compensation for the senior
management in the industry
■ Leadership by example

17. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Operations and disclosure policies
■ Operate through branches worldwide – hence only one legal entity /
financials
■ Subsidiaries created only for business and
strategic reasons
■ Where the subsidiary requires a different strategy, culture, skill sets, cost structure,
etc.
■ No material off-balance sheet items
■ Highest disclosure standards
■ The mantra is “In case of doubt, disclose. Go beyond the statute.”
■ Transparent reporting on all operating and financial metrics at the time of
announcing results
■ State of the art website with lots of useful information
■ Easy access to management / frequent investor interactions at conferences,
roadshows, etc.
■ Full compliance with laws in all countries / regimes that we operate in

18. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Acquisitions Vs. Alliances
■ Infosys has been searching for a strategic
acquisition for 3 years
■ Have not made an acquisition to date because of
valuation issues, lack of acquired management
commitment, lack of revenue visibility, financial
weakness / discipline / viability, etc.
■ Organic growth has remained comfortable, however
acquisition of target competencies important for the
“next orbit” / differentiation
■ Alliances are a possible via-medium

19. Analyst Meet
August 27, 2002
“Living up to the promise”
© 2002 Infosys Technologies Limited
Current issues

20. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Crisis of confidence in the market
■ Corporations re-stating their numbers
■ Accounting issues in large corporations
■ Disproportionate executive compensation
■ Questionable off-balance sheet items
■ Lack of basic corporate governance
Infosys’ long history of principled corporate governance,
conservative financial reporting and transparent corporate
structures differentiates us in this environment

21. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Stock option accounting
Views so far :
■ Unlike US companies, Indian corporates do not get tax
benefits on employees exercising their options
■ Stock option accounting is a non-cash charge which
does not alter the overall cash value of a company
■ Black-Scholes model based on historical volatility does
not provide fair value of an option
■ Technology companies like Microsoft are against
expensing options
We are internally debating this issue

22. Analyst Meet
August 27, 2002
© 2002 Infosys Technologies Limited
Sarbanes-Oxley Act
The act requires all CEOs / CFOs to personally
swear to the veracity of their financial statements
■ Infosys fully complies with the act

23. Analyst Meet
August 27, 2002
“Living up to the promise”
© 2002 Infosys Technologies Limited
Thank You