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October 15, 2010

Equity Research

Wells Fargo Securities' Weekly Services Monitor
Infosys Results Very Strong - Raising Our Estimates
SAIC Analyst Meeting Focused On New Growth Areas

• HIGHLIGHTS OF THE WEEK - Offshore. Even with very high
expectations, #2 offshore provider Infosys (INFY) exceeded targets at q/q Information Technology (IT) Services
growth came in at 10.2% (9.3% cc) helping drive EPS to $0.65 versus our $0.61
expectation. Although FX had limited impact on CQ3, the Indian Rupee (INR)
has strengthened meaningfully since the beginning of September. This causes a
greater headwind to operating margin (~40bp per 1% INR/USD move), but
operating leverage and improved utilization are expected to more than offset the
FX headwind. INFY’s strong and better than expected CQ3 report should bode
well for IT service providers in general, and Cognizant (CTSH) in particular.
INFY also offered positive comments on efforts in 1) supporting client’s “digital
consumer” efforts, and 2) risk management/compliance support for financial
service providers. Since these represent the vast majority of Sapient’s (SAPE)
revenue, it may imply revenue strength.
• HIGHLIGHTS OF THE WEEK - Government. SAIC (SAI) held its annual
analyst meeting and focused on its new growth areas of energy, health, cyber and
certain parts of national defense. SAI indicated that unless there is a dramatic
change in funding, it believes it is positioned to grow in the mid-single digits and
steadily (but modestly) improve operating margin over the next several years.
CEO Havenstein did indicate his visibility into the outlook has declined in the
last six months given the mid-term elections and upcoming GFY12 Defense
appropriations request, which comes out around the beginning of February.
CACI quietly announced the departure of COO Fuerst.
• THE WEEK AHEAD. On Monday, IBM is the first of the outsourcers to report
Later in the week, #1 offshore provider Tata Consultancy reports Thursday and
#3 Wipro (WIT) reports on Friday. We expect confirming market growth
commentary to that offered by Infosys. Outsourcing advisor TPI holds its
quarterly call on Thursday morning. We will also begin to hear from the Defense
“primes” next week on the their post-election view, especially given the steady
cost cutting commentary from DoD leaders.

Edward S. Caso, Jr., CFA, Senior Analyst
( 4 43 ) 2 6 3- 6 5 2 4 /
e dw a r d. ca s o @ wa c ho vi a. co m
Eric J. Boyer, Senior Analyst
( 4 43 ) 2 6 3 - 6 5 5 9 /
e ri c. bo y e r@ w ac h o vi a. co m
Richard Eskelsen, Associate Analyst
( 41 0 ) 6 25 - 6 38 1 /
ri c h a r d. e sk e ls en @ wa c ho vi a. co m

Please see page 9 for rating definitions, important disclosures
and required analyst certifications
Wells Fargo Securities, LLC does and seeks to do business with companies
covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of the
report and investors should consider this report as only a single factor in
making their investment decision.

SYKE. health. SAI client spending plans. ($1. CFO suggested a long-term political concerns. government services provider. But Stiff Headwinds Infosys Technologies (INFY. Information Services: ACXM.50. but top-line remains (possibly large ones) with repurchase a lower priority and robust. Reiterated FY11 targets.28) FYTD to 21 big wins (including IDIQs). WW Bottom-line: Departure of COO released only in an 8-K rather Source: Wells Fargo Securities.60 stiffening market headwinds likely more than offset strategic from $2. according to a story in today's Wall drilled down on org changes. MANT. $19. quick ROI view that revenue could grow mid-single-digits and margins projects.'' Mr. FDS. HSII. But High FX and Rising Tax Rate Only Headwinds To Improving Story Uncertainty Summary of Analyst Day: SAIC (SAI) highlighted Infosys' (INFY) Strong FQ2 EPS Upside On Revenue refocusing of management. DTPI. (cont. but operating improvement DoD budget likely to keep investors on the sidelines as more than offsets.65) was notably ahead of guidance and SAI believes it can continue to grow. HPQ. Rating Market repositioning and operating excellence for this leading Perform given valuation. refocused new business effort. Indian rupee (INR) dividends unlikely. MAN. CEO indicated his comfort with the offshore BPO firms EXLS. firms have noted improving demand. less market fee Services Indices Period YTD Indices Period YTD pressure. G. Tone was incrementally more positive and clients margin unless there is a dramatic change in federal spending are now stepping up discretionary spending and Europe again outlook.80. SRT. Reiterate Market Perform. CLGX. Government Integrators: CACI. KELYA. Guidance And Our National Defense with target end markets remaining the Estimates Raised. SRX. a challenged government procurement process EXLS is moving its annual budgeting from September to remains. particularly for Years Less Certain. continued G&A savings. WELLS FARGO SECURITIES. Market Perform. INFY results should bode well for leading IT service providers whose earnings reports follow.496B/$0. cyber and national security (particularly ISR and logistics). Valuation Still Issue. Fuerst's responsibilities.S. SLH. CEO Rohit Kapoor is quoted in the article as acquisitions to expand intellectual property and increased wanting a customer contract in place before hiring new cross selling of the breadth of SAI's offerings (especially cyber- employees. Market Perform. Our impression is that use of free cash flow (and real showing growth. Margin up 20-40bp and EPS primarily to the upfront investment needed for new BPO deals. MMS. Strong New Business Flow in FQ3. SAPE. which make estate monetizing) will be mostly targeted at acquisitions yr/yr EPS comparisons less compelling. in our opinion. SYNT. $68. Margin improvement reflects benefits 2 . NCIT. SFN. FQ3 (i.02) SAI: Analyst Day: Improved Positioning. within the U. the federal fiscal yearend) brought 9 more $100mm plus wins bringing ExlService Holdings (EXLS. structure and new business dollars With Some Tax Rate Offset. and the article notes that the firm has been security) all directed toward new "strategic growth areas" of monitoring accounts receivable more closely since August.28). due ~5% and non-SGA growing ~1%.55) Very Strong FQ2 – Raises Guidance – Raising Our Estimates FY11 Reiterated. GIB. Offshore IT/BPO: will temporarily take over Mr. KFY. $16.63). TTEC. WNS. INFY. In the IT Growth Targets Unchanged. Global Services: ACN. market is dramatically lower than six months ago given $18. President of U. and mix shift to new market opportunities (~100bp better). RHI. discretionary spending. and client interest in short-term. LRW. No change in our EPS estimates (FY11 of has moved notably against the USD. and WNS Holdings (WNS. $45. Sequentially Improved on growth areas of Energy. SEPARATELY. SAI. Market Perform. ops. Raised our FY2011 EPS estimate to $2. and FY2012 to $3. Fuerst resigned to ''pursue other interests. IHS. Staffing & Recruiting 1% (2%) Officially. Similar Long-term Goals. Offshore IT/BPO 4% 18% DJIA 1% 6% Customer Care 3% (25%) COMP 1% 7% CACI International (CACI. continue to improve unless the government market space but expect more muted results and cautious commentary from meaningfully changes. Market Perform. which has negative $1. LLC Information Technology (IT) Services EQUITY RESEARCH DEPARTMENT MARKET INDICES (10/8/10-10/14/10) of more fixed price. MCO. LLC.05 from $2. Elections and concern over GFY12 implications for operating margin. operations (95% of revenue). energy. up of late and a significant number of decisions are expected by Believe Offshore BPO Market Remains Sluggish FY-end. Staffing & Recruiting: HHGP. FQ2 government or those highly regulated. CTSH.46). TRI. "Reaffirmed" FY11 financial targets.S.26) Gov’t Integrators 2% (7%) SP500 1% 5% Announces Resignation of COO Via 8-K Filing Information Services 2% 14% SPMID 1% 13% CACI International announced (after the close on October 12) Global Services 1% (0%) via an 8-K filing that COO Randy Fuerst left on October 5. EXLS.e. Tax rate continues to drift up. Bottom-line: EXLS' budget planning delays highlight the difference in the offshore IT and BPO markets. $9. In Q&A. November this year in an attempt to gain more insight into Rapidly Repositioning Model for Growth Areas. FactSet than a press release only leads to more questions. Health. Market Perform. EFX. Cyber-security and Market And Business Tone. IT Consulting: ACN. Genpact (G. FICO. WIT.) up 14-18%. while expanding operating expectations. IBM. DNB. IT Consulting (1%) 42% Fuerst was primarily responsible for operating efficiencies Customer Care: CVG. uncertainty around mid-term elections and GFY12 DoD appropriations request. Mr. Operations Bill Fairl (more focused on new business activities) MSCI. But Outlook for Next Few market. Street Journal.42 and FY12 of $1. VRSK. particularly Cognizant (CTSH). Since the beginning of September. but bias remains up. While wins have picked WSJ Reports EXLS Pushing Back Annual Budget Cycle. RESEARCH COMMENTS – Government RESEARCH COMMENTS – Offshore SAIC (SAI. CSC. IT. Market Perform. MNST. We expect strong results from offshore IT providers. while BPO industry checks have Organic growth of 3-6% with new markets ("SGA") growing indicated that client decision-making cycles remain long.

4 2011 EPS.6% depreciated 15.5 Mission Solutions Group provides security operations and access control.3% of EIG results (i.6 in cash. CPM Braxis is expected to grow by SYNT 4% G 24% around 20% in 2010. $41.5% depreciated 2.8% $7..Cognizant (CTSH) announced that it has entered into a multi-year. LLC Wells Fargo Securities' Weekly Services Monitor EQUITY RESEARCH DEPARTMENT M&A / CAPITAL MARKETS ACTIVITY 1 Week Price Change YTD Price Change WNS 12% CTSH 43% . Jan-10 Mar-10 May-10 Jul-10 Sep-10 .e. Terms Jan-10 Mar-10 May-10 Jul-10 Sep-10 of the transaction were not disclosed. the option can be exercised within the 3rd and 5th SENSEX (1%) SAY (16%) anniversary of the closing date. Capgemini has an option to buy the S&P500 1% S&P500 5% remaining 45% stake (and shareholders have an option to sell SAY (0%) PTI 5% their stake). Cognizant entered into a go-to-market agreement with Invensys.2% appreciated 0. We estimate that 6 months Over the past week appreciated 0.2 Health from Palm Beach Capital.Capgemini completed its acquisition of a 55% interest in WIT 7% SYNT 29% Brazilian IT services firm CPM Braxis for BRL 517 million PTI 6% INFY 28% (€233 million).2% appreciated 6. it is somewhat below recent press reports that (as of Thursday’s close) Indian Rupee Philippine Peso indicated it might be sold for $1B. Overall. focuses on Group Average 4% VRTU 19% INFY 2% SENSEX 15% Application Outsourcing and Infrastructure Management.4 1.ManTech (MANT. making Brazil Capgemini’s sixth largest VRTU 5% WIT 26% country by headcount. Separately. We estimate after-tax proceeds 51 51 from the sale could be about $500-$600 m.8% appreciated 1.3x last twelve months sales and we estimate about 9-10x last Source: Bombay Stock Exchange Limited.Lockheed Martin (LMT).) Lockheed Martin Offshore: Local Prices (10/8/10-10/14/10) announced that it has entered into an agreement to sell its Local Shares Period YTD Indices Period YTD Enterprise Integration Group (EIG) to private-equity firm PATNI-BOM 6% (4%) BSE IT 0% 17% Veritas Capital for $815M in cash.2% and so it was included in LMT's $45.35 EPS outlook for 2010.5B revenue and Full-year – 2009 appreciated 4.5-$46.Xerox (XRX) announced its Affiliated Computer Services subsidiary acquired healthcare teleservices company TMS 1. While the multiple is in line with other recent defense transactions and well above LMT's stock Foreign Exchange Rate Watch price multiple. CTSH 1% EXLS 7% Brazilian bank Bradesco).7 previously announced acquisition of QinetiQ North America’s Euro Security and Intelligence Solutions (S&IS) business for $60mm 1. Market Perform.20) completed the 1. The $815M sale price represents about SATYAM-BOM (1%) (16%) ~1.3 1. MANT expects the acquisition to be accretive to 1. H2 2010) would represent about $0.6% repurchases and discretionary pension contributions once the Source: FactSet transaction closes by year end. . and G 2% Group Average 13% is strong in financial services (which houses its largest client. CPM Braxis will be EXLS (2%) WNS (33%) consolidated in Capgemini’s accounts.7% EPS.3 .2010 appreciated 5. Cognizant will provide a wide range of application development and related services. WIPRO-BOM 2% 14% SENSEX (1%) 15% TCS-BOM 1% 27% LMT had announced in early June 2010 that it was pursuing INFOSYS-BOM (0%) 18% the sale of two businesses (EIG and Pacific Architects and HCL-BOM (0%) 16% Engineers (PAE)). Source: FactSet . we do not see the divestiture as materially 43 43 impacting the value of the stock.06 of Quarter-to-date appreciated 1. a private equity firm. WELLS FARGO SECURITIES. Guidance will have to be adjusted for the 48 48 move of EIG to discontinued operations and there will be a 47 47 charge for a voluntary separation agreement. (Following is the research comment from defense analyst Sam Pearlstein.15-$7. serves more than 200 clients. 1. while we 46 46 expect the earnings from EIG could be offset by future 45 45 buybacks. The S&IS subsidiary of QinetiQ's North America 1.16 EIG was not previously classified as a discontinued operation Full-year – 2008 depreciated 23. Yahoo! Finance twelve months EBITDA. but could be somewhat offset by additional share Year-to-date .7 British Pound 1. Close (per 1 US dollar) 44.6 1. the selling price is somewhat below recent press 44 44 reports. multimillion-dollar agreement with 3M (MMM) to extend their strategic relationship.11 43.5 1. Overall. Cognizant previously announced a co- OFFSHORE – Other News development agreement with Invensys for product (as of Thursday’s close) 3 .2 1. Indian Rupee 50 Philippine Peso 50 We believe this sale adds another moving piece to the 49 49 upcoming Q3 release.

000 employees prior to August and should following the November elections. CY2010 new awards are expected to be “in the vicinity needs to be the world’s policemen. Heritage provide independent verification and validation for agency. creates an intelligence community inspector CACI 2% S&P500 5% general. but also troops stationed elsewhere in date total to $142 million.’ forces are withdrawn development of the Afghanistan Ministry of Defense. quarters for operations to stabilize.Dynamics Research (DRCO) announced it received new includes Rep. the revenue declining 21. Padmanabhan was previously head of HR for Patni. troops (including those in during the quarter ended September 30.S. and requires the Director of National Intelligence and SRX 2% SRX 2% the Government Accountability Office (GAO) to create a Group Average 2% Group Average (7%) framework to allow the government to audit intelligence MANT 2% CACI (7%) operations. WELLS FARGO SECURITIES. Army Research.CongressDaily reported that President Obama signed the GOVERNMENT – Other News fiscal 2010 intelligence authorization bill. the Senate’s National Defense Authorization Act) allowing The new ticker is SAYCY.DynCorp received a notice to proceed on its contract with (from 4. MMS 1% SAI (16%) S&P500 1% MANT (17%) .According to Government Executive. add 7. Foundation.6%).9% to 3. with overall 2010 budget deficit was $1. The ADRs remain redeemable.S. military.S. Barney Frank (MA-D) and Rep. as Mr. and 84% of third quarter awards were prime contract the U. indicated that the firm had included in any final bill. effective .K. this takes the year-to.The Congressional Budget Office (CBO) announced the fiscal .The Wall Street Journal reports that the annual defense- October 14. The current backlog stands at $343 Europe and Asia). which accounts for more than 50% of revenue. military agencies to exclude subcontractors or suppliers that Mahindra Satyam previously announced plans to delist from the government views as potential security risks. Frank believes the U. Government suppliers are concerned . The deficit was down by $125 by more than 23%.000 employees in India.). In response.Kratos Defense and Security Solutions (KTOS) congressional session reforming special contracting privileges announced it won multiple fully funded awards totaling $11 to Alaska native corporations (ANCs).Capgemini Government Solutions won a seven-year blanket and other services for troops. and federal deposit insurance. (MO-D) plans to introduce a bill in the upcoming lame-duck . .S. available funds for defense. which .000 more by year-end.S.3 trillion or 8. of Agriculture to reports that the American Enterprise Institute. as both the government Excluding the cost of TARP. Salil Parekh.9% yr/yr as Europe (particularly the second highest deficit as a percentage of GDP since 1945. the provision allows agencies to 1) set qualification quantified) contract with the Commonwealth of Kentucky to requirements for contractors and subcontractors. Development and Engineering labeled many arguments in favor of defense cuts as “myths” Command (RDECOM) to provide mentors and trainers to and argued that growth in entitlement spending is shrinking assist the Combined Security Transition Command. 2) consider design and deliver a document management system for the supply chain risks as a factor in bid evaluation. payments to Fannie Mae and and financial services verticals continue to have declining Freddie Mac.Mastek reported September quarter results.S.4 . Management expects it to take another 2-3 billion from GFY 2009’s $1. but some version of this provision is likely to be of Capgemini India. armed forces. Initial from their deployments around the globe. that spending increased by 9% in GFY 2010. This bill applies to the recently ended (September 30) government fiscal year. The bill aims to equalize these firms’ status with that of other businesses operating in 4 . the groups believe that Afghanistan and the NATO Training Mission in the national defense will suffer if the U. U.Defense News reported that 55 members of the House wrote SAI 0% NCIT (29%) a letter to the U. Dept. wants to bring home most U. Claire McCaskill million if the option period is exercised. Mr.S.S. its ADRs have been transferred from the New York spending authorization bill includes a provision (Section 815 of Stock Exchange (NYSE) to the over-the-counter (OTC) market. Capgemini has hired that agencies’ rationale for exclusion would not be required to Rajesh Padmanabhan to be head of HR for the group’s India be disclosed and that exclusion decisions could not be unit. LLC Information Technology (IT) Services EQUITY RESEARCH DEPARTMENT development. Ron Paul (TX- business contract awards totaling approximately $80 million R). declined according to Congress Daily.” The group does not of” 2009’s $162 million. . . the exclusion would be required of the government. contract award was in February 2010 for a total value of $232. and 3) exclude state’s child support system. which is expected to be taken up already hired 10.S. or 10% of GDP. suppliers if warranted. and opposes cuts to healthcare . “no longer awards. 1 Week Price Change YTD Price Change increases the number of lawmakers eligible to be briefed on NCIT 2% MMS 25% covert activities. The joint report issued by the groups the U. Debt Commission in support of significant Source: FactSet cuts to the Department of Defense budget. and call for a reduction in the footprint of million. the CBO reports revenues. spending will decline to historic lows as a percentage of GDP . reviewed. but the Chairman the bill. Mahindra Satyam announced a large (but not Specifically. The group. support cuts that would impact national security or reduce support for troops in the field. Defense News purchase agreement (BPA) with the U. Mahindra Satyam (SAY) announced that.According to The Hindu Business Line. but (as of Thursday’s close) is noteworthy in that it is the first such bill in five years.4 trillion. No reason for the NYSE due to late filing of U. GAAP financials. Sen. and Foreign Policy Initiative argue that defense wide ERP implementations. Finally. U. and the current go-to-market agreement was million to provide expeditionary Tricon Containers to support expected to be the next step in their relationship. Iraq and Afghanistan. The provision is not included in the House version of Capgemini had 29.9% of GDP. Additionally.

range of IT services to USCIS including application development and support. which includes smart grid technology. Dice’s monthly report indicates that the number of full time technology positions on its site is up 46% yr/yr as of October 1. public sector CSC MDA 5-year IDIQ. F-16 ASIP. 4O. GSA Region 8 prime 19 contract . O=optional year. $19mm deal from Pyro program to reintegrate and retain Group. program management and 36 organic declines in managed services (-6.8%) and Germany/CEMA CSC DoD 6-month B. A “data center” was defined as “any room Group Average 2% EFX 3% greater than 500 square feet and devoted to data processing”.2%). followed by 361 at CSC 1% IRM (6%) the Department of State and 210 at the Department of the EFX 1% Group Average (6%) Interior. 95 (-20. ACS will also Source: Company information or government disclosures implement several XRX services. with particularly CACI Navy 1B. SYKE 4% IBM 8% which also said that the federal government has 2. while the UK (-7. However.9 with Nashville0based Zycron.Ciber (CBR) was awarded a five-year. contract. test and manage its mobile phone software products ASIP = Aircraft Structural Integrity Program and solutions. News . ADP 1% CSC (18%) S&P500 1% UIS (23%) Contract Announcements GIB 1% TTEC (24%) Value ACN (1%) SYKE (43%) Company Client Details ($MM) Source: FactSet Alion EPA 5-year task. indefinite quantity. citing the 5 . Serco VA 1B task order on U. various services to help a VA . $36 million contract SAI DHS 5-year EAGLE task order. ACS will operate Atos’ finance center in Lodz. research support 72 . and network and server support. Kundra in CVG 3% S&P500 5% recent speeches. signed a seven-year deal to provide a VA = Department of Veterans Affairs full suite of finance and accounting (F&A) solutions with Atos Origin.IBM (IBM) received a five-year.S. TCV=total contract value.Atos Origin reported Q3 2010 results that featured revenue CACI Army GSA task. Inc.094 data TTEC 4% CVG 6% centers. an Indian mobile phone technology company to help veterans develop. and consulting (-11. Finally. engineering and test support 1. LLC Wells Fargo Securities' Weekly Services Monitor EQUITY RESEARCH DEPARTMENT the Small Business Administration’s 8(a) Business OUTSOURCING & BUSINESS SERVICES – Other Development Program. close to twice the 1. total). BOA= basic ordering agreement and will hire 150 full-time Atos employees. Geographically. desktop management 16. £56 million IT infrastructure IBM Army Career tracker consolidation and user 8.4 organic growth was strongest in France (+3. initiative .9%) were weak. as clients are recovering and U. help desk SAI DHS 57-months. WELLS FARGO SECURITIES. Financial details not disclosed. 4O IDIQ. . The announcement came in an October 1 memo from federal CIO Vivek Kundra UIS 5% GIB 17% IRM 4% ACN 9% and Department of Homeland Security CIO Richard Spires. MA=multiple award. provide a broad 183 with Nashville Electric Service to provide all onsite IT services. HR Solutions 20 TMA IDIQ. PDTS = Pharmacy Data Transaction Service .4 down 3. Citizenship and Immigration Services (ACS). OPM. Separately. The contract service-oriented architecture environment continues a six-year relationship. in which IBM will assume control of Petrom’s existing NRC = Nuclear Regulatory Commission OPM = Office of Personnel Management data center.5%).600 services revenue declines should be limited to 3% organically.K. while total tech jobs (including full-time. According to an InfoWorld story. IT and program mgmt 20 guidance for a “slight” organic revenue decline but 50-100 bps support for document management operating margin expansion were reconfirmed.9%). IDIQ=indefinite delivery.1 management services contract with the West Sussex County interface integration Council in the U.Xerox (XRX) announced Affiliated Computed Services TMA = Training and Management Assistance USCIS = U. operate. Poland B=base year.798 on October 1 and 74. Additionally. 4O (51 mo. IBM 2% ADP (1%) The DoD had the most data centers at 772.K.S. A Xerox Company. and Ciber is again partnering Serco Army Provide Army OneSource outreach services 14. IBM announced its position as DHS = Department of Homeland Security systems integrator for NV Energy’s Advanced Service Delivery EPA = Environmental Protection Agency GSA = General Services Administration project. SAI Air Force 1B. NOLSC OIS integration (-3. 2010 GIB NRC 8-year IDIQ. IBM was NOLSC OIS = Naval Operational Logistics Support Center’s Ordnance awarded a 10-year data center management contract from Information System Petrom. and part-time) was 70.100 figure quoted by Mr. Information Week reports that hard targets for the (as of Thursday’s close) government’s data center consolidation efforts will be included 1 Week Price Change YTD Price Change in President Obama’s GFY 2012 budget.6%) among large Enterprise Systems Integration Program geographies. Healthcare IT News. advanced meter MDA = Missile Defense Agency infrastructure and meter data management. CSC Army ERP for program manager of Army 14.Capita received a 7-year.089 on October 14.5% yr/yr on a like-for-like basis. Atos now expects organic maintain and enhance PDTS growth in 2011. assist USCIS in transitioning to 50 services. systems technical support services.Two reports indicate an improving hiring and salary environment for IT and technology professionals.

Oct. Philippines Actual Actual Change Estimate Below Summit IGTE $0. CA WIT 22-Oct 22-Oct 9:15AM 888-713-5994 Summit Source: Company information Source: Company data. 16-17 London Ticker Report Conf Call Date Dial-in Pass Code Conference Date & Time (ET) Number Global Services Conference 2011 Jan. 4 New York. 26-27 Manila.C. with all expected to see at least a 5% increase in starting salaries. 2 TBD ExlService Analyst Meeting Nov. 26 TBD "Pulse Survey" Results Ticker 9/09 9/10 % Street Above/ BPAP’s International Outsourcing Oct.25 56% $0.65 18% $0. 9-10 New York. LLC Information Technology (IT) Services EQUITY RESEARCH DEPARTMENT Robert Half Technology Salary Guide 2011. NY Wells Fargo Securities Technology.60 $0. Q3 2010 Oct.05 Source: Company data. Percentage gains are expected to be especially strong for web designers.21 $0.16 $0. business intelligence analysts. ERP technical developers.56 $0. Nov. NY UPCOMING CALLS: 10/18-10/22 Media & Telecom Conference NelsonHall’s The Sourcing Summit Nov. D. VA Market Forecast TPI Global Index Call. NY IBM 18-Oct 18-Oct 4:30PM NASSCOM India Leadership Forum Feb 8-10 Mumbai LMT 19-Oct 19-Oct 11:00AM 2011 TCS 21-Oct 21-Oct 10:30AM 866-746-2133 IAOP 2011 Outsourcing World Feb 21-23 Indian Wells. TechAmerica’s 2010 Vision Federal Oct.04 Houlihan Lokey Aerospace. Thomson Financial Infosys Analyst Day Nov.4% in 2011. & Government Conference INFY $0. WELLS FARGO SECURITIES. Q3 2010 Oct. 26 TBD EARNINGS RESULTS: 10/11-10/15 EquaTerra's Q3 2010 Outsourcing Oct. reports that starting salaries for IT professionals are expected to increase UPCOMING INDUSTRY EVENTS 3. Defense. 28 Washington. and Event Date Location/Info. 21 11:00AM EDT TPI European Index Call. 27 New York. 20-21 Springfield. StreetEvents 6 .

LLC estimates 7 .0 6. do not DTPI Diamond $12.1 0. Inc.7 5.8 27 4.1 2. Europe.98 $7. $1. Source: Wells Fargo Securities.181 1. $10.3 8. ($0.890 1.421 $0.356 5.44 costs and award delays.16-1. Inc.2 3.60 $1.0 1.4 2.223 17.60 $1.5 6.189 7. Inc. we expect a more positive ICFI ICF International.906 16. Inc.371 10/27/10 $810 $0.7 112% 1.17 NA NA has been much slower than for IT providers.08 $2.8 105 3. Note: ACN already reported FQ4 (August) 2010 results. $12. LLC Wells Fargo Securities' Weekly Services Monitor EQUITY RESEARCH DEPARTMENT IT SERVICES EARNINGS PREVIEW SUMMARY TABLE Market Wells Fargo Securities First Call Management Price Cap Report Sept Qtr Estimates Sept Qtr Estimates Guidance Symbol Company 10/14/10 ($M) Date Rev ($M) EPS Rev ($M) EPS Revenue EPS Comments FQ4 results above expectations all around.671 2.9 .8 . consult.6% CACI ICF International.3 2.6 ICFI ManTech International 1.25 NA NA more time before showing up in higher growth. believe G Genpact Limited $18.3 8.637 7.962 1. "Management guidance" section for Accenture is actual results.674 1.9 3.7 116% 7.3 1.2 114 NA WNS Government Service Providers CACI International 2.462 10/27/10 $710 $0.6 6.K. 16.688 2. Beat and raise.552 10/15/10 $1.77 $40.593 226 8.4 0.0 .35-0.0 1.5 137 7.88 NA NA headwinds. we expect non-GAAP operating margin SAPE Sapient Corp. 1.99 $19.12. Investor focus likely to remain on pace of lower-margin passthrough CACI CACI International $45.6 136 6.38 $195-202 $0. FirstCall as of 10/8/2010.S. 6. expect an in-line quarter. as cycle EXLS ExlService Holdings. NHS CSC Computer Sciences Corp.8 125 2.5 .7 SAI SRA International 1. Inc.) 2010 results.4 4. margin likely more negatively affected than peers given INR move. expect results in-line with our slightly above-consensus ests.0 4.13 $53 $0.89 $698 $0.32 $436 $0. We believe there is margin upside to full year guidance. IT Serv.2 12.003 $1.423 $0.3 5. $19.2 NCIT SAIC.0 .425 $0.11 $1. mgmt tone incrementally positive.8 467 0.33 NA NA expect an in-line quarter but cautious commentary. Wells Fargo Securities.253-1.349 8.64 $134 $0.48 $340 None $54 $0.180 $0.2 .945 $0.0 1.917 09/30/10 $5. LLC estimates and First Call DAYS-TO-COVER STATISTICS Short Short Six Month Shares Interest Interest Days Days 9/30/2010 Short/ 9/30/2010 9/15/2010 9/30/2010 9/15/2010 Low . Focus on the warfighter a near-term positive in the face of sector MANT ManTech International $40.5. Note: INFY already reported FQ2 (Sept.4 2.43 $165-175 $0.11.95 $523 11/04/10 $197 $0.5% EXLS Genpact Limited 3.0 106 4.9 5.9 0.6 . Inc. ~90% North America SYNT Syntel.43 $28.7 18.6 1. 672 670 8. $49.0 138 3. $46. and cyber.3 109 NA WIT Offshore BPO Service Providers ExlService Holdings.63 NA NA exposure a positive given better demand trends in the U.498 6.1 7.248 7.9 56 3.34 $2.033 10/28/10 $134 $0. Limited upside potential.6 5.6 5. $19.60 $1. FQ2 results were notably ahead of guidance. and U.8% CTSH Infosys Technologies Limited 6.2 7.0 1.09 $208+ NA to be within range (11-12%) but disappoint relative to the Street.63 $5.91 $5.905 $0.2.19 $333 $0.4 SYNT Wipro Limited 7.49 $1.726 10.49 $569 11/04/10 $61 $0.1 7.173 4.7 6. energy.7 GIB/GIB.023 7.7 3. Inc.052 1.102 2.0 111% 4.32 $1.8 3. LLC estimates as of 10/08/10.) a negative. WELLS FARGO SECURITIES.7 114 1.290 2. ACN Accenture plc $45.90 $809 $0.9 2.11 $1.4 G WNS (Holdings) Limited 18 21 1.5% ACN CGI Group Inc.5.5 8. Potential for revenue upside.61 $1.1 INFY Syntel. Lowest exposure among peers to DoD/intel.13 $52-54 $0.301 $0.65 revenue growth. and Americas led.9 1.7 2.8. 237 263 3.5 1.12-0.3 1. Believe offshore demand strength will continue. Believe IT services results above guidance.08 $210 $0.87 NA NA revenue growth. $71.2 .632 11/4/10 $210 $0.3 1.057 10/28/10 $328 $0.4 SRX Six Month historical compares for 4/15/10 .17 $4.8 .9 .17 NA $1.1 1.250 $0.277 NA op.14.402 6. "Management guidance" section for Infosys is actual results.1 5.5 155% 1.3 MANT NCI.5 10. "convenience translated" WIT Wipro Limited $16.26P $91 $0.175 $0.9 .727 10.11)G Believe CEO's focus on new sales and client relationships will take WNS WNS Holdings.66 Management expressed higher confidence in FY11 revenue growth Government sector headwinds (both U.01 $40.3 11. 457 554 6.252 11/10/10 $4.7 .2.20 remains focus topic.919 12/8/10 $2. $26.5 7. vs. Sale of money-losing AOS unit a positive for Era unit losses.8.6 125 1. Inc.5 .9. Were particularly vocal last quarter about increased contract acquisition NCIT NCI.3 7. We SRX SRA International $19.9 7. GIB and CSC joint coverage with Eric Boyer Source: FactSet and Wells Fargo Securities.122 3. We expect delays and higher costs to continue.0 5. In the process of being acquired by PricewaterhouseCoopers.5 DTPI Sapient Corporation 6.109 11/02/10 $430 $0. Key issue for offshore BPO remains the pace of new sales.5 16.High Avg / Avg Float Ticker (000) (000) Global Service Providers Accenture plc 9. 12-13. Inc. Recently held analyst day on Oct.13.2% q/q INFY Infosys Technologies Ltd.4 .04 $443 10/27/10 $90 $0.496 $0.22 NA NA BPO sales cycles remain lengthy. SAI stressed strong position SAI SAIC.9/30/10 ACN.59 spending trends.3 8.16 $62 $0. highlighted by 10.7 CSC Consulting & Systems Integration Diamond 1.41-0. Acquisition-related questions likely to be conference call focus.4 . Inc.44 $168 $0.2 143 5. 686 691 11.827 10/22/10 $1.2 1.175 $0.31 $1.1 2.2 SAPE Offshore IT Service Providers Cognizant Technology Solutions 5.7 4.A Computer Sciences Corporation 2.50 $4.40 $198 $0.23.62 $5.4 3.660 $0.70 $269 11/03/10 $170 $0.40 outlook relative to competition as a result. Inc.050 $1.35 NA NA in growth markets such as health.7.10 $1. $15. 7.S. expect in-line quarter.14 expect updated guidance on the conference call.548 First Wk Nov.498 6. Revenue upside possible given continued strong discretionary CTSH Cognizant $64.701 $0.5 1.

73 74% (0%) 20.040 1.280 2. 3-Underperform Source: Wells Fargo Securities.011 3.45 0.456 1.7% 18.5% 9.5 10 0.6 14% 11% 770 0.2 15 1. Growth Rev Rev Est.461 0.92 59% (1%) 2.60 2.0 MANT EC NCI.149 35.3 23% 21% 5.7 37% 25% 4.3% 73 8. Inc.77 29 25 9.038 6.7 (6%) 6% 366 1. LLC Equity Research IT/BPO Services Summary Valuation For Followed Universe ($ in millions.5 30% 15% 212 1.1 SAI EC SRA International 2 19.8 22 1.828 $2.55 52% (5%) 39. Inc.696 0.3 12% 7% 3.46 11 11 8.711 $26.0% 8.45 3.8 5% 11% 1.5 SRX S&P500 1174.67 1.28 129% (2%) 4.20 19% (21%) 1.079 18. 2 19.6 12 1.5 12 1. LTGR 1 Analyst Rating 10/15/10 Low High (Basic) (Basic) CY10E CY11E CY10E CY11E CY10E CY11E CY10E CY10E CY10E CY11E CY10E CY10E LTGR CY10E Ticker Global Service Providers EC/EB Accenture 1 $45. and FactSet EQUITY RESEARCH DEPARTMENT WELLS FARGO SECURITIES.6 14% 16% 1.8% 6.3 ICFI EC ManTech International 2 41.011 1.492 4. 2 16.Eric Boyer (443) 263-6559 CGI Group (GIB) estimates and price are in Canadian Dollars.9 SYNT EC Wipro Limited 2 16.26 13% (14%) 1.8 INFY EC Syntel. LLC estimates.30 14 12 13.78 12 11 6.6% 263 6. 2-Market Perform.8 25% 20% 522 3. Margin EBITDA EBITDA Rev.4x ACN EB/EC CGI Group.409 3.9 CSC Consulting & Systems Integration EC Diamond 2 12.61 25 20 12.29 2. LLC .274 2.8 WIT Offshore BPO Service Providers EC ExlService Holdings.48 15 13 7. Value (EV) EPS P/E Op.8% 34 14.7% 1. EV/ EV/ PE/ Price 52 wk 52 wk Cap.2% 7.3% 89 16.0% 255 6.07 41% (2%) 4.7 3% 6% 16.700 0.8 Wells Fargo Securities.86 12 12 6.4 EXLS EC Genpact Limited 2 18. 2 19.82 28 22 14.648 3.49 124% (1%) 342 278 0.4 G Information Technology (IT) Services EC WNS Holdings.1 20 1.7% 677 6.64 28% (12%) 517 631 1.80 12 11 8. Enter.51 37 32 19.76 $3.412 0.A Rating Legend: 1-Outperform.3% 23.25 75% (3%) 1.2 DTPI EC Sapient Corporation 2 12.709 0. 2 9.278 39. 2 26.5 15 0.8 NCIT EC SAIC.08 NM 120 1.450 27. Inc.6% 13.2x 12% 1.28 161% (4%) 563 472 0.49 9 9 8.9 20 1.485 0.371 1.16 1.29 1. Inc.110 1. company management.26 5. 1 16.4 20 NM WNS Government Service Providers EC CACI International 2 45.13 16x 14x 13.5% 148 6.2 GIB.0 34% 14% 2.65 0.1 22% 8% 572 0. Inc.5% 7.5 20 0.7 (3%) 5% 3. EB .63 14% (44%) 425 527 (0.25 16% (4%) SPX 1 EC .41 1.73 3.6 10 1.50 17% (19%) 1.6% 936 19.6% 13.21) 0.5% 19.20 24% (16%) 7.67 0.918 1.92 19 17 23.61 29 26 18.427 2. except EPS) Mkt.1 25% 19% 239 2.3% 1. 2 48.0% 8.496 1.533 3.42 1.2 12 1.715 6.4% 2.0 20 1.7x 5% 8% $21. Inc.955 6.3 20 1.596 8.5% 49 10.1% 8.9% 15.51 2.2 17% 13% 6.1 25 1.818 2.503 1.3% 6.Ed Caso (443) 263-6524.275 0.46 61% (2%) 40.92 27 23 33.8% 224 16.975 5.71 19 16 6.1% 142 12.6 10 1.0% 10. Inc. associated ticker is GIB.50 0.1% 2.30 0.2% 33.496 4.2 CTSH EC Infosys Technologies Limited 2 68.1% 1.278 0.476 6.2% 12.476 7.02 8% (19%) 5.654 1.50 41 25 8.9% 33 8.8 15 1.8% $3.9% 44 6.A EC/EB Computer Sciences Corporation 2 49.832 19.634 1.0 CACI EC ICF International.2 4% 5% 11.7 26% 20% 808 1.83 9% (39%) 270 270 1.23 136% (1%) $31.9 SAPE Offshore IT Service Providers EC Cognizant 1 66.

Equifax Inc. related to the specific recommendations or views expressed by me in this research report. a client of Wells Fargo Securities. Inc. Convergys Corporation. Hewitt Associates.. ExlService Holdings.. Inc. MD 21202 ATTN: Research Publications Additional Information Available Upon Request I certify that: 1) All views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers discussed.. LLC. Inc. ƒ Wells Fargo Securities. LLC provided noninvestment banking securities-related services to Equifax Inc. Unisys Corporation. ƒ Wells Fargo Securities. Syntel.1% of any class of common stock of Sapient Corporation... Unisys Corporation. Inc. or during the 12-month period preceding the date of distribution of the research report was. Unisys Corporation. Inc. or will be. LLC received compensation for products or services other than investment banking services from Equifax Inc. LLC or its affiliates received compensation for investment banking services from Equifax Inc... SRA International.. has beneficial ownership of 7.. Hewitt Associates.. Syntel... NCI... IHS Inc. directly or indirectly. LLC or its affiliates managed or comanaged a public offering of securities for Equifax Inc. LLC or its affiliates may have a significant financial interest in Accenture plc. Inc. ICF International. Inc.wellsfargo. Iron Mountain Incorporated. Genpact Ltd. Wipro Ltd. ManTech International Corporation. in the past 12 months. Inc. ƒ Equifax Inc. Computer Sciences Corporation. or any of its affiliates.0% of any class of common stock of ICF International. ƒ Wells Fargo Securities. ƒ Wells Fargo Securities.. Diamond Management & Technology Consultants. ExlService Holdings.. Baltimore.... Hewitt Associates. LLC Wells Fargo Securities' Weekly Services Monitor EQUITY RESEARCH DEPARTMENT Required Disclosures To view price charts for all companies rated in this document. Inc. ƒ Wells Fargo Securities. Inc. Sykes Enterprises. currently is. Equifax Inc. IHS Inc. SAIC.. Inc. Inc. Inc. LLC and/or its affiliates. Wipro Ltd. is.. Infosys Technologies Ltd. Cognizant Technology Solutions Corp. Inc... Inc. Genpact Ltd.5% of any class of common stock of Genpact Ltd. in the past 12 months. ManTech International Corporation. or during the 12-month period preceding the date of distribution of the research report was. Inc. or any of its or write to 7 Saint Paul Street. Inc. Inc. ƒ Wells Fargo Securities. ICF International. Wipro Ltd. Unisys Corporation. 1st Floor.. a client of Wells Fargo Securities.. Inc.0% of any class of common stock of SYKES Enterprises. or any of its affiliates. ICF International. and 2) No part of my compensation was.. has beneficial ownership of 6.. Inc. Inc. Wells Fargo Securities.. CACI International Inc. LLC. SRA International. Inc. Inc. Sapient Corporation. Cognizant Technology Solutions Corp. have beneficial ownership of 1% or more of any class of the common stock of CACI International Inc. CACI International Inc. Hewitt Associates.... ƒ Wells Fargo Securities. Inc. TeleTech Holdings. LLC provided investment banking services to Equifax Inc. SRA International. Hewitt Associates. Inc. Genpact Ltd.. WELLS FARGO SECURITIES. R1230-011. has beneficial ownership of 6. Inc. LLC maintains a market in the common stock of Accenture plc. Inc. CGI Group. Genpact Ltd. within the past 12 months. Wipro Ltd. TeleTech Holdings.. Sapient Corporation.. 9 .. LLC... Inc. SAIC.. please go to https://www. Inc. Wells Fargo Securities.. SAIC. Inc. Genpact Ltd. LLC. Hewitt Associates... Sykes Enterprises. Unisys Corporation. LLC. Convergys Corporation. Wipro Ltd. ƒ Wells Fargo Securities. or any of its affiliates. ƒ Wells Fargo Securities. currently is.. NCI. ManTech International Corporation. Convergys Corporation.. has beneficial ownership of 6... Inc. Computer Sciences Corporation. Equifax Inc. Iron Mountain Incorporated. TeleTech Holdings. Inc. Computer Sciences Corporation. Infosys Technologies Ltd. Diamond Management & Technology Consultants. Genpact Ltd. Genpact Ltd. Genpact Ltd.. ƒ Equifax Inc.. LLC. Sapient Corporation.. ƒ Wells Fargo Securities... LLC or its affiliates intends to seek or expects to receive compensation for investment banking services in the next three months from CACI International Inc.. ƒ Wells Fargo Securities.. WNS Holdings Ltd. Sykes Enterprises.

IHS: Valuation risks include weak enterprise spending due to a soft economy. and unfavorable FX. LLC does not compensate its research analysts based on specific investment banking transactions.S. uneven pace of FX gains/losses. SYKE: Risks include integration risk. increasing competition especially as pursued deals get larger. he still controls more than 80% of the voting rights. UIS: Risks include limited financial guidance. lumpy sales. Other factors are a highly competitive ITO market. CSC: The primary risks to our thesis are CSC's execution on its UK NHS project. we believe any effort to increase float of the ADS could lead to a contraction in the premium over the local shares (historically 40-60%). and acquisition risk. energy market volatility. Wells Fargo Securities. pace of IT spending recovery. and execution issues. federal government as a client. concentrated ownership with two classes of stock impacting voting power. there will be more uneven timing from an increased reliance on pass- through revenue. and relatively higher financial leverage. SAPE: Risks to our model include sustained growth in "Interactive" solutions. commoditization of largest revenue stream. access to data. a rapidly growing federal deficit. CVG: Risks to our valuation range include a decrease in demand for services during a period of slower economic growth. company restructuring. risk of a pullback in a still recovering global economy. as well as a difficult business to operate due to high attrition. utilization and SG&A leverage to meet guided improvement in adjusted operating margin. a prolonged period of high unemployment. federal government as a client. slow ramp of new facilities. Also. and the impact of the economy on discretionary spending and longer-term deal signings. the Chairman's family controls about 70% of the shares. notable client concentration. and the vagaries of having the U. Near-term concerns include the still uncertain financial impact of State Street BPO renegotiation and options for accretive deployment of significant cash balance. and more so successfully improving pricing. CACI: Risks include historic reliance on more "pass-through" related revenue growth which has a dampening impact on operating margin and generates more quarterly volatility to results.S. HEW: XX ICFI: Risks to our valuation include the uneven timing of government funding. and potential new US visa limitations. high employee turnover. digital storage cannibalizing core physical storage demand. INFY: Risks to our valuation range being too conservative is that revenue growth from new sources meaningfully accelerates driving greater operating leverage and therefore EPS upside. exposure and uncertain timing of in-theatre support contracts (about 25-30% of revenue). IFRS with "convenience translation"). EFX: Valuation risks include a continued contraction in consumer credit. LLC Information Technology (IT) Services EQUITY RESEARCH DEPARTMENT ACN: Risks include an extended period of slow economic activity and therefore IT driven investment. and any potential issues related to closing the deal with PwC. offshore cannibalization. CTSH: Risks to our valuation range include a large exposure to the financial services vertical. IRM: Valuation risks include weak enterprise spending due to a soft economy.S. WNS: Risks to our valuation range include customer concentration. the vagaries of having the U. In addition. WIT: Risks to the Valuation Range include uneven economic activity. but is not limited to investment banking revenue. Federal and State & Local government deal delays. and now FX volatility. confusing presentation of financials (not just IT/BPO services. integration risk of potential acquisitions. EXLS: Risks to our valuation range include potential economic/credit driven declines in activity levels. and potential share overhang. delays or directional change in Obama administration priorities. government regulation. and potential share overhang given 37% ownership by a pre-IPO investor. SRX: Risks include ongoing losses in the Era business. Historical track record has been mixed on sustaining margin improvement. TTEC: Risks to our valuation range include lower call volumes and a delay in new deal signings due to the economy. and a high debt level. SYNT: Risks include SYNT's need to consistently penetrate its top ten clients. Also. and integration risk. and a rapidly growing federal deficit given the economic downturn. prolonged weakness in demand from ICF's commercial and state/local markets. though the founder has reduced his stake to about 20%. price paid and assimilation of potential acquisitions. G: Risks include need to continue expansion/ penetration of the faster growing non-GE business. which includes. and potential share overhang from the founder. customer concentration. and increased competition from both domestic and offshore service providers. and acquisition integration. U. acquisition assimilation. and growing protectionist measures in the U. and to a lesser extent uneven timing of higher margin product sales. limiting share liquidity. and foreign exchange. WELLS FARGO SECURITIES. a challenging economy with particular concerns for the technology vertical and European exposure. ability to attain qualified personnel at reasonable wage levels. sticky high employee turnover. management of rising employee attrition. SAI: Risks include timing of federal outlays which has led to a slow down in award activity of late. NCIT: Risks include the uneven and uncertain timing of government funding. LLC’s research analysts receive compensation that is based upon and impacted by the overall profitability and revenue of the firm. acquisition assimilation. DoD budget funding pressure. and maturing higher-margin legacy product sales and services. Wells Fargo Securities. uneven FX gains/losses. Additionally.S. 10 . Risks on being too optimistic is more around possible larger headwinds from slower than expected growth in Europe. DTPI: Risks include sensitivity of revenue to economically short duration projects. rising Federal government deficit. GIB: Risks to our valuation range include uncertain economic conditions. as well as relatively higher financial leverage. and wage inflation during better economic conditions. MANT: Risks include fallout from the departure of the COO.

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