®

Infosys – A Unique
Business Model
 ®

Safe Harbor

Certain statements in this presentation concerning our future growth prospects are
forward looking statements which involve a number of risks and uncertainties that could
cause actual results to differ materially from those in such forward looking statements.
The risks and uncertainties relating to these statements include, but are not limited to,
risks and uncertainties regarding fluctuations in earnings, our ability to manage growth,
intense competition in IT services including those factors which may affect our cost
advantage, wage increases in India, our ability to attract and retain highly skilled
professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client
concentration, restrictions on immigration, our ability to manage our international
operations, reduced demand for technology in our key focus areas, disruptions in
telecommunication networks, our ability to successfully complete and integrate potential
acquisitions, liability for damages on our service contracts, the success of the
companies in which Infosys has made strategic investments, withdrawal of governmental
fiscal incentives, political instability, legal restrictions on raising capital or acquiring
companies outside India, and unauthorized use of our intellectual property and general
economic conditions affecting our industry. Additional risks that could affect our future
operating results are more fully described in our United States Securities and Exchange
Commission filings including our Annual Report on Form 20-F for the fiscal year ended
March 31, 2000, and our Quarterly Reports filed on Form 6-K for the quarters ended
June 30, 2000, September 30, 2000 and December 31, 2000. These filings are available
at www.sec.gov. Infosys may, from time to time, make additional written and oral
forward looking statements, including statements contained in the company’s filings with
the Securities and Exchange Commission and our reports to shareholders. The
company does not undertake to update any forward looking statement that may be
made from time to time by or on behalf of the company.
 ®

Infosys - An Overview

 End-to-end IT solutions provider

 One of the most profitable software
services providers in the world
 Publicly traded in India since 1993
 Fifth most valuable company in
India
 Listed on NASDAQ since
March 1999
 Present market cap at US$ 5.5
billion (as of May 11, 2001) [based
on BSE prices]
 ®

Continuous Growth
Revenues and Operating Profit

450.0
413.8
400.0

350.0

300.0
(in $ million)

250.0
203.4
200.0

150.0 137.5
121.0
100.0 68.3 60.5
IPO 39.6 35.8
50.0 18.1 26.6
9.5 2.6 4.1 6.3 9.2 13.4
-
1994 1995 1996 1997 1998 1999 2000 2001
Revenues Operating profits

Excluding one-time charge for compensation arising from stock split

 ®

Growing Earnings Per Share

2.5

2.01
2

1.5
(in US$)

1 0.93

0.49
0.5
0.22
0.12 0.15
0.05 0.07
0
1994 1995 1996 1997 1998 1999 2000 2001
Earnings per share

Excluding one-time charge for compensation arising from stock split

 ®

Per-capita revenue growth

450.0
413.8
400.0

350.0

300.0

250.0
203.4
200.0

150.0
121.0

100.0 87.0
68.3 68.0
57.0 57.1
42.0 48.0
50.0 39.6 35.6
25.4
11.4 17.2
-
1997 1998 1999 2000 2001

Per capita revenues (US$ 000) Billed manmonths ('000) Revenues (US$ Mn)
 ®

Business outlook

 Quarter ending June 30, 2001

› Net revenue is expected to be in the range of $ 123 million to
$ 125 million
› Earnings per ADS is expected to be in the range of $ 0.28 to
$ 0.29

 Fiscal year ending March 31, 2002

› Net revenue is expected to be in the range of $ 530 million to
$ 545 million
› Earnings per ADS is expected to be in the range of $ 1.24 to
$ 1.27
 ®

Challenging external IT environment

 Reports on slow-down in IT spending by US companies

 Earnings warnings from some of our major customers
 Concerns on dot-com and venture-funded businesses
 Earnings warnings from some of the software companies in US
 Possible softness in labor markets in the US
 Internet consulting companies facing pressure on visibility and
billing rates
 There may be supply-demand gap in India resulting in escalation
of labor cost
 Falling markets and stock options becoming unattractive
resulting in escalation of compensation costs
 ®

Investors’ Concerns

 Business
 Effect of slow-down in IT spending in US on Infosys
 Visibility in business
 Future revenue growth
 Per capita revenues
 Ability to increase the per-capita revenues on a go-forward basis
 Impact on the per-capita revenue growth rate due to reduced dot-com / venture-funded
businesses
 Hiring and Utilization
 Ability to attract the best and the brightest
 Lower utilization rates coupled with increased hiring
 Labor cost escalation due to falling market price of the stock
 Margins
 Ability to maintain or grow the margins on a go-forward basis
 Exposure to dot-com/venture funded companies
 Strategic investments and accounts receivable
 ®

PSPD Model Quality Transparency

People

Predictability Sustainability
Maintenance Translating clients to partners

Long-term relationship

Offshore Software
Development Centers

Growth

Higher value services

Increase revenue productivity
Offshore model - Global Delivery
Upsell to existing customers
Exposure limits for client concentration
Exposure limit for dotcom businesses
Exposure limit for opportunity
businesses (like Y2K)

Iterative Model of Development Geographical diversification

Profitability De-risking
 ®

Repeat business through the years

94.0

92.0

90.0

88.0
(in %)

86.0

84.0

82.0

80.0

78.0
1996 1997 1998 1999 2000 2001
Repeat business (% to total revenues) 91.8 84.1 83.1 90.0 87.6 84.5
 ®

Million dollar customers

300 90%
80%
250
70%
200 60%
50%
150
40%
100 30%
20%
50
10%
0 0%
FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01
Million $ clients 4 7 9 19 35 42 80

Total clients 19 31 69 93 115 194 273

Million $ clients/ total (%) 21.1% 22.6% 13.0% 20.4% 30.4% 21.6% 29.3%

Million $ client revenues / 65.1% 69.9% 57.4% 68.8% 80.2% 81.8% 85.6%
total revenues (%)
 ®

Quarterly per-capita revenue growth

160,000

140,000

120,000

100,000
(in US$)

80,000

60,000

40,000

20,000

-
Q1 FY00 Q2 FY00 Q3 FY00 Q4 FY00 Q1 FY01 Q2 FY01 Q3 FY01 Q4 FY01

Per capita revenues - Onsite 95,511 103,888 103,036 104,028 115,434 135,600 138,400 134,900
Per capita revenues - Offshore 49,536 51,098 53,115 54,756 60,862 64,500 65,200 64,500
Per capita revenues - Blended 62,809 67,975 70,160 71,571 80,959 90,400 89,600 86,200

Per capita revenues - Onsite Per capita revenues - Offshore Per capita revenues - Blended
 ®

Key parameters
60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
Q1 FY00 Q2 FY00 Q3 FY00 Q4 FY00 Q1 FY01 Q2 FY01 Q3 FY01 Q4 FY01
Gross margin % 48.1% 45.6% 45.3% 43.7% 47.7% 48.7% 47.3% 49.6%
Selling and general expenses % 14.0% 12.4% 12.7% 13.5% 13.2% 14.6% 12.9% 14.8%
Operating margins % 31.0% 30.5% 30.1% 28.1% 32.9% 32.9% 33.2% 33.7%

Gross margin % Selling and general expenses % Operating margins %

Excluding one time charge arising on accelerated amortization of stock compensation expense
 ®

Moving-up the Value Chain – A

Multi-pronged Approach

Expand and diversify End-to-end

base of IT professionals service provider

Increase employee
productivity by Offer new services
promoting reuse to existing clients

Use tools and Develop

methodologies new clients

Our intention is to increase per capita revenues by a

minimum of 3-5% per annum to maintain margins
 ®

Hiring and utilization

 ®

Infosys: the Employer-of-choice

 Adjudged “India’s Best Employer” by the

first Business Today-Hewitt Survey
conducted in December 2000
› Ability to attract the best and the brightest
 High investment in technology and training
› 14 weeks of intensive training for new hires
› 55 member faculty, including 8 Ph.Ds
 All employees in Infosys are covered by the
stock option plan
 Incubation mechanism for employees to
launch their own ventures. Piloted
OnMobile - a end to end wireless solutions
provider
 Attrition rate of 11% for fiscal 2001 and 9%
for fiscal 2000
 ®

Our views on labor cost pressures

 Wage pressures for freshers may not arise because of

increased market penetration. This is due to:
› Softening of wages in the US markets due to lay-offs
› Slowdown in hiring by second / third tier companies in India
due to a decline in business opportunities
 Wage pressures already exist in the market for project
managers since demand outweighs supply
› This situation may not change
 We require a growth rate of ~3-5% in per capita revenues
to neutralize wage pressures
 ®

The impact of stock options

 Stock options are not a substitute for salaries.

 Stock options are granted as additional incentive
 Stock options are widely distributed amongst employees
 Most of the senior employees of the company (around 1550) are covered
under the 1994 stock option plan that created substantial wealth in their
hands
 62% of options outstanding under the 1994 plan (covering 1,472
employees) will vest after 2 years
 Part of the grants under the 1998 and 1999 option plan, have already
vested
 Stock options have created 80 dollar millionaires and over 1,150 rupee
millionaires, at Infosys
 The employee ownership in Infosys including the outstanding option
grants is 11.7%
 ®

We continue to focus on margins

 ®

Utilization rates and margins (%)

90.0% 51.0%

50.0%
80.0%
49.0%
70.0%
48.0%
60.0%
47.0%
50.0% 46.0%

40.0% 45.0%

44.0%
30.0%
43.0%
20.0%
42.0%
10.0%
41.0%

0.0% 40.0%
Q1 FY00 Q2 FY00 Q3 FY00 Q4 FY00 Q1 FY01 Q2 FY01 Q3 FY01 Q4 FY01
Utilization % -IT 75.8% 71.2% 68.1% 76.6% 74.9% 65.4% 66.7% 64.9%
Utilization % -ET 80.5% 81.1% 74.8% 81.5% 85.6% 80.5% 77.6% 73.0%
Gross margin % 48.1% 45.6% 45.3% 43.7% 47.7% 48.7% 47.3% 49.6%

Utilization % -IT Utilization % -ET Gross margin %

ET – excluding trainees
IT – including trainees
Margins are the key. Bench is for strategic reasons. The cost of
bench is hardly $800 per month per person
 ®

Strategic investments

 Investments are key to Infosys’ strategic objectives of gaining access to

niche technologies and markets
 We leveraged the expertise derived from our relationships with our investee
companies to deliver value to large clients across the globe
 We become the IT strategic partner for our investee companies
 Benefits arise in the form of revenue and net income enhancements
 Investments are also envisaged in technology specific venture capital funds
 We have invested:
› $3 million in Cidra, a developer of photonic devices for high-precision wavelength
management and control for next-generation optical networks (FY01 revenues -
$1.7 million and cumulative revenues of $ 2.1 million)
› $ 0.4 million in M-Commerce Ventures Pte Ltd., Singapore, an early stage VC fund
› $ 1.5 million in Asia Net Media BVI Ltd. (FY01 revenues - $0.9 million and
cumulative revenues of $ 1.1 million)
› $ 0.5 million in PurpleYogi Inc
 ®

We have today the infrastructure, processes and

people to manage future growth
 ®

Creating physical infrastructure

140.0

120.0

100.0

80.0
(in $ Mn)

60.0

40.0

20.0

-
Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01
Capital expenditure 5.0 8.9 10.8 12.2 19.4 25.0 26.8 29.7
Capital commitments (end of quarter) 7.9 14.2 16.0 18.5 26.6 26.4 26.3 34.0
Operating cash flows earned in the next quarter 14.7 14.2 29.0 20.6 43.4 29.0 44.5 -
Cash balances (end of quarter) 102.6 104.1 106.8 116.6 105.8 116.5 110.9 124.1

Capital expenditure Capital commitments (end of quarter) Operating cash flows earned in the next quarter Cash balances (end of quarter)

As of March 31, 2001, we had software development space of 1.66 million sq. ft. capable of accommodating 10,100
personnel and 1.91 million sq. ft. capable of accommodating 8,500 personnel under construction.
 ®

People statistics

12,000

10,000

8,000

6,000

4,000

2,000

-
Q1 FY00 Q2 FY00 Q3 FY00 Q4 FY00 Q1 FY01 Q2 FY01 Q3 FY01 Q4 FY01
Employees (total) 3,943 4,778 4,996 5,389 6,445 7,925 8,910 9,831
Software professionals 3,321 4,122 4,261 4,623 5,594 6,941 7,824 8,656
Added in the quarter 177 835 218 393 1,056 1,480 985 921

Employees (total) Software professionals Added in the quarter

Additions are on a net basis
 ®

World-class Quality Processes

 Focus on defect prevention, technology insertion

CMM Level 5 and process changes to improve quality and productivity

 Reduction in cycle time and defects for six cross

Six Sigma functional processes
 Orders Through Remittance (OTR)
 Visa processing
 US Payroll

 Cross functional teams to address improvement areas in

Baldrige strategic management functions
 Leadership Development, Customer Relationship
Management, Human Resource Management,
Information Systems and Process Management

We have strong internal quality processes to manage growth

 ®

We have built a strong brand

 Prominently covered in Business

Week, New York Times and Wall
Street Journal
 Most admired company in India -
poll by India’s largest business
daily, The Economic Times
 Infosys figures in Forbes
“20 for 2000”
 First recipient of the UTI award for
corporate governance - chosen
from over 7500 listed companies in
India
 ®

We have won several awards

 The Far Eastern Economic Review rated Infosys as

the No. 1 company in India in the Review 2000, an
annual survey of Asia's leading companies
 Infosys became the first IT company to win the IMC
Ramkrishna Bajaj National Quality Award in the
services category
 We were judged by the Financial Technology Asia
Magazine as the Best Regional Software House
 The BankAway product from Infosys won the CSI-
Wipro award for the Best Packaged Application for
the year 2000
 “Silver Shield” Award for the Best Presented
Accounts awarded by the ICAI for Non-financial
Private Sector Companies for six consecutive years
ended March 31, 1995 through 2000
 ®

In summary

We have a unique business model which is fully

poised to exploit the growth opportunities in
the market and minimize risk
 ®

Thank You

Visit us at www.infy.com