S. Gopalakrishnan – Chief Executive Officer S. D. Shibulal – Chief Operating Officer V. Balakrishnan – Chief Financial Officer Ashok Vemuri – Senior Vice President Subhash Dar – Senior Vice President

George Price – Stifel Nicolaus Ed Caso – Wells Fargo Mark Zutovich – Piper Jaffray Joseph Foersi – Janney Montgomery Scott Moshe Khatri – Cowen & Company Ashish Thadhani – Gilford Securities Julio Quinteros – Goldman Sachs James Friedman – Susquehanna

Welcome to the Infosys Technologies first quarter fiscal 2010 earnings release conference call. Today’s call is being recorded. At this time, for opening remarks and introductions, I’d like to turn the conference to Sandeep Mahindroo.

Good morning everyone, and welcome to this call to discuss Infosys’ financial results for the quarter ending June 30, 2009. I am Sandeep from the Investor Relations team in New York. Joining us today on this call is our CEO and MD, Mr. Gopalakrishnan; COO, Mr. S.D. Shibulal; and CFO, Mr. V. Balakrishnan along with other members of the senior management. We will start the proceedings with a brief statement on the performance of the company for the recently concluded quarter, followed by the outlook for the quarter ending September 30, 2009, and year ending March 31, 2010. Subsequently, we will open up the discussion for Q&A. Before I pass it onto management team, I would like to remind you that anything we say which refers to our outlook for the future is a forward-looking statement and must be read in conjunction with the risks that the company faces. A full statement and explanation of these risks is available with our filings with the SEC, which can be found on www.sec.gov. I would now pass it on to Mr. S. Gopalakrishnan. S. Gopalakrishnan: Thank you for joining us for this call at the end of Q1. We exceeded the higher end of our guidance by 3.9%. Our guidance was $1.06 to $1.08, and we did $1.12. Revenue increased sequentially by 0.1%. Of course, in constant currency, it declined. Volume declined sequentially by 1.1%. It’s slightly better than what we had projected at the beginning of the quarter. On-site volumes declined by 2.1, offshore volumes declined by 0.6. In constant currency terms, the revenue per employee has come down by about 1%. Utilization is slightly lower, but given where we are, given the environment in which we are operating today, we feel we’ve been able to execute this quarter reasonably well. We’ve increased operating margin by about 0.7%. We’ve added 27 clients. We’ve had three large what we call outsourcing deals. We have won three transformation deals. We continue to add employees. We continue to invest in sales and marketing. We continue to invest in solutions and IP. We have capacity. We see growth opportunities. We can take advantage of that, and our ability to manage the margins in these circumstances gives us the confidence that we would be in a strong position. If I look at the environment, medium to long-term, we still believe in the growth story for the industry. In the short term, it is going to be volatile. It’s going to be challenging. It’s going to be unpredictable, and that’s why if you look at our guidance, in dollar terms, we did not revise the upper end of the guidance. The lower end of the guidance reflects what happened in the first quarter. It has been increased by about $100 million. At the EPS level, for the full year, we’re saying $1.97 to $2.00. It is a sequential decline from last quarter, and we feel very cautious in the short terms but optimistic in the medium to long-term. When we discuss with our clients, they were actually probably more upbeat a couple of weeks back. In the last two weeks, sentiment may have become a little bit negative. They also tell us that recovery will be sometime in 2010, beyond this fiscal for us. So we want to be cautious at this point, and that is reflected in our guidance. The currency is fluctuating, quite volatile. We have benefited from currency movements, and Bala will explain the details this quarter. Our philosophy always has been to take the exchange rate at the last day of the quarter and project, so whatever is reflected includes what has happened in the first quarter, but it’s based on the last day’s exchange rate, and what is seen now is our guidance based on the current economic environment. Now, I’ll pass it onto my colleague, Shibulal, to give you more segmentation details. S. D. Shibulal: I will just start with the pricing environment. The pricing environment continues to be challenging. We have an increase in our revenue per person this quarter—1% in total currency. This is after a decline of 3% in Q4—the last quarter, but in constant currency terms, actually the revenue per person has declined by 0.9%. The pricing continues to be challenging. At the same time, we believe that most of the negotiations are over, at least for phase 1. It doesn’t mean that there will not be a second round of negotiations. That will depend on the economic situation going forward. Utilization is 70.1% compared with 74.3% in the last quarter. This is excluding trainees. We have honored all the commitments which we gave to campus. People have joined. Gross addition this quarter has been 3500 plus. Net addition is negative actually—900 plus. The attrition is 11.1%, which includes an involuntary attrition of 2.9%. Client additions: We have added 27 new clients this quarter, two of whom are Fortune 500. We have 330 million-dollar clients, giving us $1 million in LTM basis; 19 clients giving us more than $50 million; and 4 clients giving us more than $100 million. Our total active number of clients is 569 as of this quarter. Revenue breakup: There is an increase in maintenance revenue as a percentage. It has gone up from 21.7% in the last quarter to 23.2% this quarter. This is very much in line with what we believe what the clients are trying to do. We are trying to reduce their total cost of ownership of lights-on work. So they are trying to convert their fixed costs to variable costs as well as do some partner consolations which is showing up as increased revenue in application maintenance. Meanwhile, the consulting revenue has dropped from 25.4% to 24.4%. This is a reflection of the tightness in the discretionary spend. As far as vertical split is concerned, most of them have remained stable. Insurance, banking, and financial services gave us 33% this quarter, exactly the same as what is was last quarter. There is a marginal increase in telecom—16.9% this quarter compared with 16.7% last quarter. Geographies remained pretty stable. North America is 64.7% of the revenue—again quite stable compared with last quarter. With that, let me hand over to Bala for the financial updates. V. Balakrishnan: This quarter has been extremely good—much better than what we expected. In the beginning of the quarter, we said we’ll have revenue of $1060 to $1080 million. We did $1122 million because we got some benefit because of the cross currency movement of something around $23-$24 million. The rest of it is due to better volumes and pricing than what we expected in the beginning of the quarter. We had a gross profit of 42.7%. Last quarter, it was 42%. The sales and marketing expense remained constant, and our operating income was 30.1%. Last quarter, it was 29.5%. If you remember in the beginning of the quarter, we said for full year the operating margin could come down by around 300 basis points because we want to make arrangements outside India, want to hire locals in all the markets we operate, and we also want to put more money on sales and marketing. Those investments have not happened in the first quarter. In the next three quarters, we’ll be making those investments, and we also reconfigured those costs. So net-net, for the full year from the earlier expectation of 300 basis point drop in operating margin, it could be something around 150 basis point drop in operating margin. So to that extent the effective tax rate could go up from 17% to 20% that is already factored in the guidance. For the current quarter, our net margin was 27.9%. Last quarter, it was 28.6%. All the subsidiaries did well this quarter, except for consulting which still made a loss of $2.5 million. Most of the other subsidiaries turned profitable, and to some extent, that improved our margins. For the full year, we have revised our guidance at the lower end—not in the upper end. We revised upwards the lower end guidance by $100 million. We want to keep the upper end of the guidance at the same level because we believe that uncertainty in the environment still continues, and we don’t want to go overboard. On the currency side, the rupee appreciated by around 3% this quarter. Technically it should have impacted our margin by around 1.2%, but the cross currency movement has benefited us, so we’ve not seen larger impact of currency movement on the operating margins because the rupee movement has been offset by the cross currency movement. At the operating margin, we had an impact of $8 million because of the currency. At the non-operating level, we had a benefit of $7 million because we had a translation impact of $13 million which was offset by hedging benefit of $19 million. Net-net at the net income level, the impact due to currency is only $1 million. We have a hedging position of $598 million at the end of the quarter. Last quarter end, we had $506 million. We continue with our strategy of hedging for the next two quarters at any point of time. We don’t want to go beyond that because the volatility in currency is huge, and if you take a long-term view, it could hurt us. For example, this quarter, the Australian dollar moved by around 15%, Euro moved by around 5%, and UK pound moved by around 8%. So in this kind of volatile situation, there is no point in taking a long-term view, so we’ll continue to take a short term view and cover our exposure for the next two quarters. We ended the quarter with $2.5 billion of cash. Our DSOs are under control. DSO days are 56 days, only 5% of the receivable are more than 90 days. So all in all, it was a great quarter. We want to be cautious for the full year, and that is reflected in our guidance. With this I conclude. Now, we can now open the floor for Q&A.

(Operator Instructions). Our first question is from the line of George Price with Stifel Nicolaus. George Price – Stifel Nicolaus: The fiscal ’10 constant currency revenue growth guidance I understand is coming down versus what was given last quarter despite better than expected volume performance in the quarter and what looks like a reduced pricing headwind. Why is that? What’s changed in the view over the next three quarters to cause that? V. Balakrishnan: It’s basically because we don’t want to change the guidance at this point of time. We know that with constant currency it is slightly coming down from what we guided in April, but at the end of the day, the uncertainty in the environment continues. Even though we’ve done well in the first quarter, we don’t want to increase the guidance in the next three quarters. We want to wait and see how the whole environment changes because even though there is some positive news coming at the macro level, at the micro level, things have not changed much. So basically, we want to be more cautious, so we’ve not changed the dollar guidance. If that reflects a small decline in constant currency, that’s it. S. Gopalakrishnan: Just to add to that, if we look at our first quarter, there is a volume decline of about 1%, and since there is a volume decline, it is not growth, so we said let us be cautious at this point. So it turns out to be flat actually for the rest of the three quarters. Previously we had said that there would be slight growth in the next three quarters. Now it’s actually flat for the next three quarters, and the net result of that is in constant currency terms a slight decline. George Price – Stifel Nicolaus: The lower constant currency is primarily a volume issue? Is that just a slower than expected ramp-up? S. Gopalakrishnan: No. Basically we want to be cautious because there was a volume decline of 1% in the first quarter. We believe that things have not stabilized in the environment, so we are more cautious about the environment. That is reflected in the guidance. George Price – Stifel Nicolaus: Bala, could you just step us through the specific new drivers of the 150 basis points of operating margin decline in fiscal ’10? What’s the new expectation on pricing impact, operating margin in the year, currency utilization, investment, and that kind of stuff? V. Balakrishnan: Earlier we said we could be spending close to 300 basis points for the two initiatives which we spoke about—one is onsite hiring in all the geographies where we operate. Second one is increased spending on sales and marketing. In the first quarter, we were not able to spend that because it takes some time to spend money. In the next three quarters, we could be spending that, and it could spill over to next year. We also reworked the cost based on the current realities, and the revised expectation is the impact would be around 150 basis points on the margins. On the utilization side, we are still going out with the 18,000 hiring which we said in April, so utilization could come down for the full year. We are keeping the model ready. We’re keeping the people trained, so if there is a turn in the environment, we’ll be better positioned to take the growth. Onsite-offshore mix, we are assuming the same level of first quarter to remain for the next three quarters. Normally our guidance assumes the same pricing level of what we see in the earlier quarter for the rest of the year, so whatever pricing level in the first quarter we assume that to remain constant for the next three quarters in our guidance. Currency rate, we normally taken the quarter-end rate and assume that to be remaining constant for the rest of the year because these are variables which we don’t know how they’re going to move. So all those factors are reflected in the guidance, and the revised guidance fully reflects all these assumptions. George Price – Stifel Nicolaus: Typically, you can break those out in terms of the basis points either hit or benefit to get us to the delta in the operating margin. Can you do that based on the new assumptions? V. Balakrishnan: Those assumptions remain. For every 1% utilization, there will be a 40 basis point impact. For every 1% move in rupee-dollar rate, there is a 40-basis point impact on operating margin. Those assumptions remain same, but the variability will be a percentage of those. George Price – Stifel Nicolaus: When you say the costs of the investments you intend to make have been reconfigured, obviously they’re lower, but can you give a little bit more detail as to why they’re lower? What investment you’re not ultimately making? V. Balakrishnan: That will be too much of detail. There are two initiatives which have reworked the costs and also it got deferred for the next two to three quarters, and overall reduction is 150 basis points. George Price – Stifel Nicolaus: As you go forward, how should we think about how they’re going to impact margins on a quarterly basis as we move to fiscal ’10? Are investments going to be more weighted to the back half of the fiscal year, or are they going to be relatively evenly distributed? Any color along those lines? S. Gopalakrishnan: We’ve given you the margin figures and the EPS figures, so it is reflected, and we’ve given you for the next quarter also. So it is there. The numbers are there actually. Bala, do you want to add anything? V. Balakrishnan: No. We’ve given the guidance for this year. Whatever will happen for the next three quarters is already factored in that. What’ll happen next year, we’ll say somewhere in April next year.

Your next question comes from the line of Ed Caso with Wells Fargo. Ed Caso – Wells Fargo: I’m just trying to get some clarification on the higher tax rate. Is that because of your flat revenue assumptions and that means less work is going to SEZs and your having some of your STPI facilities hit their 10-year targets? So because of this lack of growth, you’re sort of having a mix problem with your tax rate? Is that the right interpretation? S. Gopalakrishnan: Tax rate normally changes when more revenues come out of that tax holiday. This year, some of the units are getting out of the tax holiday. When we gave the guidance, we are assuming the margins to come down by around 300 basis points. To that extent, the tax outflow was less. That’s we said 16.5-17%. Now that margins are going up by 150 basis points from the earlier assumption, to that extent, the effective tax rate could go up by around 2%. So it could be between 19-20%. We assume 20% because it depends on the growth. If incremental growth comes in, that could go into SEZs. We have to see how much of incremental growth is going to come, how the mix is going to change. Right now, I think it is safer to assume 20% because the margins went up and the effective tax rate has to go up. Ed Caso – Wells Fargo: My other question is on the H1b visa issuance, I believe you dramatically reduced that number this quarter versus a year ago. What kind of expense implications did that have in the June quarter? S. Gopalakrishnan: The demand is flatter at this point. In fact, volumes came down a little bit, and so our need for additional visas has also come down, and that’s the only thing. We anticipated that the quota would not get filled up because the demand is low, and in fact, the quota has not filled up. I am told that the number of visas applied is about 45,000 out of the 85,000 or so. We felt that we could just in time if need be, and so we did not apply for the number that normally we would have applied. We have sufficient visas at this point, and that’s really not a concern. Ed Caso – Wells Fargo: Bala, what is the financial impact in the quarter? V. Balakrishnan: Last year in the first quarter, I think had some $15 million in visa costs. This quarter, I think it’s around $4-$5 million.

Your next question comes from the line of Mark Zutovich with Piper Jaffray. Mark Zutovich – Piper Jaffray: Just a followup to the earlier question about the reduced investment. I’m just wondering if this sort of parallels with your slightly more cautiousness for the year? Simply put, are you reducing your investments because you’re just not seeing the return there, and then could you also talk about what the mix of that 150 basis points will be broken out between investment outside India and in the selling and marketing line? S. Gopalakrishnan: We are cautious at this point. We’re very clear there. The environment continues to be challenging, and we’re cautious. We want to make sure that of course the investments give us return in the medium to long-term. We don’t expect it to give us returns in the short term. These are sales investments, these are recruitments in the market, so all these are actually outside. In India, we’ve already factored in 16,000, and that’s all factored in. Lower utilization, that’s factored in. So these are primarily outside India. We had in the beginning said we will recruit about 100 people onsite, 1000 people outside India. It is taking more time for us. As Bala said, some of this is getting shifted, may even get shifted to the next fiscal year. That’s partly the reason. Second is we continue to run the business as efficiently as possible. One of the other examples we just now talked is the visa and things like that, so we make sure that we keep our expenses under control, and we’ll continue to do that for the rest of the year, and so we’ve recomputed all that, and there are a few items here, and that’s the reason why we’re not breaking these things out, and we will make the right choices as we go along this year. If we feel comfortable that we can accelerate growth by recruiting more aggressively, we will do that. Mark Zutovich – Piper Jaffray: Regarding utilization, I think last quarter you had mentioned for the year you expected it to be down roughly 500-600 basis points. Are you still looking at that target which would put you at around the 68% level, and if so, what quarter do you see a bottom on the utilization front? S. Gopalakrishnan: We have involuntary attrition that has gone up by 1%. Our overall attrition is 11.1%. In fact, for the first time in many quarters, our overall employee count has come down this quarter by 945. So yes, utilization is going to come down, but to a certain extent it is going to depend on attrition, it’s going to depend on volume growth and things like that. We need to recruit in certain services. For example, in BPO, we have to recruit at this point. There are certain areas where we need to do the recruitment because the business is there, growth is there, so utilization will depend on that. Secondly, we are also extending training. We want to make sure that given that there is slack, we train our incoming batch properly. So utilization will come down. Is it going to be exactly 68? Somewhere in that range it will be, maybe even lower than that actually for a brief period.

Your next question comes from the line of Joseph Foersi with Janney Montgomery Scott. Joseph Foersi – Janney Montgomery Scott: : We’ve heard some early signs of a movement towards stability. I was wondering if you could be clear. Are you seeing this? It sounds like on the macro side of things, you’re seeing some movement there, and how do we reconcile that versus your cautious tone?

Relative to about 6 months ago, we’re definitely seeing a lot more stability, if you will, but there are a lot of contradictions from a macroeconomic perspective. The data is leading us to believe contradictory things actually, let me put it that way, and some of that is actually getting translated into client behavior as well. So it is true that we’re seeing some amount of client traction. Conversations are getting converted into transactions, but at the same time, we’re not seeing any change in the amount of due diligence or the fact that sales cycles are still very long and that decision making is happening at the top of the house. And also recent data is also creating some amount of hesitations as we see from our clients whether it is increasing delinquencies or the other macroeconomic environment, and we’re continuing to see forced attrition from our clients of their employees. So a combination of all these things in spite of the fact that we have shown reasonably better number this quarter, we want to be cautious because it is a little difficult to look out and see how this is going to pan out. We hope it will pan out in the same fashion that it did in the quarter that just preceded us, but we cannot be sure, hence the caution. S. Gopalakrishnan: Just to add to that actually, if you look at technology analysts’ predictions, they said that the beginning of the quarter, IT spending will be 3-4% down. Now actually they’ve revised it to 6-11% down. So we poll our clients; they have not changed their stance about when they expect recovery happen. Most of them said beyond March 2010. That means beyond this fiscal year. Technology analysts have predicted a downward trend in IT spending. I saw some financial analysts’ reports also, which said the same thing saying that IT services spending will be muted and most companies will conserve cash and will only look at maybe keeping the lights on, as Shibu says. We have seen a dip in discretionary spending, and application development has come down. Our enterprise solutions consulting has come down slightly, so we’ve factored all these things in. We have several data points, and there are some positive but enough negatives to tell us that we need to be cautious at this point. Joseph Foersi – Janney Montgomery Scott: Shibu, you talked about completing pricing and that you’re through phase 1, but that there could be phase 2, if I understand that correctly. Maybe you could just talk about what phase 1 entails and then what would cause there to be a phse 2, and if there would be further price decreases because it sounds like initially you thought it was 6% down this year, and now you think it’s 5%. S. D. Shibulal: What meant by that is one round of price negotiations are over, and potentially and we’re not saying that’ll happen, but potentially because the clients are saying that they may come back. If the environment becomes blurred, they may come back. So potentially there could be other rounds. That’s the uncertainty in this environment. There is a little bit of unpredictability in this environment. At the beginning of the quarter, we said we expect revenue per employee to drop by about 6% this year, but now that we have better information, we have seen one quarter, we have seen the impact, we have changed it to 5%. So that’s the current projection for the year in terms of revenue per employee. Joseph Foersi – Janney Montgomery Scott: You talked about some key factors, and it sounds like polling your clients is where you’re getting most of your data from, but in your conversations with your clients, what would generally be the correlation that would drive things down low? Would it be a continuous economic instability or is that just correlated directly to the economy in general? S. Gopalakrishnan: Clearly the ability of clients to forecast and control their own revenues, that’s what drives it. It’s all driven from the CEO downward. If the CEO sees revenue drop by 20%, there is an immediate cut on expenses by 20%. This is in US of course. In Europe, the way they handle these things is slightly different. So, it is CEO down, it is their ability to forecast their revenues, it is the growth or the impact on their own business, so it’s really driven top down, and the IT departments and various business functions react to that actually. We’ve had clients tell us that in March, April, etc., their ability to forecast was one of the lowest in recent memory. They had absolutely no way to forecast their revenues. In May-June, we got the feedback saying that we’re feeling slightly better, but in the last two weeks, as Ashok already talked about, again there is some slight tentativeness again. So this is the uncertainty we are faced with today, and nobody is able to give the comfort level, and then we read all this economists’ reports and analysts’ reports, etc., and so we felt that we have to be cautious at this point. If you look across sectors, manufacturing, and retail, clearly they’re going to take much longer to recover. So there are sectoral differences, there are overall economic impact, and lots of data points, and we have tried to look at all these things and, as I said clearly, the negatives at this point outweigh the positives even though we had a good quarter. We felt that we cannot change the guidance at this point, and that’s why we’ve left it at this point. Then you start back-calculating from that guidance various other parameters and you get the rest of the numbers.

Your next question comes from the line of Moshe Khatri – Cowen & Company. Moshe Khatri – Cowen & Company: I think BFSI was actually flat for the quarter, and telecom was up I think 1 or 2% for the quarter sequentially. Can you focus and talk to us about trends in both these important verticals, talk about bookings for the quarter, and pricing.

Let me actually give you a quick update on BFSI. Basically, BFSI was fairly flat this quarter as compared to the previous quarter. Of the 27 new accounts that we have opened this quarter, 9 of them are from the BFSI space—equally distributed in the US as well as in Europe. We are beginning to see some traction in a variety of areas, especially around productivity improvements, efficiencies, projects on agility, etc., that have started and we are in active conversation on post-merger integration work—not as large as we thought we would see, but even then we’re seeing some of those programs start. We’re seeing a lot of work on consolidation. We’re seeing a lot of work on elimination of process duplications and replications, a lot of work on agility and process improvements. Specifically, we’re being invited increasingly to areas where we were not being invited, and I mentioned post-merger integration as one of them. We’re seeing a lot more traction on some of our platform-based solutions, especially in the payment area. We’re seeing opportunity in the replacement of legacy transaction systems, especially in core banking. We’re seeing some opportunities in securities trading and processing, wealth management—an area that’s been a forte of ours—we’ve seen it there. We’re seeing activity in our risk management and compliance solutions, especially on internal audit, and I also mentioned the post-merger integration and consolidated IT cost reduction opportunities in certain lines of businesses and in certain geographies. We are also seeing increased traction, if you will, in new geographies which are typically not our areas of strength especially in the Nordic regions where we are seeing some traction, in continental Europe, in Australia, as well as in South Africa. With regard to pricing, as Shibu had mentioned earlier, we do believe that most of the price renegotiations are behind us, so the flights to procurement that happened at the beginning of the quarter and there was a little bit of an overhang into the quarter as well, that is over, but having said that, we do not eliminate the possibility of a revisit in certain cases to that. Having said that, our pricing continues to command premium, as we understand from our clients as well as from the industry analysts continues to command maybe a little bit lower, but command a premium over the pricing that our competitors are charging. Moshe Khatri – Cowen & Company: And then telecom had a slight uptick sequentially for the first time since the September quarter of last year. Can you talk about what you’re seeing also on the telecom side?

In telecom, we did see a slight increase, although it’s more like flat revenue this time, and basically this is because of revenues coming from certain clients and kind of balancing out some of the fall which may have had in other accounts. As you know, telecom business is quite lumpy for us in terms of revenue per customer. The revenue concentration tends to be pretty high, and therefore slowness of decisions even by one of those clients can create some of this unevenness across quarters, so I wouldn’t reach too much into this quarterly number. I think the overall trend is that the telecom demand has not been seriously impaired in this downturn; however, the main issue has been the slowness of decisions, and that is the main concern for us in telecom. I didn’t quite catch your last point. Was that a separate question or was it the same? Moshe Khatri – Cowen & Company: I just mentioned that the contribution from your largest client, and I’m assuming it’s a telecom client, declined sequentially during the quarter.

I agree. Moshe Khatri – Cowen & Company: You mentioned that the consulting segment lost more than $2 million during the quarter. What should we factor in terms of the profitability of this unit for fiscal 2010, and can you also give us an update on your operation in China? V. Balakrishnan: Consulting subsidiary is a statutory reporting, and so don’t look at it too much because consulting overall is split between the parent and the subsidiary, and overall consulting is doing well. It is profitable. They have actually higher utilization than overall company and doing well actually. They have a few combined entity, their margins are pretty good. In the transformation deals that they’re working, their margins are better than company average. If you just taking consulting alone, their margins would be closer to 68% actually, so overall consulting is doing okay. China is still incurring a very small loss. We have now multiple multinational clients. Most of the clients we are working out China are multinational companies who are entering into China, the number of employees is about 1000, and we’re happy with the progress we are making in China. Of course, our foray into domestic Chinese market is yet to yield results, but clearly we are in the direction in China, and we are happy with the progress we’re making. The quality is very good. They have assessed at the highest level of the capability-maturity model already, and quality is pretty good.

: Ashish Thadhani – Gilford Securities: : S. Gopalakrishnan: It’s very difficult to paint a worst case scenario. Let me try. Worst case scenario would have to be that the law comes into place and it is effective immediately. If it gives some time to companies to meet the targets, let’s say six months a year to meet the target or if it’s only for new visas, etc, the impact is much lower, and it gives us the time to adjust to that. What we would have to do is recruit additional people and bring back some of the existing people and replace them with people hired locally in the market. There is a blip cost temporarily because there is an overlap between the two teams, but then when it reaches steady state, offshore would probably increase slightly, onsite will come down. Onsite teams will be mostly about 50% hired locally, and it will come to steady state after that, so that’s the scenario most likely if it really goes through, but given that that the quota is not through, I don’t know where it’s going to go. Unemployment is high, so it’s really not clear at this point which way it is going to go, and even before this all happened, we had been recruiting in the US, and we continue to recruit in the US. This year also we had said that we will be recruiting about 1000 people. We are adding sales capacity in the US, so we continue to recruit in the US, both at experienced level as well as in colleges, so we continue to recruit, and we’ll have to wait and watch at this point. Ashish Thadhani – Gilford Securities: Based on your analysis of what the temporary interim costs might be, is there any way that you can put a boundary around that or quantify it? S. Gopalakrishnan: No. We have not attempted to do that. We may have to recruit maybe about 2000 to 2500 people to meet the numbers or we have to acquire a company. We can also acquire a company, so we might have to do something like that.

The next question comes from Julio Quinteros with Goldman Sachs. Julio Quinteros – Goldman Sachs: On the margin trends and also the earnings trends, typically the seasonality for September quarter tends to be flat to up when we look at margins or earnings expectations, but it looks like even this quarter when you go into the September quarter, the expectation based on the implied earnings is that we will actually see a down take in earnings. What is driving that because typically it seems like September had been one of your strongest quarters? S. Gopalakrishnan: Julio, we are considering this as an extraordinary year. We never had a year of zero growth, right? It’s an extraordinary year. The uncertainty continues to be very high. I actually just read a Goldman Sachs report where it said that IT services and offshore you’re quite negative actually, so just know I read that report. We read all these reports, and we are also concerned, so we felt that it is better to be cautious. Julio Quinteros – Goldman Sachs: When you look at the margin buildup, I think when we had some numbers last quarter, I think this question is for Bala, we walked through some scenarios in terms of how much of a benefit you would get from rupees. The rupee was going to benefit you 450 basis points, and then you told us that pricing would be down 250 to 300 basis points and you told us that utilization would a drag of 200 to 250 basis points. Along with that, you told us that reinvestments in sales and marketing would also be a drag anywhere between 200 to 300 basis points. The change in your guidance this time around for the operating margin assumption is purely the reinvestments in sales and marketing. Is that what you are suggesting? V. Balakrishnan: You’re right Julio. It’s basically the change in the investment because we talked about two investments. One is onsite hiring, second is sales and marketing, so those things we were not able to spend in the first quarter. That could get spent in the next three quarters, so to that extent that is some reduction in the spending, and number two, we also reworked the costs, and overall, the savings is around 150 basis points. Julio Quinteros – Goldman Sachs: Can you just clarify the cross currency benefits? Historically we had only worried about the rupee and the rupee impact to the margins, but obviously with everything that’s going on now with the pound and the euro, etc., some of those things are working either with you or against you, and I didn’t understand what you were trying to suggest about how much those other currencies either helped to hurt relative to what the rupee was doing in the current quarter. Can you lay that out a little bit more clearly please? V. Balakrishnan: Yes. Life has become tough with cross currencies because earlier we had to worry only about rupee-dollar. Now there are multiple currencies which are moving up and down. Most of the European currencies have strengthened against the dollar during the quarter. When it strengthens, our reported dollar revenues look good and to some extent the benefit flows into our margins, so this quarter we had a 3% appreciation in rupee that could have impacted the margin by around 1.2%, but we had that cross currencies moving in our favor. It more or less offset the impact. It’s very difficult to put a number for the cross currencies like the Indian rupee because rupee-dollar, for every 1% move, we can quantify it has a 40 basis point impact. Cross currencies are difficult because each one moves in different direction. For example, Australian dollar appreciated by around 15%, UK pound appreciated by around 8%, Euro appreciated by some 5%. That sort of currencies and the percentage of revenues coming from those currencies also vary, so it is very difficult to put an exact number for the cross currency movement. Julio Quinteros – Goldman Sachs: So the 3% rupee change would have been a 1.2%. Were you saying a drag or a benefit? V. Balakrishnan: What I said was 3% appreciation of rupee could have impacted the margin by around 1.2%. It was offset because of the beneficial movement of cross currencies. Julio Quinteros – Goldman Sachs: That would have been a negative drag, right? V. Balakrishnan: Yes, negative. Julio Quinteros – Goldman Sachs: There’s a lot of other noise, so it’s hard to quantify that, so I got that. Just to be clear on the constant currency assumption, at the beginning of the year, we are thinking a range of constant currency flat to down 4% and you are now seeing constant currency is going to be down 3 to 4%. Most of that I think you guys have explained as your being cautious, the environment stinks, and we did write a report saying that thing are still pretty bad out there, so I agree with you guys that it probably makes more sense. But that is correct that the cross currency number is moving towards a lower end, is that correct? S. Gopalakrishnan: Constant currency is minus 3 to minus 4, yes. Julio Quinteros – Goldman Sachs: Just one of the questions that was being asked, and I’m looking at the metric sheet that you guys provide on a quarter over quarter basis in constant currency terms, it looks like the only vertical that improved from what I can tell was BFSI, but manufacturing, retail, and telecom all seem to be actually doing worse on a quarter to quarter basis when I look at the vertical constant currency breakouts. Is this the worst, is the worst behind us, or are you guys still assuming that some of these other verticals could stay squishy and I guess related to that, the telecom client that has been decreasing, is it done showing the atrophy or could you guys still see more pressure there? S. Gopalakrishnan: When you look at industry verticals, we believe that manufacturing, retail, etc., would take much longer to recover. Having said that, there are specific clients who start spending early, and we may see some of that also. They may in anticipation of recovery start spending, because retail includes CPG also, and we may see some of that. Then we may see better growth on one of these sectors, but generally we feel that manufacturing and retail would take much longer to recover. Telecom because they had gone through a downturn in 2001, probably the memory is quite current, seems to handling this better. BFSI has reacted very quickly, has also got help from government, and this is all North America. Europe is very different behavior actually. The second part of your question… Julio Quinteros – Goldman Sachs: The telecom client, do you guys think is it done shrinking? S. Gopalakrishnan: We want to retain all our clients. We have good relationship with all our clients. It has declined. We hope at some point it will start growing back again, and our endeavor is to continue to work with all our clients, and there is nothing else at this point. Different companies are affected differently, they spend differently, they look at their partners differently, all those things. Just that this quarter, we have no $300 million plus client, that’s all. There’s nothing more I would want to say here at this point. Julio Quinteros – Goldman Sachs: The headcount decline this quarter, and I think this is the first time I’ve ever seen you guys actually have net headcount go negative for a quarter, but I think you are still saying 18,000 adds for the year. That’s a gross number, correct? S. Gopalakrishnan: That’s a gross number. We had involuntary attrition go up by 1%. This quarter, the involuntary attrition is 2.9. If you exclude that, actually attrition has come down by 1% this quarter, and overall 18,000 gross. First quarter, we hired about 3500 odd gross number, and so we are looking to hire about 5500 in the second quarter and 18,000 for the year. That overall number has not changed.

: .: James Friedman – Susquehanna: I want to ask first about the BPO operating margins. I don’t know if Amitabh is on the line, but they nearly doubled to 18%, and I was just wondering to what that might have been due and was that contemplated when you gave the original guidance? V. Balakrishnan: We had contemplated meeting these numbers when they had given the guidance originally. There of course has been small margin improvement by about 1.3% as compared to budget, and this is because of the cross currency movement which has been in our favor, so overall when we had given the guidance this year, we had anticipated that we would be meeting a possibility of approximately 20% on an overall basis, and we are in line with meeting that target. James Friedman – Susquehanna: I had a question, Bala, with regard to the unbilled revenue. The unbilled revenue seems to have risen both in absolute terms and as a percentage of revenue. Historically, I thought that moved in concert with fixed price contracts, but they actually declined. I’m just trying to understand why it was that unbilled might have moved up if fixed price moved down. V. Balakrishnan: The way to look at is you have to see the net of unbilled and unearned revenues. Normally the incremental movement is something around $10 to $20 million. That is what happened this quarter also. Especially the unbilled revenue would have gone up slightly because of the currency factor also because the dollar declined against European currencies, so if some of the fixed price contracts are denominated in European currencies, the dollar value of that could look higher this quarter. James Friedman – Susquehanna: Bala, the subtext to some of the questions on this call seem to be that you may have sandbagged the guidance both for this quarter and for what remains for this year. One question I had was with regard to the onsite-offshore mix because your onsite-offshore mix came down actually about 100 basis points, which I realize it takes a while to spend what you had contemplated in your guidance, but that number in particular seems more mechanical and because of the related visa costs and the profitability profile, that does seem to be potentially an important margin factor. My question is with regard to onsite-offshore, what are you contemplating now? Are you moving more people here or there and what is the overall trend for the year in the onsite-offshore mix? S. Gopalakrishnan: In our guidance, we have assumed the same levels. When we negotiate with clients and clients want lower costs, etc., one way to give that to them is to bring more work offshore. Don’t read too much in into a quarterly number, but yes, there is some benefit to clients, some benefit to Infosys if you do more offshore in this environment. That’s one factor that is driving it, but quarter on quarter, there will be some small variations. There’s reduced development work now, and discretionary spend is lower. It’s possible that some of those people have come back, so that’s where it is right now. It’s not a trend yet, and let’s wait for more data points in the future quarters before I say that we are definitely moving work offshore. We are also going to recruit onsite, and we have already stated that and hence some of those costs are go back in to the model over the next three quarters, and that’s where we are. Unfortunately, we’ve completely ran out of time. Our investment relationship managers are Sandeep, Shekhar, etc., are in touch with you, and so they could answer any questions or arrange calls with us if need be, and let me again thank you all for taking the time to interact with us. We look forward to interacting with you during the quarter, or if not at the end of next quarter, maybe I’ll see some of you during the quarter also. Thanks again.

That concludes today’s conference call. Thank you for your participation.