Nandan Nilekani – President, CEO and Managing Director Kris Gopalakrishnan - COO and Deputy MD V. Balakrishnan – CFO Sandeep Mahindroo - General Manager, Investor Relations

Alan Hellawell - Lehman Brothers Moshe Katri – SG Cowen & Co. Rod Bourgeois - Sanford Bernstein Jospeh Foresi - Janney Montgomery Scott Bryan Keene - Prudential James Friedman - SIG Rama Rao - RR Capital Management Julio Quinteros - Goldman Sachs Joseph Vafi - Jefferies & Co. Anthony Miller - REIT Research

At this time I would like to welcome everyone to the Infosys Technologies first quarter financial year 2007 results conference call. (Operator Instructions) I would now like to turn today's call over to Infosys Technologies' management. Please go ahead.

Good morning and thank you all for joining us today to discuss the financial results for the quarter ending June 30, 2006. I am Sandeep from the Investor Relations team in the US. Joining us today on this conference call is CEO, President and MD, Mr. Nandan Nilekani; COO and Deputy MD, Mr. Kris Gopalakrishnan; and CFO, Mr. V Balakrishnan, along with other members of the senior management. We'll start with a brief statement of the performance of the Company for the recently concluded quarter, followed by the outlook for the quarter ending September 30, 2006 and the year ending March 31, 2007. After that, we'll open up the discussion for Q&A. Before I pass it to Mr. Nilekani, I would like to remind you that anything that 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 like to pass on to Mr. Nilekani.

Thank you, Sandeep. I'm indeed very glad to invite all of you to this analyst call, and I do hope that we are able to answer all your questions in the next hour. I think this has been a good quarter for Infosys. Even as we see global spending and momentum growing for our business model, we are finding that our robust organic growth is being fueled by the fact that in the last few years, we have done a lot of brand-building on Infosys; Infosys is a well-known brand among our global clients. Therefore, our client base has gone up. Today, we have 221 clients giving us more than $1 million of business. We have 11 clients giving us more than $50 million of business. We have two clients giving us more than $100 million of business. So we are able to create the market share and the mind share in the minds of the clients. Complementing that has been the fact that on the delivery side, we have built a critical scale, execution capabilities and end-to-end service offerings to take full advantage of the market opportunity. Thanks to this, we've been able to have a volume growth of 11.3% sequentially quarter to quarter; and also, because of depreciation of the rupee to the dollar, we have been able to have a 15% growth in rupee terms. Consequent to the robust performance and to depreciation, we have revised our guidance under US GAAP to something like 35.4% to 35.9%, or close to 36%. In rupee terms, we have revised it to over 40%. Later on, my colleague, Kris, will talk about some of the reasons for that. Fundamentally I think this is one more validation of the fact that our business model is really very, very clearly a superior one with the model of IT services that delivers faster, better and cheaper services to customers. As all of you know, in any industry, if you create a business model and a value proposition which delivers faster, better and cheaper services to clients, then they will switch from the old to the new. Therefore, I think this is really a substitution behavior where people are switching from the legacy firms to the new firms. People are switching from the old to the new, and from yesterday to tomorrow. We think that this is just one incidence of the trend which is happening in the marketplace. As I explained, I think Infosys is particularly well-placed because of its strong market position. Also, I think, as I have said, for a long time now, the structural benefits of our business model can only be achieved from building the business model organically. This cannot be done to augment and reconfigure itself from the legacy model to the new model. Completing that has huge consequences in terms of rebalancing the workflow, organizational structures, turf issues, control issues, counter-pricing issues between locations. So this type of business model cannot be done on the fly; you have to build that organically. I think the strength of Infosys business model has been its strong robust organic growth, where, as I said, can be administered both on the capabilities and the scale on one side; and on the brand-client acquisition account management on the other. So I think the results of this quarter is nothing but a very strong validation of what we have been saying now for several years. I believe that all investors and all analysts need to look at very clearly the dynamics of this industry and the long-term consequences of what we are doing to the entire info system of the industry as they make their a future investment decision. Very important, the last point I want to make is that we have a couple of senior management changes that I thought I would share with you. We have Mr. Narayana Murthy, our Chairman, who has led with distinction for the last 25 years, is turning 60 on August 20, 2006 and as to the service rules, he will retire from service on that day. The board resolved to appoint him as an additional director and he will become the non-Executive Chairman of the Board on August 31, 2006. Also, given the role he has played in the creation of this Company and its history so far, we represent him to continue as Chief Mentor, which will be a non-executive position that enables him to provide the leadership and advice and all of that for our upcoming leaders of the next generation. At the same time, we are also happy and proud to announce that Mr. Gopalakrishnan will currently be Chief Operating Officer is being promoted and re-designated as the President, Chief Operating Officer and Joint Managing Director. This will also come into effect from August 21, 2006. I believe this is very welcome and very desirable development, and Kris will play a very, very important role in the future of this Company in this new, expanded role. With this, I will hand over to Kris to speak on some of the operational highlights. Kris. Kris Gopalakrishnan: Thank you, Nandan and good afternoon, good evening and good morning to each one of you. As Nandan already mentioned, we have seen all-around growth this quarter. From a geography perspective, the U.S., Europe has shown growth; especially Europe compared to other geographies. From an industry perspective – telecom, financial services, manufacturing -- are all sectors of some growth, these being the strong industry verticals for Infosys; have of course, helped us grow. Similarly from a services perspective, package implementation testing, business process outsourcing application development, all have shown growth. We have two clients we have grown to $100 million spend base. We have about 11 clients who give us $50 million or more. So clearly, from a client perspective, from our ability to mine existing relationships; from an industry perspective, a geography perspective, services perspective, we have seen growth. Currently, as Nandan said, we have 221 million-dollar clients. We added 38 new clients this quarter. The top 5 clients grew 90% quarter-on-quarter in this quarter. We have added 8,097 employees this quarter, that is a growth addition of at least 11.9%. We are adding 50 more people in sales. In fact, our system marketing expense has gone up in the quarter because of these additional people. We have increased salaries in India; we have increased salaries outside of India. This had an impact of 3.3% on our margins. This is offset by depreciation of the rupee as Bala will explain. All in all, we have seen all-around growth, as I said. It has been a good quarter. Now I will pass it on to V. Balakrishnan, CFO, to talk about the numbers. V. Balakrishnan: Good evening, everybody. Good morning, for some of you on the other part of the planet. This quarter we had seen the revenues grow by 11.3% sequentially. It comprises of 8.5% growth because of volume, around 1.8% growth because of change in per capita revenues. On-site per capita revenue grew by 1.1%, offshore grew by 0.2%. On a blended basis, it grew by 1.8%. This quarter we absorbed the impact due to wage increases. We increased the wages in India effective April 1st, of 14% to 15% and outside salaries by 3%. This had an impact of 3.3% on the operating margin. During the quarter, we had an incremental investment in [visas], we spent around $11 million investing in [visas]. We made applications for close to 3,500 [visas], because we felt that when there is an incremental benefit, we need to reinvest in the business, and that's what we did. There was an impact of stock composition costs of around $1 million which had an impact of 0.2%. So overall we absorbed an impact of 4.8%. We had a positive benefit because of the rupee. The rupee depreciated by 3.6% during the quarter. The average rate of rupee was 45.65 this quarter as compared to 44.22 last quarter. So it had a positive impact of 2.2% on the operating margin. Depreciation came down by 2%. Last quarter we had a one-off impact, because we had leased premises in UK that is not there this quarter, and the depreciation normalized. So overall we had a 4.8% impact and 4.2% benefit because of rupee and depreciation. The operating margin came down slightly from 26.3% last quarter to 25.28% this quarter. So we were able to maintain the margin in spite of wage increases and the incremental investment in [visa]. Going forward, we increased our guidance for the whole year. Initially in the beginning of April we gave our guidance of 28% to 30% for revenues. We increased it to 35.4% to 35.9% in revenue terms. In terms of EPS, good growth from 32.4% to 33.8%. If you look at the cash flow, we had acquired a minority interest in Progeon. We paid around [$150] million to fit in, to buy out the minority stake in Progeon because of goodwill and also intangible assets on the balance sheet. Of course for June end, we have $91 million in goodwill and $[19] million in intangible assets, because of the acquisition of minority stake in Progeon. So overall it was a good quarter. We have absorbed all of the costs and maintained the margin. Going forward, in the guidance we assume the per capita revenues to be flat. We have not assumed any increase in per capita revenue. Today we believe the environment is stable with some of the new customers coming at higher price points. We have not assumed any big deals. Most of the growth is organic growth. We are not looking at any inorganic growth in the guidance. So overall it's a good quarter. Now we open up for questions.

Our first question comes from Alan Hellawell - Lehman Brothers. Alan Hellawell - Lehman Brothers: Thank you very much. Two questions. You stated that you are quite optimistic of higher client spend in FY'07; and top 5 clients’ spending has increased. Can you actually give the figures or the absolute numbers on top 5 clients’ spending year-on-year? Kris Gopalakrishnan: As I said, in this quarter the top client is 5.8% of revenues. The top 5 clients constitute 19.5% of revenue. The top 10 clients constitute 31.7%. The top 20 clients constitute 47.3% of revenues. Top 5 clients has grown by 19.1%; the top 10 clients by 13.8%, and the top 20 clients by 9.8% in this quarter. Alan Hellawell - Lehman Brothers: You are obviously investing a large amount of resources; you profiled it at the learning and development center in Mysore. Can you give us a sense as to whether you think that's going to have an appreciable impact on attrition rates and staffing of projects? Specifically, from which quarter would you -- if there is a material impact --would you see tangible results from this investment program? Kris Gopalakrishnan: Out of the 8,097 people we have recruited, about 1,900 people are with prior experience, excluding the additions in Progeon. Progeon has added about 1,000 people. So about 4,500 people are going through the Infosys training program now. These people will undergo training typically for about 16 weeks. Some, if they have a prior computer science background, may undergo training for about six weeks. They will be absorbed into the projects as and when they come off the training. The utilization, including trainees, is about 71%; excluding trainees, it’s 77%. Now all of the salary costs of these people are already factored into our model. We have given 14% to 15% salary increases in India, and 3% salary increases outside India. That’s also factored in. We have already announced that for the next fiscal year -- that is starting April 1, 2007 -- we plan to increase the salaries to 2.7 lakhs, which is about 270,000 rupees from 240,000 rupees, which is an increase of approximately 11% to 12%. What normally happens is when these people come in, that’s when we give the salary increase, because every year we have been giving a salary increase. This year we pre-announced it, so that we have a better opportunity to recruit the best and the brightest from the campuses. In fact, we have seen that this has had a positive impact in our ability to recruit. We have already gone to a few engineering colleges. We plan to go to about 240 engineering colleges. This year’s target is 25,000 people, of which 8,000 joined in the first quarter. The second quarter, we’re looking at 7,000. The second half, we’re looking at 10,000. So considering all of this, we’ve said that we must announce the increase right away. We are seeing it has had a positive impact. Does that answer your question? Alan Hellawell - Lehman Brothers: Yes. One very small add-on question: as a result of all of these innovations and development, can you talk about where you think it might take attrition and things like that? Because the profiling of your investment in training, you have better profiled it of recent. But can you help us think about how that investment might translate into attrition rates and what not? Kris Gopalakrishnan: Currently our attrition is 11.9%. It has gone up from 11.3%, so a slight increase. We believe that all this will help us maintain attrition. The competition for resources is serious, but our objective is to maintain our Best Employer status. Our objective is to give competitive salaries. Our objective is to make sure that we have a very good learning and working environment for our employees. Hopefully this will keep our attrition one of the lowest in the industry, which is what it is currently. Our objective clearly is to keep the attrition low. Alan Hellawell - Lehman Brothers: Thank you very much. Congratulations on the very strong growth. Kris Gopalakrishnan: Thank you.

Our next question comes from Moshe Katri – SG Cowen & Co. Moshe Katri – SG Cowen & Co.: Let me also add my congratulations. The question is for Bala. Bala, can you give us an update on the ABN AMRO contracts, specifically, where we are in terms of ramp up and in terms of the impact from ABN AMRO on earnings so far? V. Balakrishnan: Well, the ABN AMRO contract is still in the [inaudible] stage, not a transfer stage. They have not come to a steady state yet. The impact of that on the margins is very much limited because, our business [inaudible] and as we told you earlier, when they have rolled the full period [inaudible] the margins will be similar to what we earn in the rest of the business. So ABN AMRO margins does not impact significantly on the numbers we are today. Moshe Katri – SG Cowen & Co.: Then, the various investment initiatives: North America Consulting, China, Australia. Is there any way also to quantify these investments in terms of their impact on EBIT margins? Also, get an update on when are we going to get or are we getting to a breakeven level on each one of these three investments? V. Balakrishnan: China and Consulting are still in the investment phase. We had a loss of $2.2 million in INFY China and $4 million in Infosys Consulting; both are in the investment phase. We are also seeing mainly breakeven in the next three to four quarters. China will take some more time, because we are just starting up. It will take some time for it to come to steady state. Progeon Australia, are [inaudible] So overall, net-net, if you look at the number, the numbers are, [inaudible], the impact of $6 million of investment both in China and Consulting. Going forward for the full year, we would be absorbing something around $15 million to $16 million due to INFY China and Consulting. Moshe Katri – SG Cowen & Co.: Finally, just a general big picture question. Any comment on IBM's plan to invest about $6 billion in India? Have you seen IBM in the market, have you seen them recruiting aggressively? Because we're scratching our heads here trying to understand exactly what you can do with $6 billion in India in three years.

Well it's very inexplicable for us also. We welcome it, it in the sense that I think IBM is coming to India and investing $6 billion, that's a big vote of confidence in India and we welcome that. So we have absolutely no issue in terms of competitive pressure and so forth. We can't really say, we haven't really seen any impact on the attrition side because of that specific factor. As we have said for a long time, the fundamental thing which is happening in this industry is that we have a disruptive model. Now whenever you have a disruptive model in any industry, there is a predictable behavior of the incumbent. First the incumbent ignores this disruption because it's just a whole new, it’s coming out of left field. Then, over time, the incumbents tend to [rubbish] this model, the disruption. And then, gradually acknowledge. Finally, you embrace the disruptive model. So in a sense, you're seeing that kind of evolution happening in the marketplace. Also, I think frankly my view is if any company really wants to grow this business and really transform to our model, they will have to make investments in training. I think it cannot be a model where you establish operations and then just take a lot of people from other companies as part of a scalable model. I think what distinguishes Infosys is a huge, huge investment in training. We are investing $100 million this year in training. I think the Corporate University that we have built in Mysore is the world's largest. I think the fact that we can take close to 1.5 million applications a year, identify 25,000 people, bring them to Mysore and train them; that's a serious and strategic competitive position that we have. I don't think that's replicable by anybody in a jiffy. We welcome our competition, we've been taking competition for the last 25 years. In many senses this is nothing but a validation and confirmation that our business model is the model of the future and it has had absolutely no impact on either our recruitment or attrition. Moshe Katri – SG Cowen & Co.: All right. Thanks a lot.

Our next question comes from Rod Bourgeois - Sanford Bernstein. Rod Bourgeois - Sanford Bernstein: Our thoughts and prayers go out to all those that were affected by the Mumbai bombings. I should ask quickly if these bombings seem prone to have any impact on the business?

Certainly I think this was a very, very terrible act and a very shameful act. Our hearts have gone out to all the people who were innocently killed and injured here. But for Infosys, we don't really have that many operations in Bombay. What we do have is people who support our various banking clients, and we are not having any impact from the bombings. We don’t believe that this really has an overall impact on the business because today, we have seen terrorism in New York; we have seen terrorism in London; we have seen terrorism in Madrid. So I think there is no part of world which is insulated from these kinds of dastardly acts. I think people understand that. I think the India story is a promising story, India is as strong as ever. I think the very fact that the people of Bombay have gone back to work and gone back to business today shows their courage and resilience. Rod Bourgeois - Sanford Bernstein: Great. Good. Two other quick topics. What caused the mix shift towards on-site revenues? To what extent will this mix shift towards on-site potentially continue in upcoming periods? V. Balakrishnan: On-site percentage has gone up to 33%. This is due to an acceleration of the growth. The growth accelerates in the period more towards the start, and this is a reflection of that. Our target on-site percentage is somewhere between 30% to 33%, 34% and it’s well within that range. We believe that Infosys manages this percentage very well, it is one of the ways we have in order to manage our margins. We have managed this very well. Rod Bourgeois - Sanford Bernstein: Is the on-site revenue percentage likely to attenuate in upcoming quarters? Or should the mix shift towards on-site continue? Kris Gopalakrishnan: It will be in a narrow band. The reason why I am saying this is if growth continues, on-site will be slightly on the higher side of this band. I think it is a steady-state growth, and then it comes back to 31%, 32%. Rod Bourgeois - Sanford Bernstein: All right. Turnover was up and you’re clearly increasingly wages for freshers; the competition for talent is definitely severe as you characterized it. The question is whether you’re seeing more pressure from wage inflation and supply challenges than what you had expected earlier this year? In other words, when you enter the year, you were seeing a set of trends. The question is, are those trends intensifying versus where you started the year or is this about what you expected?

I think in this year, we sat back to re-look at the strategy after we spoke to you in May. We said, one, we have to get the best people, young minds in the business, to walk inside the doors and stay here. Two, we also have to make sure that we regain people who are spending a year, a year-and-a-half with us, as we have the highest attrition in the one to three-year period. We looked at our compensation structure over the last four to five years. For the last four years, the compensation has been restructured for people who are in the higher levels. People with six to seven years experience, and it is reflected in the lesser attrition. Whereas people in their one to three years have not seen such a big increase in compensation and that is at least part. These are people who are required to fill in project positions and leave them in larger numbers. We have to build up adequate tenure of senior people, or unique people, at the bottom and people who come up fresh. So we said we would do three things: First, we make sure that we restructure compensation for freshers, so that we get the best, we get the largest number we want, and we are not forced to hire from the marketplace. Every year, we need to get about 40% to 50% of the people at the entry-level from the colleges, and the balance through the marketplace during the course of the year. We said that the strategy is growth, but what we get in the course of the year is not the same quality as in the colleges and we have to increase in the colleges. The increase from the colleges is that we will pay slightly more. Two, if you went out to the marketplace and the colleges and tell them that you want to be the top 3 recruiter for people from colleges, because it is a narrow band. Normally, what we used to offer was a salary for freshers joining this year for next year; and then to join next year, they got a hike. So we said, we will take next year’s hike and make an offer right now for next year. When they join, not hike it further. We significantly offered more, and we have about 8,000 people who are signed up for fiscal ’08. Third, we said in a one to three year band, we also restructured compensation. So in the first instance, in the month of April we gave a 3% hike. On the 1st of July they are giving a further 8%; as the release has outlined, this is going to cost us $2.5 million a quarter, which is not really significant. We think we have a very competitive wage structure, and a greater demand for work, and the demand from our customers. We also have all of the people to meet it. We escalated hiring in the first quarter to 8,000 people, so in Q3 and Q4 we’ll have an adequate number of people to meet demand. Last year you will notice that we had a great growth in Q2, so our people strategy has been reoriented. We don’t think all of this will lead to any wage increases because we are essentially reconfiguring salaries in the one- to four-year band, and paying more in the beginning and a lesser jump as they go higher up. Rod Bourgeois - Sanford Bernstein: That’s very clear. Thanks for that explanation. Would you guys expect wage inflation and turnover issues for your peer group, for the other Indian IT services firms? Would you expect wage inflation and turnover trends to continue to worsen as the year progresses, or do you see anything happening in the market that would cause the aggregate of the Indian players to see less pressure from those factors as the year progresses? Kris Gopalakrishnan: Well, obviously at the entry level, it is slightly higher as the wages go up. You know, the best people who walk into the door at Infosys, and hopefully it will result in a better pricing period. So a wage increase for us is both strategic and tactical. Strategic because the competition in the marketplace goes up and the people have to have a better pricing behavior, hopefully. Two, tactical to meet the requirements of times like now to make sure we meet the needs of tomorrow. I think for other companies, they have to look deeply and reorient to what we do. Rod Bourgeois - Sanford Bernstein: Okay, so they’re playing catch-up to sort of replicate the model that you have? Kris Gopalakrishnan: Oh yes, they are playing catch-up, but we’ve created a pyramid structure, which allows wage inflation to ease itself out as it goes up the pyramid. The average wage will increase for the full year will be nearly 40% of the increase in the beginning of the year. Rod Bourgeois - Sanford Bernstein: Got it. All right, thanks guys, very much.

I think it’s important to understand that what is happening here with systematic values of Infosys are coming up on different facets of our business. So you have to have a high growth rate to pay for all these things. Essentially, we are trying to create a virtual cycle which we believe will lead to further consolidation from the pack.

Your next question comes from Joseph Foresi with Janney Montgomery Scott. Jospeh Foresi - Janney Montgomery Scott: Hi, gentlemen, good quarter. I’d like to concur with the sentiments that our thoughts are with you, given the tragedy in Mumbai. My first question is around the other income line. Can you guys give us a break-up of how much of that is foreign currency gain and sort of how that breaks out? V. Balakrishnan: For that, if you look at the revenue growth, it grew by 11.3% sequentially, 8.5% came because of volume. Jospeh Foresi - Janney Montgomery Scott: No, I was actually looking at the other income line itself. V. Balakrishnan: Oh, other income, okay. Jospeh Foresi - Janney Montgomery Scott: Yes, other income. I wanted to know the breakout of the foreign exchange gain. V. Balakrishnan: Yes, sure. On the other income side, we had a benefit because of the rupee depreciation, and also the hedging impact came in. Because of the calculation of the foreign currency as we had in the balance sheet, we had a benefit of $17.4 million. We had close to $300 million towards foreign contracts and option contracts outstanding after the end of last quarter, which gives a negative impact of $5.8 million. So net-net, we have seen positive results close to $25 million because of the rupee on the non-operating income, but that gave around $0.03, because initially we forecasted around $0.57. We ended up with $0.63 -- $0.03 is to cover the non-operating benefit we saw because of the rupee/dollar rate. Jospeh Foresi - Janney Montgomery Scott: Okay, thank you. That’s helpful. Just two more quick questions. Given your change in recruiting and what you’ve been saying about wage inflation, do you expect wage inflation to rise as a percentage of revenue, or can we expect that to stay stable? V. Balakrishnan: In the initial few quarters, we see the impact. What it does also for the whole year, it gets normalized. So in the last two years, we have given 13% to 15% increases. There’s nothing new. It’s a manageable issue as of now. Jospeh Foresi - Janney Montgomery Scott: My last question is around margins. Given what you guys said about the onsite revenue kicking up, just looking at the other levers that you guys have in place, utilization and SG&A spending, where do you see those sort of headed throughout the back-half of the year? Do you plan on maybe kicking up utilization or using SG&A to offset any work or impact from an increase in onsite work? V. Balakrishnan: Well, we always said we are comfortable with the utilization base between 76 to 80. We really want to keep it at the lower end of the range. This quarter it was 77.3, so we have leverage left there. On the revenue side, in the first quarter we have seen the sales and marketing costs certainly going up, because there actually is our investment by adding some 50 people more. So on the SG&A, we may get some benefit in the next few quarters, but still we are comfortable in saying that on the year-on-year basis, the operating margin will be similar to what it was last year. So we have some leverage there, which we’ll effectively use in the next few quarters. Jospeh Foresi - Janney Montgomery Scott: Thank you, gentlemen.

Your next question comes from Bryan Keene with Prudential. Bryan Keene - Prudential: Hi, just a question on the development revenue. Sequentially, that looked like that pops almost 18%, and it hasn’t done that in quite a while. Anything happen there? Any color on what happened to development?

As you can see this quarter it is still, there is no additional revenue, and some of that has come from the discretionary spending from our customers. The discretionary spending is mostly application development, so that is regularly seen -- it goes in that development revenue. Bryan Keene - Prudential: Do you expect that to be strong because the discretionary spending looks higher for you guys going forward, or is that -- to me, that’s a little bit of a surprise. Is that a surprise number to you guys or did you expect that kind of strength?

I think that if you look at the growth, it wasn’t a surprise. But it’s all linked together because of the discretionary spending, the technicians they would recommend increase in on-site -- all these work together. So in that sense, I am not surprised. I don’t expect it to go materially higher over the next couple of quarters. It will fluctuate within the percentage range of probably one or two. Bryan Keene - Prudential: Okay, and just a question on the number of clients. I saw specifically the $5 million clients ramped pretty nicely to 94. It looks like it’s up 13 sequentially. Is that just that you’re just gaining market share and wallet share inside of customers that are only a million, or is that just a size thing that they just happened to pick over the $5 million? That looks like a good sign that you’re gaining on the wallet share. Kris Gopalakrishnan: Over the last few quarters, we have been investing in our clients, placing people, investing in our call management, investing in mining these accounts. We have increased our services footprint to make sure that we have the right and relevant services for our clients. So it is a result of a program we have launched in terms of growing our existing accounts, and that is reflected this quarter. Not all of it. We are starting consulting, starting our strategic global sourcing group, which looks like at larger relationships and larger deals. Prospect management, business process outsourcing, [inaudible] these things. I think we have become a very, very important service in today’s world, where every business exposes its internal IT system on the Internet. To make sure that each of those systems is having success is an important service to all sorts of our clients. This is the result of things which we have been doing for the past several quarters. Bryan Keene - Prudential: Okay. Finally, on the other income line, obviously that’s spiked up due to some of the gains, the depreciating Rupee. What do you guys expect? How should we model the other income line going forward in the next couple of quarters? V. Balakrishnan: Well, in the guidance, we have not factored in any impact of the rupee/dollar rate for the next three quarters. It is very difficult to predict which area the rupee will move. The biggest asset for a country like India is oil price, and in the short-term we believe that the rupee is under pressure. In the long-term, the economic growth at 8% to 10% lots of capital, that will put some pressure on the rupee to appreciate. There is a certain model. We have taken a hedging of $381 million. Our policy is to hedge for the next three to six months and not to predict on the long-term. So we have to manage that. There is a certain model in the guidance we have not factored in any impact of the rupee/ dollar on the non-operating income for the next three quarters. Bryan Keene - Prudential: Right. I guess last year, that number was about $9 million, but I guess mostly we just think about that number being just a pure interest income on the cash? V. Balakrishnan: Yes, the interest income on cash has slightly turned down because we made a sale of [$250] million, or one-time dividend. Otherwise, more or less, interest income will be stable for the next three quarters. Bryan Keene - Prudential: All right, thanks and congratulations on the quarter.

Your next question comes from James Friedman with SIG. James Friedman - SIG: Congratulations on the quarter. I just had a quick question about the customer metrics. It looks like you did 97% repeat business, yet you added nine new active customers. I think that’s the highest level since September of ’04. Could you comment on the type of work being done at those new customers, and how that work should ramp? V. Balakrishnan: Some of them are in our consulting practice. Some are opened through our application development stream. So we are doing revised [inaudible] in the new customers which we’re opening. There is nothing specifically this quarter that would cause us to change that demographic. James Friedman - SIG: Great, thank you.

Your next question comes from Rama Rao with RR Capital Management. Rama Rao - RR Capital Management: Good morning, gentlemen. I have one comment and two questions. Number one, in your conference call, mostly analysts participate and we are investors. Investors go through the same kind of a risk-reward as the management and employees go through. So if you can keep some slots for investors, we’ll appreciate that. Now, my question. Your operating margins are slowing decreasing. Any concern that you have that you will be able to maintain this margin on a going-forward basis in the future? Kris Gopalakrishnan: The operating margin normally comes down in the first one or two quarters, because we have to absorb the impact of the business. We will get normalized when we start adding pressures for the year. That’s why we’re confident in saying that we will be able to maintain the operating margins on a year-on-year basis, even though we are seeing a slight decrease in the first quarter because of the investments we make. So we don’t have any significant concern there. We have several levers on the cost side to effectively use to hedge against given the rate increase. Our guidance assumes that the margin will be stable for the full year. Rama Rao - RR Capital Management: Number two question, there is some anticipation that the consumers in the U.S. will slow down and the U.S. economy may slow down. What strategy are you adopting to maintain the present growth rate in case the U.S. slows down? Will it have a material impact on a going-forward basis on your future growth pattern?

I think to answer that question, you have understand the dynamics of this industry. We agree with you that -- we’ve listened to a lot of economists, they talk about local imbalances and all that, and but there will be a slow down. What is happening in the industry is that while IT spending is not going up significantly, the proportion of IT spending that the customer is reserving for the global approach is going up. In other words, the off-shoring is going up and the global delivery model is becoming more and more acceptable and more mainstream. Large corporations are now willing to make major bets and major commitments to really have thousands of people in a global facility, say in India. So to that extent, the customer has completely bought into the business model for the simple reason that the value proposition that we give is also a better entry for our customers. Now, what is going to happen in a slow-down is we believe that in a slow-down, different criteria are going to start coming into play. Our customers want to continue to get more value for money. They want a better value proposition. So we believe that even when the economy slows down, the pressure of customers to deliver, get more value for their money, goes up. To that extent we think we are in a defensive situation where we continue to gain business even when the market is slowing down. In some cases, it could even accelerate the movement towards offshore. To that extent, I think there's a natural hedge in our business where when times are good, we can take advantage of the investments of our clients; when times are bad, we can play into their cost-cutting initiatives. Rama Rao - RR Capital Management: Now if the US slows down, can you improve your penetration in the market share in Europe and Japan to maintain the present growth rate? Kris Gopalakrishnan: Well, proactively we are investing in sales and marketing in Europe. We've invested in Australia. So we are slowly trying to shift our revenues from North America and reduce this dependence. Having said that, I also need to say that North America continues to be the largest market.

Also I think that the world – it is difficult to argue that one part of world will slow down and others won’t. So it will always be a global phenomena. I think we can go on to the next question. Rama Rao - RR Capital Management: Thank you.

Our next question comes from Julio Quinteros - Goldman Sachs. Julio Quinteros - Goldman Sachs: Good evening, guys. I guess I wanted to stay on a similar point with regards to the environment. Part of this is because everything seemed to have worked in your favor in this quarter; obviously the demand environment was there, the rupee helped. Based on our last conversations, Bala, when we were down there we talked a lot about how growth essentially trumps a lot of the issues that you would have to face in the normal course of business in the interim. Having said that, if you look at everything going right today, but then you assume going out that things actually do slow down, and things actually decelerate, how are you positioned to deal with that in an environment where clearly your expectations right now are for relatively flat pricing, wages are going up, attrition is staying at levels? I'm trying to play the Devil’s advocate more than anything else and understand what you would do in an environment where essentially the pace of growth would decelerate. Can you walk us through the mechanics of how you think of the world in that vein? V. Balakrishnan: Clearly you are painting a picture of those days. First of all, as Nandan said, there is an element there to our advantage, which is they are going to try to cut costs and they would be looking at off shoring the cost of that. Once again, wages have been going up for several years now. If you look at the last few years, we have been increasing salaries by 13% to 15% at least in a year. Our objective is to be the last man standing. Nandan, do you want to add something?

I think to look at the wage issue, I think we have to look from the prism of Infosys and the prism of global player. Indian salaries grow by 14% to 15%, and selectively they go up 15% a year. Now in an organically-based Indian company like Infosys, the contribution of the Indian salaries to total revenue is about 12%. So if you look at the whole thing, the impact of that is 1.8%. What that really means, in fact, is an inclusive business model. We need to combat a 1.8% impact on revenues because of wage increases in India. As a global company, you will see the Indian operation as [inaudible] and therefore you will see the wages increase 15%. So fundamentally, the prism through which we look at it, the wage increase is the prism through which a global company, which is a fundamentally a different animal to understand, then you will understand the implications of that. Julio Quinteros - Goldman Sachs: Okay. Specifically to the bench that you are building, obviously you are bringing in a lot of folks and you’re putting them into training and facilities. How would you manage, in a slowing environment, events that have been building? Is it manageable in the sense that if you do see a slowdown those folks don’t necessarily create a significant drag? How should we think about that? V. Balakrishnan: Well, when you hire people you naturally have great visibility for two quarters at least. This quarter we had great visibility. It means that we hired people against potential demand, one quarter down. In seeing the potential slowdown, we probably will hire less in Q3 and Q4 where you will not make any commitments to hire. There is a pipeline and if you can get [all your sales] you can map it out throughout these quarters. Julio Quinteros - Goldman Sachs: Got it. Okay. Perfect. Maybe if I can just switch gears to something that’s a little bit innocuous on the last page of your disclosures as it relates to your upcoming stock split. I ask you guys this overnight, I just want to reiterate this and make sure I understand. The 1:1 bonus issue that you guys are getting ready to enact, or effect here, will have – according to the notes here – an impact of essentially doubling your share count and cutting in half your EPS, based on the note on the last page of your disclosure for US GAAP here. So essentially, when we look at the US ADR stock price, the sense is that that would also be cut in half to reflect the new capital structure. Is that correct? If that is the case, how should we think about the net impact to the shareholder as it relates to that stock split? Because that would essentially mean there is no net change to the holdings as a shareholder.

The bonus issue in the ratio of 1:1, that’s similar to a stock dividend of 2:1. We are basically capitalizing the [inaudible] reserve and issuing additional equity. Particularly, what you’re saying is right, [you can relate] that to come to half after the stock split is effective. The number increased, so --. Julio Quinteros - Goldman Sachs: Well that makes sense. Just finally for me, with the large client ramp-ups that we saw, can you just characterize the type of work? Is it recurring, was there anything that was one-time in nature that would not recur in the next quarter? V. Balakrishnan: No. This is a continuous thing. We have been systematically working to increase our timeframe as well as increase our penetration to existing accounts, our relationship model, building long-term relationships is fundamental to our business; cross-selling, up-selling, having the right services, which they would demand in the future. All these are part of our strategy. This is how we grow. In cross-sell, if you look at it, 90% plus of our business is repeat business. So we have to build our existing accounts. That is why we have $221 billion relations and we have approximately 127 $1 million to $5 million clients. It is something we have proactively built. Julio Quinteros - Goldman Sachs: In the past we had seen at least one of your largest clients had had a material ramp up and then a material ramp down. In hindsight, a lot of that incremental growth was associated with some major M&A integration work that you guys were working on for some specific platform. I'm just worried that in this ramp up that we are seeing something similar. Or, is this more consistent with the sustainable recurring revenue model that you guys have been citing all morning? V. Balakrishnan: There is of course the bad debts, you can reduce this through a broad base of clients. The largest client is only 5.8% of our revenues. We work hard to keep on reducing that. Julio Quinteros - Goldman Sachs: Great. Thank you very much.

Our next question comes from Joseph Vafi - Jefferies & Co. Joseph Vafi - Jefferies & Co.: Hi, gentlemen. Good evening. Great revenue growth. I was wondering if we could talk for a bit on pricing. I know in your prepared comments, you talked a little bit about some incremental price increases for new work. I was wondering, could you make some commentary on pricing within your base business change year-over-year, or how do your see pricing in existing business? The dynamics there playing out over the remainder of the year. Kris Gopalakrishnan: Well, the pricing is stable in our existing business as well as in the new business. The new business we are signing are being signed at 2% to 3% increase. On the old, we are renegotiating as and when the contracts come up for renegotiation. We are in negotiations with many of them with 2% to 3% increases. So given that, some of it is flowing back to the revenue for that [inaudible]. On the other hand, because the repeat business is so high, it takes time for the result to show up. Also, as clients become larger and larger, some of the old discounted rates which we have are kicking in, which is resulting in the price increase. So now we have become more diligent in our discounting arrangement with customers. Joseph Vafi - Jefferies & Co.: That's helpful. If we look at the growth here in the quarter by customer size, clearly impressive in growing your largest customers here to $90 million to $100 million annual run rate level, on four customers now. If you look at the outlook for the rest of the fiscal year, clearly growth comes from all categories of size, companies, but can these largest customers continue to grow from this level or do you actually think there might be risk that the volume side where they are at now on a run rate basis could actually decrease for these very large customers? Kris Gopalakrishnan: I believe some of the larger customers will grow, [inaudible] because most of the mid-size customers [inaudible]. New customers, [inaudible]. We believe that there is enough headroom in our customer base for growth. Joseph Vafi - Jefferies & Co.: One final question on attrition, which did kind of spike up here a little bit sequentially. Could you provide some commentary on attrition rates on-site and offshore and if you're seeing any increase on the on-site, employee pool relative to attrition levels? Kris Gopalakrishnan: There is no material change on-site. But at the same time, we have recruited a large number of graduates this quarter, close to 2,117 graduates compared with 1,500 graduates last quarter. We have also been able to hold on to high performers. As we look at our attrition at those performance criteria, they were finding that there is more attrition at the lower performance criteria; and less attrition at the high end performance group. Joseph Vafi - Jefferies & Co.: Thank you very much, gentlemen.

Your next question comes from Anthony Miller - REIT Research. Anthony Miller - REIT Research: Hello again, gentlemen. I've got a follow-on question on attrition and on pricing. On the attrition, yes you have reported an increase from 11.2% to 11.9%, but of course, that is on a parent company, the last 12-months basis. If you actually look at the quarterly annualized attrition for the whole company, by my calculation that went up from 14.7% last quarter to 17.3% this quarter. If that is right, then it indicates that attrition went up a [Progeon] much higher than the rest of the Company. I wonder if you could comment on that please. Also, give us the Progeon head count at the end of period.

You are perfectly right, if you attrition separately for Progeon and Infosys, because both are different business models, Progeon has a business model based upon a much higher attrition level than Infosys. The attrition for Progeon is higher. It is about 39% for the quarter. Progeon hired 4,500 people and added slightly more than 1,000 people net. The attrition for Progeon is like this because of two reasons. One, Progeon attrition is in their one group, zero to three months span. The people come in and they go to training, but they don’t like the night shifts and they leave. About 44% leave in the 12-month time span, where they have completed 12 months of training and work, and after that they expect to get a promotion, because this is a [inaudible] industry. So including the attrition is less, but attrition has come down this quarter for Progeon. Despite the attrition at Progeon, at the Infosys level, it has gone up from 11.7% to 11.9%. The attrition is different at different points. At their previous levels, attrition was highest through the one to three year span. The one to three year span where people go on training, they get into work and some of them leave to do their MBAs. 32% of attrition in this span is because people leave to do MBAs. Only 45% is because they go to other companies or go elsewhere. The other percentage is for the drop-out and do something else. So it is one to three years, and after that it comes down to something like 7.528%, which is very, very reasonable. Anthony Miller - REIT Research: Are you still therefore happy with the 25,000 hiring number for FY ‘07 even though the attrition is on the increase?

When we do a project team and when we do our numbers for the year, we build in a slight factor. Anthony Miller - REIT Research: Can you just give that period and head count number for Progeon as of June 30? Kris Gopalakrishnan: We ended this quarter with 8,012 employees against 7,021 employees last quarter. Anthony Miller - REIT Research: My second question is really following on on the pricing; you say that you are able to get some pricing uplift on contract renewals, albeit at 95% or 97% of your business. Can you tell us then, what percentage of your contracts are actually up for renewal this year? And whether you would therefore expect to get that 2% or 3% increase on those contracts? Sandeep Mahindroo: Most of the contracts have a clause to re-look at pricing on an annual basis. Only some of them will see an increase. Typically, due to the nature of the relationship and the relationship continues to grow, what happens is in fact it will be neutralized because the volumes are going up. I would say that about 10% to 15% of this will flow into the system to show a real impact. Now this is complicated because this a totally different price point, and that is why I am not able to give you – I don’t have the analysis for – We are not able to review because we do not have that particular service and duration, in looking at the customer level. Anthony Miller - REIT Research: Can you give me an idea of what your average contract length is with your clients? I understand this would vary by project, but is there a working average that we can use? Sandeep Mahindroo: There are three types of contracts. We have Master Services agreements which look at a three to five year horizon, defines the terms and conditions, defines the rate, defines the period for review of these rates. Then it defines which services will be delivered under this Master Services agreement. So each of the projects then becomes a work order under a Master Services agreement. Each of the projects will be maybe six months, nine months at the start. The second type of contract is a maintenance contract for a fixed period with service levels defined. So here the term could be three years, five years, sometimes seven years. The third type of contract, which are the ones which are recently being won and negotiated, are almost like a sealed price contract for five years or seven years, where the increase on an annual basis is predefined, predetermined in the contract. There are productivity improvements that are also part of the contract. These are like the older outsourcing contract, but much smaller in size. They are typically negotiated across market vendors and things like. This is the ABN AMRO type of deal which we won recently. So these are the three types of contract.

Thank you. Ladies and gentleman, we have reached the end of the allotted time for questions and answers. I would turn it back over to management for closing remarks. Kris Gopalakrishnan: Thank you very much for participating in this call and the excellent questions. I hope, as Nandan said, that we have been able to answer your questions. If there are more questions, please write to us or phone message to our Investor Relationship Manager, and he will definitely try and answer those questions. Thank you again for participating. See you all in the next quarter.

Thank you ladies and gentlemen. This concludes today's conference. You may now disconnect.