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

Moshe Katri - SG Cowen Bryan Keane - Prudential Joseph Foresi - Janney Montgomery Scott Chip Chowdry - Global Equity Research Jamie Friedman - Susquehanna Alan Hellawell - Lehman Brothers Julio Quinteros - Goldman Sachs Rod Bourgeois - Sanford C. Bernstein George Price - Stifel Nicolaus Rama Rowe - RR Capital Management

At this time I would like to welcome everyone to the second quarter results for fiscal 2007 for Infosys Technologies Limited conference call. (Operator Instructions) Mr. Mahindroo, you may begin your conference.

Good morning and thank you all for joining us today to discuss the financial results for the quarter ended September 30, 2006. I am Sandeep from the Investor Relations team in the U.S. Joining us today on this conference call is CEO and MD, Mr. Nandan Nilekani; COO, President and Joint 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 completed quarter, followed by the outlook for the quarter ending December 31, 2006 and the year ending March 31, 2007. After which, we'll open up the discussion for Q&A. Before I pass it on 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.

Thanks, Sandeep. I'd like to welcome all of you to this call. I’d like to give you some highlights. As you have noticed, the revenue for the quarter improved 13% in dollar comp, and thanks to this strong performance we have been able to revise our guidance for the year. We have revised it to exceed $3 billion and basically, 40.6% to 41.1% growth. So I think the quarter you are seeing here is really a confirmation of many trends we have been talking about the last several years. As you know, we have been postulating for some time that what you see here is not really just a business but a fundamentally new business model, a fundamentally deceptive business model; a business model which delivers faster, better, cheaper and more innovative solutions to our customers. I think that is reflected in the kind of growth that Infosys has been able to demonstrate over the last six years. As you are aware, we went public in the NASDAQ first in March of 1999. We had revenues of $121 million and now with the latest guidance for the year ending March of ’07, we anticipate revenues to grow in excess of $3 billion. In other words, this company will have grown from $121 million in 1999 to over $3 billion by March of ’07. I think another way of looking at it is that it took us 23 years to do the first billion; it took us 23 months to do the second billion; and in effect, we have gone from $2 billion to $3 billion in one year. So I think you can see the kind of growth that is happening. I think this clearly demonstrates that it is really a fundamentally new business model we have which is taking away market share from the legacy players in this industry, which is creating a whole new, compelling value proposition, and I believe this is a model that is here to stay. This model is not just about what we do as a company, but what is the impact and consequences of this model on the existing legacy players? What does it mean for their revenue streams? What does it mean for their prices? What does it mean for their global realignment of the workforce? These are all large, structural challenges that will be faced, and we think that we are eventually driving the agenda in this space and other people essentially are following the agenda that we have laid out. I think the other important thing we are increasingly saying is we are increasingly convinced that the world is being buffeted by some major, mega trends. We have identified emerging economies as one mega trend, economies like India and China, which is global GDP and went down to 7% in 1970 is slowing inching back to take a larger and larger part of global GDP, which is very important in tightened markets. We also think the impact of demographics, with the rise of the young workforce in the Asian countries as opposed to an aging workforce in Europe, which has implications on health care, on dependency ratios, on pension benefits, and the need to get a high return on capital in emerging markets. We also see a huge impact of regulation, whether it is financial regulation, health regulations, privacy regulations. All kinds of regulations which have a huge impact on companies. Finally, we find a huge impact on technology and businesses in a sense Infosys is a child of technology through change because we are able to have thousands of people trading across the world using one network to deliver value. So clearly, these four mega trends: emerging markets, demographics, regulations and technology, we think is flattening the world and I think it is affecting each and every company, because every company that is in the business of selling to customers is finding that who they sell to is changing, what they sell is changing, how they sell it is changing, where they produce it is changing, where they source it from is changing, where are the employees to provide the value is changing. In other words, everything is really up for grabs, and we think that this transformation is going to affect every industry, whether it is banking or retailing or telecommunications or insurance or what have you. We think that Infosys is uniquely placed to be of service in this change, because we ourselves are (a) a creature of these changes; and (b) we ourselves being what we call a flat company, we are in the best position to tell or advise our customers on what they should be doing, because we have gone through these changes ourselves or we have been constructed on the basis of these fundamental changes happening in the global world. So we find that this message is resonating extremely well with the customers. Our customers believe that the world is flattening, our customers believe that they have to go through a transformation. Our customers believe that Infosys is the right partner for this transformation, and this is contributing to a huge impact in terms of mind share, in terms of global awareness of the Infosys brand, in terms of what we can do for them. I think all of these things which you would think are not really that relevant, actually play a huge role in the strategic positioning of Infosys. It is that strategic positioning which provides essentially the wind power in the sense that drives this whole thing. I think with that context, you will notice that we have had tremendous growth, and an important facet of this growth is that unlike maybe a couple of years back where growth was due to three or four large customers, what you will find is that this time the growth is coming due to a whole constellation of large customers who span industry, who span geographies. I think this broadening of large customers and creating multiple engines of account growth I think is one of the reasons for the robust growth that you have seen. Now there are many, many other aspects to this. I think the other important thing which we have been emphasizing for quite some time is that our growth is fundamentally based on robust, organic growth. I think that we are growing at 40% this year entirely on an organic basis. The reason again that this is happening is because Infosys focused on building client value, we are focused on building a broad range of capabilities to deal with our clients, we are focused on expanding our relationships, we are focused on delivering value. These are old-fashioned concepts, but that is how we get growth. I think we have demonstrated that the business model is very important for this growth, an organic model that is customer focused is very important for this growth. So I think when we look at the results, at one level we should look at it in terms of quarterly performance; but I think it is equally important to understand how strategically it fits in to the global scheme of things, and how major changes are happening in the industry and how Infosys is leading that charge. With that, I'll request my colleague, Kris, to continue with the discussions. Kris Gopalakrishnan: Thanks, Nandan, and good morning/good evening, to all of you. Let me give you some more details. If you look at the geographical distribution of revenues, almost all the major geographies have contributed to this growth. The U.S.A. grew by 12.6% quarter-on-quarter. The U.K. grew by about 14.2%, France 27.4% --these are major countries in Europe. Japan grew by 12.7%, Australia grew by 28.7%. So it is all-round growth from a geographical perspective. If we look at Infosys, we had again growth in all the services, some of course better than others like package implementation, consulting, testing, business process management, et cetera grew faster than the Company average. Products also, that has been a colossal growth. From an industry perspective, the industry segments which were strong were banking and capital markets, telecom, energy and utilities. So, again, we had all-round growth from an industry perspective. Our revenue per employee on a blended basis grew 1.2%, 1.4% onsite and 1.1% offshore. For the past three quarters we have seen that the revenue per employee has been growing. We have seen a 3% to 4% increase in rates for new clients, and about 1% to 2% increase in some of the contract renewals. Now it's starting to get reflected on the revenue productivity. We had 271 million-dollar clients, this quarter 232. We have 61 $10 million clients and 12 $50 million clients and two $100 million clients. The largest client is 6.6% of revenue. So, again, we saw faster growth in our top 10, top 20 clients. From a scalability perspective this quarter, we have added the largest number of employees, 10,795 employees of which 2,560 are experienced hires. Attrition has inched up to 12.9% but we are also much more rigorous in looking at performance and encouraging people to leave. Out of this 12.9% about 2.9% is involuntary attrition, or attrition which is encouraged. Utilization, excluding trainees, for the services business is 80.3%, last quarter was 77.3%. It's partly because of the faster growth experienced this quarter. Including trainees at 68.7%, which represents the huge addition at the entry level, most of those people are undergoing training. We have absorbed salary increases. This quarter we have also announced a long-term bonus for some of the senior people within the Company. During August we were able to maintain the margins. We continue to invest in infrastructure building. 7 million square feet of space is under construction, which will give us capacity for an additional 13,400 employees. With this, let me hand it over to Bala to give you more details on the financials. V. Balakrishnan : Good morning, everybody. This quarter the revenues were $746 million, which is a sequential growth of 13%. Of that, 11.2% is volume growth, 1.2% is price growth. On-site, per capita revenue went up by 1.4%; offshore it went up by 1.1%. On a blended basis, it went up by 1.2%. Gross profit, 43.3%. We had the benefit of lesser visa costs during the quarter. It impacted the margin positively by 1.1%. We also have the currency in our favor. The rupee depreciated by something around 1.4% during the quarter. It impacted the operating margin positively by 90 basis points. Sales and marketing costs were 6.4%. It was 6.8% last quarter. G&A is 8.4%, similar to what it was last quarter. Overall we got a benefit of 50 basis points, and we achieved it because of the scale. Non-operating income was less during this quarter because we don’t have the benefit of large exchange gains which was there in the first quarter. Income tax is 3.5%. The effective tax rate is 11.7%, similar to last quarter's. Overall net profit was 26.6% this quarter as compared to 26.4% last quarter. So overall, we had the benefit of visa costs, currency and levered what we saw because of scale, which has improved our operating margin by something around 2.5%. Going forward, we've given a guidance of 5.9% to 6.6% growth in revenues for next quarter, revenue being $790 million to $795 million. EPS to be $0.37 for next quarter, which is 3% growth, because we are assuming the currency to appreciate next quarter. Our guidance is based on a rupee/dollar rate of 45.6 for next quarter and for the next full year. For the full year we have given a guidance of 40.6% to 41.1% growth in revenues, with an EPS of $1.44, which is 41.2% growth. Our balance sheet today is $2.2 billion. We have around $948 million in cash. Accounts receivable is around 65 days. So I think overall it's a good quarter. We have seen a margin improvement. For the full year we are assuming the operating margins to be stable, similar to what it was last year. Last full year the operating margin was 27.8%. We believe it should be similar to that during this year, within a narrow band of 40 to 50 basis points. I think with this I'll conclude the financial presentation. Now the floor is open for questions and answers. Thank you. Sandeep Mahindroo : We are ready for questions. Please go ahead.

(Operator Instructions) Your first question comes from Moshe Katri - Cowen and Company. Moshe Katri - SG Cowen: Yes, thanks, and congratulations on a very, very strong quarter. On the pricing front, what in your view has been contributing for the recent pricing strength, especially on the base of existing clients? V. Balakrishnan: For the past three quarters we have been saying that we are able to get slightly better prices. It's primarily driven from the clients appreciating, understanding that the costs in India are going up and that at some point it will have to get reflected. It is a small increase but it is happening now. In Infosys' case, we are also quite clear that below a certain price we will not take up work. So that is also helping us with new contracts to try and push up our price points. Moshe Katri - SG Cowen: On the attrition rate side, you’ve indicated that if you looked at voluntary turnover, it was probably about 10% for the quarter. For comparison purposes, can you just give us a feel, what was the voluntary turnover levels during the past two quarters? Was it flat? Was it high? Was it lower? V. Balakrishnan: The voluntary turnover last quarter was approximately 9.2%, and the quarter before that was about 9%. So there are three kinds of issues here. First, our training has increased in the sense that you have to get a certain minimum level of accomplishment to get through training. So there we are seeing people not getting close, so they don’t get in. Two, very importantly, this quarter we had 450 people or so leaving for higher studies, because it's the quarter that it happens. So this quarter it will not happen. Three is, of course, the people at the bottom level of performance who left. These are the three things that drive the largest part of the attrition. In the voluntary part we are not seeing any appreciable increase. There is a marginal increase and that’s caused by the fact that the markets are buoyant. The U.S. markets too are buoyant and that is the main reason. Moshe Katri - SG Cowen: Finally, after we've seen decelerating revenue growth last year, it seems that we're headed towards accelerating growth. Can you comment on this trend? Is there anything unusual here? Because obviously this is a pretty positive trend for the industry.

Yes. Nandan was saying it shows that this market is better for the clients. They are able to get better quality deliverables at very good price points. So clearly this is a better model, and clearly that's the reason. As companies become larger, clients are more and more comfortable working with us on larger projects. Clients are willing to increase their revenues or increase their services with us. So today we have two $100 million relationships and all the parameters from a customer perspective are growing. We have a very diversified portfolio of services. If you include BPO, the footprint is very large. So it's a combination of all these things, all the things we have been doing in the past five years: starting new services, starting consulting, starting BPO, creating the brand equity, enabling our Company to scale up, creating the capacity to recruit, train. All these things are paying off at this point and the market conditions are right, and so we're able to take advantage of that. Moshe Katri - SG Cowen: Thanks.

Your next question comes from Bryan Keane - Prudential. Bryan Keane - Prudential: Hi, good morning. Just when you look at your guidance for the first quarter and then the second quarter, you obviously have blown through those numbers, especially on the top line. Can you pinpoint what surprised you? Why the out-performance?

Clearly, the environment is conducive. We got the benefit of better market conditions. Our services were appropriate for the market. We executed well, so customers were able to give us more business. The surprise was the volume, and of course we were able to take advantage of that in terms of capturing that business. So volumes were the surprise and we took advantage of that. Bryan Keane - Prudential: You mentioned in your opening comments about taking some share from legacy players. Has that been a change over the last couple of quarters that you're seeing now, where work used to go to the multinationals, now Infosys is taking some of that work?

Yes. We believe that as companies become larger, this will enable our clients to actually work with us on larger relationships and larger projects. That also has been a cycle, at least, that's going on here. If you look at some of the fastest growing services like package implementation, consulting, the total number of people who are able to deliver consulting type of service is almost 3,000 today. That is helping us, those transformation projects, consulting assignments, end-to-end solutions, BPO driven, business transformation. So I think it is what is driving the replacement which is happening from the legacy players to companies which are more global delivery-oriented. Bryan Keane - Prudential: Finally, on the metrics, I just noticed that repeat business was down to 95%; that number's usually 97% or so. Did some clients move away? What explains that downtick?

The way we compute it is it is reset every finance year, so Q1 is higher, Q2 is lower. At the end of the fiscal year it will come down to 90%. On an average it's 90%. It gives us better visibility into the pipeline. It allows us to build a deeper relationship with our clients, increases the predictability. New customers are also ramping up faster at this point.

Your next question comes from Joseph Foresi - Janney Montgomery Scott. Joseph Foresi - Janney Montgomery Scott: Hi, gentlemen, congratulations on some good results here. I just had a couple of quick questions for you. The first one is that it appears here that the offshore movement continues to evolve, with the Indian vendors moving into different geographies, verticals and offerings. Can you comment on any specific areas of growth that you feel you guys are focusing on? Anything new on that front? Obviously the movement towards package implementation is there, but anything new on that front? V. Balakrishnan: From a geography perspective, proactively we are investing in Europe. Europe has gone from 9% of revenues some years back to 25% of our revenues. From a services perspective, it's more business solution driven rather than a technology solution, combining our consulting package implementation, BPO. Today we are able to offer clients transformation projects, transformation solutions. We have also come out with our point of view on what the landscape is today from a business perspective and what companies need to do in today's world. Nandan, in his opening remarks, talked about the four major shifts which we see, and we are able to help our clients with how they need to respond, how they need to compete in today's world. Joseph Foresi - Janney Montgomery Scott: Obviously it looks like demand is pulling the market and putting pressure on the labor supply. Can give us some idea where maybe you expect attrition to be in the future? Also, on the wage front, could you give us a lateral fresher mix for recruits this quarter? I think you gave it in the earlier call.

Attrition for the rest of the year should be in the same range, sitting where we are, seeing what we're doing. Salary increases for the next year should be in the range of 12% to 15%, sitting where we are today. The reason is we don’t see any perceptible shift there. The key challenge you face when you grow out is getting enough middle level people in to meet our growth requirements. Otherwise the base pressure is there but there is no perceptible shift or change. We're also seeing that for the big companies who came into India, who used to raise wages and pay much more than what we pay for people who joined them, they're becoming more cautious and more discriminating. The indiscriminate increase in salaries has come down and they are benchmarking against large Indian companies. So I think there is some stabilization going on there, because people are very conscious that continued pressure on wages is not going to help anybody. So on both fronts I think there is some stability, but it all depends on the growth rate. The growth rate go up, obviously other positions open up and attrition will be slightly higher. I think that attrition is not a great cause of risk or worry for us at this point of time. We want to bring down the attrition, of course, but it's not something that is giving us very sleepless nights. Joseph Foresi - Janney Montgomery Scott: Just staying with the labor question, as far as middle managers, any rough idea what the attrition rate is at that level? Could you give us a ballpark number of what salaries are at that level?

Well, middle level is something from three to seven years of experience. Attrition at the middle management level is around 12.5% if you take the entire basket of people. The wages at the middle management level, I would estimate is something around $20,000 to $25,000.

Per year, per year; not month. Joseph Foresi - Janney Montgomery Scott: Per year, of course. One last question on the BPO front, any growth drivers in that business? If you could just give me the attrition rate this quarter that would be great.

Well, the growth drivers in the BPO business is the [Effendi] business, [Effendi] is growing; more customers are coming in, we have about 1,500 engaged in [Effendi] and we got a lot more enquiries in that particular area. In the knowledge processing area, the research area is opening up and is seeing much more enquiries. But these are two large areas which are growing pretty fast, along with the rest of the business. The attrition in the BPO business is about 28% for the quarter. And it's come down about 2%, and if you consider 25% of attrition is in the zero to three month category. That is very strange in this industry, because when people join they have to go to night shift, some of them don't adjust and some of them leave. About 40% attrition is in the one year to one-and-a-half year's category. Because the one-year people get trained, and the demand for them is much greater than the people below one year. These are the two categories. In the category one-and-a-half years plus, the attrition comes down. So there are two lumps that happen in the attrition and that's for a very particular reason. But we are trying to push it down. I think in the future, attrition rate in BPO will come down.

Your next question comes from Chip Chowdry - Global Equity Research. Chip Chowdry - Global Equity Research: Thank you. And, again, congratulations on a phenomenal execution. First question is for Bala. You did mention that the visa costs have gone down. I believe that the H1 visa cap had been reached, I think in the month of April. Is that one of the reasons, or is there something else you are seeing there? V. Balakrishnan: No you are right, because we actually reached the visa investment in the first quarter, because we knew that window was going to get closed. We spent close to $11.5 million in the first quarter. The impact is not there in the second quarter. That is one of the reasons why the margin went up. Chip Chowdry - Global Equity Research: Beautiful. Now, other question I had is the consulting team that is led by Steve Black that seems to be doing very well. I was wondering, when will you feel comfortable telling us how many customers did they engage in? And among these various customers, we have in $1 million, $5 million, $10 million, or $100 million segments, among them, where do you see Infosys Consulting having the maximum traction?

Infosys Consulting will have the best value right now for the large transformation projects. It is helping clients resolve what they need to do to compete in today's world and what they need to do in order to transform themselves to compete in this flat world. So we are doing client workshops regarding what it means, what are the drivers. We do assessment, and come up with a program for them to look at the transformation itself. Most of the work, of course, involved changing the technology platform; again, because of the large enterprise solutions we have in many cases, the transformation is led by the implementing a [inaudible] something like that. Again, we are able to help our clients make this transformation. So today the focus is really in how clients transform themselves to compete in this world. We have frameworks, we have methodologies, we have toolsets to help our clients do this. Chip Chowdry - Global Equity Research: The last question is on insurance, banking and financial vertical. It seems like all the companies I follow, including the software vendors, they seem to be doing very, very well in this vertical. I was wondering is there something really endemic to this vertical, which is giving a lot of business to almost the whole software industry? Thank you again and congratulations on a phenomenal execution.

This industry always, especially the banking and capital markets, not so much the insurance side, has been a high spender. They love technology. It's driven by innovation and use of the latest technology and things like that. As a percentage of revenue, typically these companies spend higher than other sectors, for example, manufacturing, which typically spend 1% to 2% on technology. Whereas a financial services company would typically spend, maybe, close to 5% and sometimes up to 10%. Some services are completely technology driven, actually. So that's the reason why this sector is a very good sector for software companies, IT services companies, hardware companies.

Your next question comes from Jamie Friedman - Susquehanna. Jamie Friedman - Susquehanna: My first question is regarding Progeon, did you disclose the operating margin at Progeon? V. Balakrishnan: Yes, let me give you the operating margin for Progeon; as per U.S. GAAP, the operating profit is about 20%. Jamie Friedman - Susquehanna: Okay, thank you. V. Balakrishnan: 20% operating profit. Net income is 21.3% because of non-operating income. Jamie Friedman - Susquehanna: Thank you. Next question is with regard to headcount, I believe that your prior fiscal year '07 headcount guidance was 25,000. Did you update that number? V. Balakrishnan: Yes, 28,300. It is gross of attrition. This is a gross number, not a net number. It is gross of attrition. Jamie Friedman - Susquehanna: Yes. Thank you. And then the final question is regarding the ADR issuance. Could you help us walk through the prospective calendar? It sounds like you are going to meet in November to tentatively approve an offering. But can you remind us, based on the prior schedules, how we should think about the mechanics of the offering again? Thank you.

Well, the Board has just approved the offering. We are working on the timeframe, we have not finalized that. The Board approved the re-issue of 32 million shares to a sponsored second year program, which will include their part of certain public offer we are introducing in [Japan]. We can't share anymore details on this offering, because we are constraint by the regulations of SEC. Jamie Friedman - Susquehanna: Very good. Thank you very much.

Your next question comes from Alan Hellawell of Lehman Brothers. Alan Hellawell - Lehman Brothers: Hi gentlemen. I was just hoping to get a little more clarity on your U.S. market strategy. I know that you've invested significantly in large account chase teams. Can you talk about any capabilities that you've developed to entertain larger contracts and whether that is going to be a thrust that we'll see in your contract size in the United States?

There are two ways you can have large relationships, one through large contracts, another through a master service agreement under which you execute multiple projects. Our traditional model, which is very different from the legacy players, has been to have a master service agreement under which you execute multiple projects. It gives the client flexibility. It gives them the option to work with a company for the long term, so that you can take advantage of knowledge retention. You can take advantage of best practice sharing and things like that. But still keep the partner on their toes, because there is always the threat that, if you don't deliver the last project well, I can shift, or I can switch. So that is the bulk of our contracts. It is helpful for us, also, because of the long term nature of the master service agreement we get written into the budget, we are part of the budget process. We are now bidding for larger and larger transformation projects, outsourcing projects. You may have read about the ABN Amro deal in Europe, where we got a share of application outsourcing from them and we are seeing more of those opportunities. What is happening is that, these large outsourcing deals are getting split between two or three vendors. In almost all cases we make the short list, and some of them we win. It's not all going to one company, its going to two or three companies. Alan Hellawell - Lehman Brothers: Great. Well thank you very much.

Your next question comes from Julio Quinteros of Goldman Sachs. Julio Quinteros - Goldman Sachs: Hey guys, good afternoon. I wanted to go back to the consulting practice real quick. Can you give us a little bit more color on how many folks you have in the consulting practice today, profitability? And if it's not profitable, when you actually expect it to go profitable?

The consulting subsidiary has 220 people. Consulting, as a service, spans multiple units within the company. We have solution consulting in each of the business units. These are the people who look at industry trends, proactively comes up with solutions. We have some [inaudible] built into it, which has some maybe designs, et cetera and are proactively taken to clients and new projects. Then there is a whole area of package implementation, where we start with the package selection, business process re-engineering. Helping customers create the template for their business. Help them with sales management, global roll outs and things like that. Today, we have about 2,000 odd people doing this type of work. Traditionally, you would have classified all these as consulting. We have approximately 2,600 people today, doing consulting type of work. Now, again, the consulting subsidiary standalone is making a loss today, because we are still investing in that. We hope that in the next two or three quarters it will turn around and start making profit. Consulting, as a service, is very lucrative especially when it drives downstream, it is giving us the required margins to justify us continuing to invest in that. In fact, the transformation type of project requires us to do program management, change management, business processing which are really consulting type of services. Julio Quinteros - Goldman Sachs: Understood. A lot of the descriptions that you've just given on the consulting business, the lucrative nature of the kind of work that you are having to do there for your clients. When I relate that back to the profile, the folks that you are currently hiring, 77% freshers. I struggle with understanding how the current mix, which is very weighted towards freshers, will allow you to truly move into some of this higher end consulting work given that those folks are probably not going to be the guys you are going to need for consulting engagements. So if you are going to be looking at this business, over the long term, why aren't you hiring more MBA types? Or more folks from outside of industry that can help you truly ramp up this business? Just to get a sense for where you want to take this business.

So, just to give you some numbers, we hired 600 MBAs this year. We are recruiting more MBAs as we speak. We have recruited 2,568 experienced folks this quarter, in just one quarter 2,568 experienced folks. We have recruited 600 CPAs in the last 12 months, especially for our BPO business, they are helping our clients with more of the analytics and more of the research kind of work and things like that; consolidation, closing of books and things like that. And then, of course, we are recruiting in the market also. For example, in the U.S. universities we are recruiting 130 people who are undergoing training in India today. So there is a combination of multiple initiatives, where we believe that we are recruiting the right people for us to participate in this large transformation project. Now, you also need to realize that these large transformation projects require a few consultants at the front end. They require a strong technical team to do the architecture, the design and things like that. A very large number of people to do the programming, testing the development type of work. We have looked at the composition of large transformation projects, and structured the pyramid for the company based on what we see as the requirement. Now, we don’t want to be a pure consulting firm. That is not our objective. We want to be a company which can help a client do end to end transformation, which includes an impact probably that is what is unique about Infosys. We will help implement and ramp the business operations, which is required today to be competitive. So, we will help implement and operate. So that's the direction in which we are moving. Julio Quinteros - Goldman Sachs: Okay that's really good. Related to the transformation engagement work that you are doing, what percentage of that work can actually be done first? If you take a standalone transformation engagement, how much of that can you actually do? So, if you break that up between on site and off shore.

So, again, we have to take examples and illustrate this, when we start to package implementation 80% of the product was being delivered on site. Today, only 35% of their product delivered on site. So we have been able to change the outsourcing methodology to move a significant amount of work offshore. Even in consulting, which is considered primarily an onsite type of service, over time we are trying to do now second or third documentation preparation, analytics again from offshore. In some cases we are able to deliver 20% of the effort from offshore. So, overall, our hope is that the entire lifecycle, if you look at, it will be 30% onsite, 70% offshore on a blended basis, and that's what we are driving towards. Julio Quinteros - Goldman Sachs: Okay great. And maybe one quick question on the sales and marketing percentage of expenses, we are down to a level now, I think you said roughly 6.4%, is what I am beginning to model now, on a U.S. GAAP basis. How much more scale of benefits should we expect to see in sales and marketing as we go forward? So, as a percentage of revenue, what's the band that you think this number will bounce around at? Also related to that, what was the depreciation impact in the quarter? How much did depreciation benefit the expense items? Thanks. V. Balakrishnan: I think we will not get major benefit on the sales and marketing side. Most of the leverage may come on the G&A side. Last quarter the sales and marketing costs went up by 1% because we hired more people. This quarter it got normalized, we got some 30 basis points of benefit there. Overall, I think, on the G&A side we can get another 40 or 50 basis points here and there. Coming to the depreciation which is similar to last quarter, we have not seen any incremental benefit or impact because of depreciation.

Your next question comes from Rod Bourgeois of Bernstein. Rod Bourgeois - Sanford C. Bernstein: Hi there guys, nice growth, particularly since it appears you haven't been as aggressive in winning large single contracts as some of your Indian competitors. So my initial question is, is it accurate that you haven't been as aggressive in winning large single contracts? And if so, are you able to hit your growth targets going forward, with below average reliance on these really large deals that are out there?

So, in our guidance for the balance of this fiscal year, we have not considered any large deals to be won. Our philosophy, at this point, is that in a market which is buoyant, we don't want to lock up our resources on deals which don't give us the required margins. So we are reluctant to compete on price on these large deals, and lock up our resources. So, we look at where the client is willing to structure the deal the way we would like it to be structured. We still believe that we are very competitive and we deliver good value to our clients, better than our competition. But the deal has to be structured such that it would make sense for both of us, for the client as well as for us to take up. That's the philosophy of the Company. So, we are not that aggressive, you are right. We have certain parameters by which we will evaluate each deal, and go forward. Rod Bourgeois - Sanford C. Bernstein: Great, that sounds good. Now, a couple of questions on the margin side. In terms of margins going forward, are you expecting operating margins to decline sequentially in the December quarter and then follow that by an increase in operating margin in the March quarter? Is that the outlook? V. Balakrishnan: Last year, the full year, we had an operating margin of something around 27.8%. In the first half of this year our operating margin is closer to around 27.2%. We believe that it will be stable at around 27%, 27.5% in the next two quarters. On a year-on-year basis, the operating margin will be stable except for the narrow band of some 40 to 50 basis points here and there. Rod Bourgeois - Sanford C. Bernstein: Okay, but are you expecting more strength in the March quarter on margins than in the December quarter? Or is it going to be pretty balances? V. Balakrishnan: Well, it's going to be pretty balanced, because in this current quarter the operating margin is 28.3%, which includes 19 basis points impact because of currency. Going forward we are assuming the currency to strengthen by around 1.4%. So it should be within a band of 27% to 27.5%. Rod Bourgeois - Sanford C. Bernstein: Okay, great. Are you planning mid-year wage hikes this year? We watch the turnover rate move up and some of the supply challenges in the market. Is it possible that you will employ some mid-year wage hikes, beyond the wage hikes given in the June quarter? V. Balakrishnan: Well, sitting where we are sitting, and seeing what we are seeing, we don't believe that we will be increasing wages mid-term this year. Rod Bourgeois - Sanford C. Bernstein: Okay, and when you talk about wages, are you talking about bonus and other related compensation on the stock front; are you broadly defining wages? V. Balakrishnan: No, I think the long term bonus is different in that it is more of a retention plan. The impact of this is not material. Wage hikes come only once a year in April. We don't believe that we will be increasing that mid-year. Rod Bourgeois - Sanford C. Bernstein: Okay, so you may give some additional compensation but they will not be in the wage category? V. Balakrishnan: You see, our variable compensation depends upon the profitability and the revenues, and that is variable. But the base level of salaries will not be increase. Variable in the percentage of the base, and the variables may increase if they do much better, and come down if they don't do well, but the base won't go up. Rod Bourgeois - Sanford C. Bernstein: Okay, great. Mohandas Pai: What we did in this quarter, second quarter, is for one particular sector, we gave an interim hike. The reason is that, we wanted to do that in the first quarter, we could not do it because the fact that, at the beginning of the quarter we felt there was not enough money. So since, we saw things go much better. It was an unfulfilled agenda of the compensation structure in this quarter, but its not going to happen in the next two quarters. Rod Bourgeois - Sanford C. Bernstein: Okay, is that Mohan? Mohandas Pai: Yes. Rod Bourgeois - Sanford C. Bernstein: Okay. Good to hear from you Mohan. Thanks for the explanation on that. And there is just one quick follow up on the pricing front. Can you define whether price on like for like deals is going up? Or is the increase in price that you are experiencing more due to business mix shift than pricing on like for like deals?

Both. We are playing around with the business mix so that we can optimize our margins and do the right thing. We are also seeing an increase of 3% to 4% on new client deals and about 1 to 2% in some cases, where we are able to renegotiate, so both are applicable. Those are two levers we have. We also have the onsite, offshore mix lever where when the growth rate accelerates we have more project starts, which is what happened in the last two quarters where onsite went up. But then proactively we bring down onsite, and that also helps us improve margin. Rod Bourgeois - Sanford C. Bernstein: Okay, great. Thanks guys.

Your next question comes from George Price - Stifel Nicolaus. George Price - Stifel Nicolaus: Hi, thanks very much for taking my questions. Again, congratulations on very strong numbers. First question is, I wanted to ask about the top account growth, where we've seen the year-over-year growth in your top accounts really seem to accelerate materially. I am wondering if there is any particular trend that we can take away from that?

Clearly we have worked very hard in creating a basket of services which are relevant. We've made sure that we service the client, made sure that the satisfaction is very high. The size also helps, because as offshore becomes very strategic the client would like to work with larger partners, again size helps in that regard. So it’s a combination of having the right services, executing very well, making sure that the clients are happy and satisfied, and taking advantage of the opportunities. The trend we see is that companies are looking at increasing offshore, they are very confident; it has become mainstream. They are confident about the quality of the services and things like that. George Price - Stifel Nicolaus: Is there any change to the trend? Certainly at one point it seemed like there was a trend towards companies to embrace offshore on a broader basis. They look to possibly add to their list of strategic offshore vendors, to diversify their incremental business. Is there any change, do you see, to that trend? Or is it just the sheer volume of business moving offshore is offsetting that?

Some of the companies are choosing two or three strategic partners; that trend continues. Some of the companies are looking at setting up their own unit; that trend also continues. But as it becomes mainstream this will reflect what is there in, let's say, U.S. or Europe, where companies will do some work in-house, they will have some work outsourced. In outsourcing they will look at two, three strategic partners to work with. Very rarely will a company look at giving their entire IT, hardware, software, infrastructure people, applications, everything to one vendor; but few, very few cases. Today, the trend is towards two, three strategic partners, maybe sometimes a captive, a significant drive towards offshore. Even visibility from the Board on what is India's strategy, and especially combining IT and operations from the same vendor offshore. So all these we have anticipated and we have tried to create the relevant services, the relevant client relationship structure to manage this. George Price - Stifel Nicolaus: Okay. Just a couple of other questions, one on utilization, excluding trainees obviously up significantly quarter over quarter, the highest level we've seen in some time. I think since back some time in fiscal '05. Obviously it looks like there was strong, pretty strong demand in the quarter, even surprising you. Is that just simply the answer on that strong utilization? Or was there anything else driving it? In terms of expectations going forward, do you think that that level of utilization you are running hot is that going to come down or is it sustainable?

The way we manage this is we shoot for about 77% excluding trainees. This gives us the slack required if the demand is better than we expected, as it was in this quarter, the utilization can go up to 80%. We try to keep it between 77% and 80%; beyond 80% customer service is suffering. So this quarter, the utilization went up to 80.3%. This is actually part of our plan and strategy. George Price - Stifel Nicolaus: Okay. Last question on the comment that you made on being able to be selective, on deals based on your targeted pricing and margins, and being able to do that given the strong demand. For the work that you don't take on because it doesn't meet your criteria, can you give us a sense of who is then coming into take on that work? Would it be tier 2 firms who are being a little bit more aggressive on price? Any color on that would be great. Thank you.

Well it's typically tier 1, it is a small set of companies today who are getting a higher share of the demand which is out there. It is seen from the first quarter results, second quarter results; so we have to wait and see what happens from the other companies. But if we look at the results of the other companies in the first quarter, the larger companies have grown faster than the mid-sized and the smaller companies. So typically it is the larger, the tier 1 companies who are benefiting from this. George Price - Stifel Nicolaus: Thank you very much.

Your next question comes from Rama Rowe of RR Capital Management Rama Rowe - RR Capital Management: Good morning, guys. It's very impressive growth, you guys have almost defied gravity; the law of large numbers says that when you grow, when you become bigger you slow down, but you guys keep on going. How do you see that you will be able to maintain the growth rate that you have at this time? Or that a point will come when you begin to hit the ceiling?

Well, I think that's a good question, and that also we ought to think about that question often. I don't think we have a clear answer, because clearly there is a lot of scalability in the model. The market for the rebalancing of the global workforce in IT services is still not matured yet. There is huge customer demand. So, I think it's difficult to say when this whole thing will reach an equilibrium stage. I wouldn't like to venture a guess. The fact is that we have been able to demonstrate scalability in services, and we have been able to ramp up our people from a few hundred to 60,000. In this business there are companies who have a much larger base in employee count. So, I think, all these things are open questions. But we are trying to build as scaleable an engine as possible. I think our investment in recruitment, in training, in systems and processes, have all contributed to the scalability. I think we need to come to the end of this. I'd like to thank everyone for participating, for a very enthusiastic and very interesting set of questions. Please feel free to email us and ask us more questions about the business performance, the direction. Let me once again state that we believe that we are at a whole new point in this business. Our model is increasingly the sustainable model and it's having a huge impact on global players. I would urge you to study this industry not just as what is happening in India, but what are the global impact and the consequences thereof. Thank you very much.

Ladies and gentlemen, that concludes the second quarter results for fiscal 2007, for Infosys Technologies Ltd Conference Call. We appreciate your time, you may now disconnect.