Sandeep Mahindroo - General Manager of IR Nandan Nilekani - CEO and MD Kris Gopalakrishnan - President, COO and Joint MD V. Balakrishnan - CFO S. D. Shibulal - Group Head, Worldwide Sales & Customer Delivery Mohan Pai - Member of the Board and Director of Human Resources Amitabh Chaudhry - CEO and MD of Infosys BPO

Rod Bourgeois - Bernstein Moshe Katri - Cowen & Company Julio Quinteros - Goldman Sachs David Grossman - Thomas Weisel Partners Bryan Keane - Prudential Trip Chowdhry - Global Equity Research George Price - Stifel Nicolaus Andrew Steinerman - Bear Stearns James Friedman - Susquehanna Financials Sandy Notardonato - Robert W. Baird

Good morning. My name is Cynthia, and I will be your conference operator today. At this time, I would like to welcome everyone to Infosys Technologies' Fourth Quarter and Fiscal 2007 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Mr. Mahindroo, you may begin your conference.

Thank you, Cynthia. Good morning and welcome everyone to this conference call to discuss Infosys' financial results for the quarter and year ended March 31, 2007. This is Sandeep here from the Investor Relations team in the US. Before we start, I would like to apologize for starting the call a bit late. Joining us today in this conference call are CEO and MD, Mr. Nandan Nilekani; President, COO and Joint MD, Mr. Kris Gopalakrishnan; and CFO, Mr. V. Balakrishnan, along with other members of the senior management. We'll start the proceedings with a brief statement on the performance of the company for the recently concluded quarter and the year, followed by the outlook for Q1 and fiscal 2008. After that, we'll open up the discussion for the Q&A. Before I pass it on to the Infosys management, 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 it on to Mr. Nilekani. TRANSCRIPT SPONSOR : What if there was a way to promote your company to a perfectly targeted group of potential customers, partners, acquirers and investors? What if you could tailor your pitch to them at the moment of maximum interest? And what if you could do this for a no-brainer price? :

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Thank you, Sandeep. First of all, I would like to apologize for the slight delay in starting, because we really have been having back to back meetings and engagements today. So, I am really sorry about that. Let me start by briefly mentioning the senior management changes, which are going to come into effect from June 22. Mr. Kris Gopalakrishnan will assume the role of CEO and Managing Director form June 22. Mr. Shibulal will assume the role of Chief Operating Officer of the company. And I will become Co-Chairman of the Board. All this will be after the AGM on June 22. We think that this will lay the stage for the organizational structure to take this company forward in the coming years to come. Now for the fiscal year 2007. We had revenues of $3.1 billion, which on a year-to-year basis is a growth of 44%. And as we look forward, we are looking at a growth of between 28% to 30% in dollar terms, and we believe that we will reach a revenue of $4 billion for fiscal '08, out of which the profit will be $1 billion. While there has been a talk about slowdown and all those things, we believe that the global IT service industry continues to show a strong growth. We think that there continues to be exciting opportunities for firms like Infosys, and Infosys thanks to its long-term investment in building a key pole position in this industry is well positioned to take advantage of these changes. Now, the important thing to note is that we are seeing very high-quality growth. All our growth has been organic. And we have seen growth not only in rest of the world, including Australia, Europe, and we have also seen very strong growth in our consulting, engineering services, BPO and package implementation. And one of the areas where there has been remarkable growth is in telecom, where we have grown sequentially by 25%. And even the BFSI space, which is seen by many people as having slowed down, had grown sequentially this quarter by 0.7%. Now, this quarter our operating margin dropped by 100 basis points. This is primarily on account of rupee appreciation. But as we look forward, we have given guidance where we expect the profitability to be maintained at the same percentage level next year. However, we've had a dilution of our shareholding by virtue of 13 million shares being exercised by employees in the last quarter of this financial year, which has had an impact of about 3% on our total issued share capital. The EPS for next year will be around a little lower than the growth in revenues terms. We also had a look at the entire opportunity. We have looked at the large opportunities across the customers, and we believe that our investments are bearing fruit as we go forward. I think we've been saying for several years now that we have built a fundamentally receptive business model that we have invested in building a unique position. And I think all the things are paying off. And we have gone from a $1 billion in 2004 to $2 billion in 2006 to $3 billion this year, and we expect to cross $4 billion next year. With this, I'll request to my colleague, Kris, to go into some of the other details of our performance this quarter. Kris?

Thanks, Nandan and good evening to everyone of you. Let me give you some more highlights of the growth. The top 10 customers have been sequentially growing by double-digits over the four quarters. This quarter, the top 10 customers grew 15.5%. It clearly shows that the growth is there. It shows that customers are clearly leveraging offshore much more than ever before. There is a fundamental transformation, which leverages the opportunities for sourcing around the world. And this is primarily driving some of the growth we are seeing today. Nandan talked about growth in the telecom sector. If I look at the different sectors, we can clearly see that on an annual basis, there are multiple sectors which have been growing for us. Banking and financial services grew 49% for the year. Manufacturing grew 39%, retailing 42%, telecom 68%, et cetera. So, there are multiple sectors which are growing. From a geography perspective, we have been investing in Europe and that is yielding results. Europe grew 54% for the year. Coming back to the trend, we have $275 million relationships. We have three clients contributing more than $100 million, and one client contributing more than $200 million. 34 clients, who are new clients, were added this quarter. Repeat business continues to be high at 93% and the DSOs are well under control. So, overall on the client side, we are making sure that there is opportunity to grow. From an employee perspective, we have added 5,992 employees, and we are looking to add another 24,500 employees for the coming year. Attrition is slightly up 13.5% to 13.7%, but if you exclude involuntary attrition it is actually flat. And we are targeting where the challenges are and making sure that we adjust some utilization, excluding trainees to 74%. So, this allows us to take advantage of any business opportunity, which comes in our way in the future where we can accelerate growth. This is also factored into our guidance and this is one of the ways we are offsetting some of the compensation increases and things like that. With this, I am going to handover to Bala to talk more about the financial numbers. V. Balakrishnan: This has been a very good quarter. Our revenues were $863 million, which sequentially went up by 5.1%. For the full year, the revenues went up by 44% to $3 billion. We have seen the gross margin coming down slightly this quarter as compared to December quarter. It's mainly because of rupee. Rupee has appreciated by 1.8%. The average rupee dollar rate was 44.53 in December quarter compared to 43.75 this quarter. That had an impact on the gross margin and also operating margin. SG&A was similar. There is no big change. On the operating margins, the margins came down by 1.1 percentage point, mainly because of rupee. And non-operating income went up slightly because we have additional investable surplus and also the yield went up. The average yield was 7% in December quarter on the investable surplus, which went up to 10% this quarter. That has resulted in additional non-operating income. Provision for tax came down during this quarter, mainly because of tax reversal of $29 million, which pertains to tax provisions that we’ve made in the earlier year for some of our tax obligation in both the jurisdictions. And in some of those cases, the assessments are over. So we have to reverse the provisions we made in excess of the liability and in one of the jurisdiction the limitation period is over. So, it is a one-time event. Excluding that, the top-line growth and the bottom-line growth is almost same. We gave a guidance of $0.40. Our actual EPS for March quarter was $0.46. If we exclude the one-time tax reversal of $0.05, our actual EPS is $0.41. So net-net it has been a good quarter. We have seen the top 10 clients growing at 15.5% sequentially. We have seen good volume growth. Onsite volumes went up by 4%, offshore went up by 3.4% sequentially, and total went up by 3.6%. We have seen good increase in per capita revenues. Our onsite per capita revenues went up sequentially by 1.7%, offshore went up by 1.4% and blended went up by 1.7%. Overall, for the whole year, we have seen the blended per capita revenue growing by something around 4.9%. If you look at the subsidiaries, most of the subsidiaries have done well as per plan. Our Infosys BPO had a revenue of $147 million with net income of 21%. Infosys Australia did $100 million in revenues, with a 16% net income. Infosys Consulting had $47 million of revenue with a net loss of $25 million. They are still in the investment phase. But if you look at Infosys Consulting plus the slowdown work we did in the offshore global delivery model, they are still making profits with standalone losses. Infosys China had $13 million of revenue with a $6 million loss. Coming to guidance, our guidance for next year is the growth in revenues of 28% to 30%. We are not factoring any increase in per capita revenue in our guidance. We are not factoring any big deals. We had guided for an EPS growth of 26% to 28%, excluding the one-time tax reversal that we made in the March quarter of fiscal 2007. The difference in the growth is mainly due to dilution. We have seen 13 million shares getting exercised in the March quarter, because we are getting into a new FBT regime from April where most of the employees have exercised the stock ahead of the new regime. We had seen something around 20 million shares exercised in fiscal '07. Our outstanding options, as of March 31, is something around 4 million options; 2.1 million under our 1998 ADR plan and another 1.9 million under our 1999 Rupee plan. So, most of the dilution has happened this year and the growth accelerated because of the new tax regime. Going forward, we believe that our effective tax rate could be within the range of 11% to 12%. In the current quarter that is March quarter, the effective tax rate went up to 12.9%, mainly because of the higher non-operating income. We believe that it will be within the range even for next year. I think overall what we are saying is we are bullish about the market, given that our guidance factors in 28% to 30% growth in dollar terms. We are not seeing any dilution in margins for next year. We are increasing the offshore wages by somewhere between 13% to 15% and onsite wages for people outside India by 5% to 6%. Overall, the impact on the margins because of the wage increases is something around 300 basis points, and we are assuming the rupee/dollar rate at 43.10. The average for fiscal '07 was 45. So, that could have an impact of something around 150 to 160 basis points on the margin. We are planning to offset that by higher utilization. We are ending the fiscal '07 with utilization of 74%. We’ve always said that we are comfortable with the high 70s kind of utilization. So, some improvement will come from utilization. We believe that we can get some scale benefits from SG&A, and the subsidiary losses will be less next year. So, overall, we believe that we will be able to maintain the margins in spite of absorbing the wage increase and the rupee impact for next year. With this, I’ll conclude my presentation. And we can throw the floor open for questions now.

(Operator Instructions.) Your first question comes from Rod Bourgeois from Bernstein Rod Bourgeois - Bernstein: Hi guys. I just wanted to inquire about the strategy of increasing the utilization rate over the next year in order to benefit margins. A year ago, we had the discussion about needing to lower utilization in order to create a bigger bench of talent in order to maximize revenue growth opportunities. And I am wondering if the plan to increase utilization reflects any change in that strategy at all? S. D. Shibulal: This is Shibulal. If you look back at the conversation, that's exactly what we have done. We are very comfortable with the utilization in high 70s. Our utilization this quarter is actually in the low 70s. So, there is definite room for improvement in the utilization and then we will be very comfortable, number one. Number two, as the utilization goes up we have the ability to recruit people just in time, by which we can actually manage the utilization at whatever level we need. Rod Bourgeois - Bernstein: Yeah. Is there is something that has happened in the market that would suggest that maintaining a bigger bench of talent is less important this year than it would have been a year ago in order to have people available when clients say they need people on a new deal? S. D. Shibulal: Well, a higher utilization actually creates stress within the system because it's like having a manufacturing plant and you cannot have people come just in time all the time. So, it made sense for us to have some amount of strategic bench, especially when you are bidding for large deals. And when large deals come into picture, there is one-time investment of people acquired. And today, on an average, every quarter we close some large deals, some multimillion dollar multiyear deal gets closed in every quarter. So, it was important for us to build a strategic bench. At the same time, at this point in time, we have the fleet transferring too in the bench without impacting the business -- including the utilization, without impacting the business. Rod Bourgeois - Bernstein: Right. And help us a little bit with the debate that is out there in the market. There is some who argue that the slowing US economy could actually help demand. There are arguments that demand for your business is countercyclical. Do you subscribe to that view? Or is there any risk of the slowing US economy affecting the demand for your services?

Well, I think they have been saying for some time now that there is a natural edge in our business. What happens in our businesses is that when the economy is booming and companies are increasing the spend on the technology then we become a natural choice to have that increased spend upon. On the other hand, when economies are not growing and companies are under pressure to become more efficient, to become more competitive, and to reduce costs, then they are looking for the best partners in the world to do the reinventing on themselves. They need to do to be more effective and competitive. And that's where also we come into play. And therefore, in some sense, our business is able to do well both in times of stress as well as in times of economic growth. I think, particularly, this is becoming all the more relevant because we think that most of our customers are facing enormous challenges in the way they reengineer themselves in a flat world. We think that they will have to look at how they sell, where they sell, whom they sell, what they sell, at what price they sell, where they produce it and where they service it from. So, all these things are being redesigned. And I think our knowledge and intellectual capital in helping our customers' transform is becoming increasingly valuable and is one of the sources for moving on demand that we are seeing. Rod Bourgeois - Bernstein: Okay. Now, that's well said. And can you just comment, in the last year you guided to 28% to 30% revenue growth initially and ended up reporting 44% for the year, which is pretty impressive. Would you say that your guidance this year is as conservative as it was in the year-ago period? V. Balakrishnan: No. Rod Bourgeois - Bernstein: Is there any way to sort of help us to maintain the difference in conservatives in this year versus last year? V. Balakrishnan: No, I think the fact that the guidance this year is coincidentally the same as the guidance last year. I don’t think from that you can automatically deduce that the growth this year will be the same as last year. I don't think the two are related. And I think last year we had the fortunate benefit of buoyancy right from day one and we are able to build the company. And I think Mohan wants to add some more.

Our guidance is based upon a snapshot at a particular point of time. Even last year, when you gave the 30% guidance, it was a snapshot at that point of time. We don't know about future events. As of date, our guidance is based upon all the information and our reading of the marketplace at this point of time. So, guidance is only a snapshot. So, as you go along, we'll know how the market pans out. Rod Bourgeois - Bernstein: Great, that's very helpful. Thank you.

And what we do is that, as we said, we have a utilization of 74%. And if there are opportunities, then we are able to take advantages of those opportunities, and that's where the acceleration happens. So, we are prepared. We are ready. We keep a strategic bench. And then, if the opportunity presents itself, we will grow fast. But as we look towards the future, as we stand where we are today, we are saying that we will grow 28% to 30%.

Your next question comes from Moshe Katri with Cowen & Company Moshe Katri - Cowen & Company: Hey, thanks. Going back to your remark on the financial services vertical that grew -- I don't know, roughly 1% sequentially, it’s still a slowdown sequentially. Is there anything you can say just to give us some sort of a color that we are not really seeing a slowdown that some people actually are worried about the financial services sector at this point? I think this is a second consecutive quarter where we are seeing that slowdown.

We are not seeing any slowdown. Quarter-by-quarter, there may be some slight slowdown in a particular industry vertical. It's really not a slowdown. If you look at the last 12 months, the financial services sector has grown by 49%, whereas the company grew by 44%. So, it is actually doing reasonably well for the company. Moshe Katri - Cowen & Company: Okay. So, we shouldn't read anything into it. And then, growth from your non-top 10 clients, it is also sequentially or -- I don't know, flat. And typically, the growth is pretty well between your top 10 and non-top 10. Can you elaborate on that a little bit?

We have initiatives to broaden our exposure within a client by cross-selling the different services. Again, I want to say that quarter-by-quarter, there will be differences. But when you look at the trend, when you look at how things are happening, for example, if you look at the growth this year. If you look at the breadth of that growth in terms of different industry segments, in terms of the different customers, we have more million dollar relationships now than when we started the year. We have more $10 million relationships and more $100 million relationships. So, across the board, we have seen growth. When you look at the service footprint, we have seen that all the services are growing, especially those services, which we started in the last three, four years, BPO, Infrastructure Management, Independent Validation Services, Consulting, they are showing good growth. Then when we look at geography, we are proactively investing in Europe that is showing results. We are investing in Australia that is showing results. So, we are seeing broad-based growth, and that is what has given us the confidence to say that there is momentum. Now, a particular sector, a particular customer may show differences in growth rates in a particular quarter. But you have to look at the overall direction and how broad-based this growth is and that's what has given us the confidence. Moshe Katri - Cowen & Company: Okay. And the third and final question, just for Bala. I think you lost about $30 million from both China and North American Consulting. I think, I don't remember, if it was for the quarter or for the year, maybe you can clarify the exact losses? And then, what is your expectation for fiscal '08 in terms of China and North American Consulting? Thanks. V. Balakrishnan: In China, we had factored in a loss of $2 million in the March quarter, Consulting made a loss of $11 million in the March quarter. For the full year, Consulting loss was $25 million and China was $6.5 million. Going forward, next year, our guidance factors a lower loss for Infosys Consulting. We are factoring a loss of something around $4 million for Consulting and same amount of loss for China, because both the companies are still in the investment phase. For Consulting, the losses could come down in the near future if we can break even on a standalone basis. But as I said earlier, we should not look at Infosys Consulting on a standalone business. We have to look at the slowdown work and the flow-through work that comes at a superior margin. So overall, they are still making money, but on a standalone basis they are making losses. Moshe Katri - Cowen & Company: Great, thanks for your clarification.

Your next question comes from Julio Quinteros with Goldman Sachs. Julio Quinteros - Goldman Sachs: Good evening guys. My question is, first of all, just to get the March quarter sort of behind us at this point. Why was the volume growth so low in the March quarter? V. Balakrishnan: We have had three quarters of good growth. Now, this is as per the guidance, which we gave. So this is what we had factored in, nothing extra kicked in, and so we have this growth at this point. So, this is as per guidance. Julio Quinteros - Goldman Sachs: Your volume growth of 4% is consistent with what you expected for the quarter.

Yeah, that's the guidance which we gave at the beginning of the quarter. Julio Quinteros - Goldman Sachs: Okay, yeah typically we see a little bit of upside. So I think when you look at the utilization trends coming down in the quarter and the net hiring being about in line with not a lot of upside. The pushback I think right now is going to be more around the lines of “is this driven by you guys trying to manage your business or is this driven by clients who are pushing back, pushing out may be seasonality.” So, can you just sort of provide may be a little bit of color around that?

See, our third and fourth quarter have been slow quarters for us and those are the quarters where we start building up a bench for the future. So, yes there is some seasonality and we try to manage that. Sometimes, we get an extra kick through a particular client or through a particular deal and it accelerates. But this quarter was just as we thought it would be and nothing different. Julio Quinteros - Goldman Sachs: Okay. And then the top client this quarter, was it the same top client last quarter?

Yes. Julio Quinteros - Goldman Sachs: Same client, okay. And what drove the kind of acceleration in that client? Was there a major project, a major conversion? Can you just maybe, without talking about the client itself, just the specifics on the work that would drive such a material acceleration from quarter-to-quarter?

We are trying to cross sell our services and do everything as plan, and in this case we were successful in coming out with the right kind of services for this client, and that's why they grew. We have been investing and broadening our relationship, investing in our relationships team, in order to make sure that they are able to handle much larger relationships and recruiting the right kind of people who can handle relationships at high level. We have been building CEO and Board level relationships with many of our clients. So, there are many things which we are doing, which gives the client the comfort. We have the right mix of services, so that they can buy and grow the business. And of course, we have the execution capability today to scale-up rapidly. We have the bench which is required again to scale-up rapidly. There are many things which we have done, which allows us to grow relationships, our brand equity, and the perception of risk. All those factors actually play a role in growing an account. Julio Quinteros - Goldman Sachs: Okay. And then may be switch gears over to Bala. Bala, when you said that you expect the margins to be basically flat year-over-year, are you talking about an EBIT margin or EBITDA margin in U.S. GAAP? V. Balakrishnan: I am talking about the operating margins. We always said, we should be able to maintain the operating margins within a narrow band. The only joker in the pack is the currency rate. What you are saying now is even though we factored in some kind of a rupee appreciation in next year’s guidance, we should be able to absorb that and still maintain the margins within a narrow band for next year also. Julio Quinteros - Goldman Sachs: Narrow band, okay. So, you are talking about EBIT then, right? V. Balakrishnan: Yes. Julio Quinteros - Goldman Sachs: Okay, got it. And then in the comments that you made you suggested that you would get some benefit from utilization, get some benefit from SG&A. What about pricing? What's your pricing assumption for fiscal year '08?

Yeah. On the pricing, we are assuming the price to remain flat for the whole of next year. It’s a tradition we follow year-on-year. We don't assume any price increases in the guidance and that continues. Julio Quinteros - Goldman Sachs: If you look at the pricing over the last couple of quarters, it's been going up. Your comments on pricing suggest that your clients are coming on at higher rates. Why is there such a conservative posture on pricing?

No, we always do it, even in last year when we started the year. And we gave a guidance of 28% to 30%. We are not factored in the guidance, as we are not factored in the price increase because it depends on a lot of things, the kind of business mix we have, kind of customers we have, and the kind of growth we see from the new customers. It's very difficult to predict in the beginning of the year. So, normally we don't factor in any price increase in our guidance. And if it comes, it will be on top of what we guided. Julio Quinteros - Goldman Sachs: Okay. Great. Thank you.

Your next question comes from David Grossman with Thomas Weisel Partners. David Grossman - Thomas Weisel Partners: Thanks. When you look at in terms of the guidance, can you provide some insight into relative growth by segment between the BPO segment, the product segment and the services segment?

The guidance for BPO is $217 million compared to $147 million this year. David Grossman - Thomas Weisel Partners: And products and services?

We have assumed revenue from products about $145 million. And the rest of course, are in other services. David Grossman - Thomas Weisel Partners: And looking at, I guess this is coming out from the other question, just not to the level of point. But it looks like the combination of sequential unit growth utilization and hiring, it just looks like there has been a little bit of change in the profile of the growth rate of the services business. I know you made some comments about that. But is there anything fundamentally that you are seeing in the market? Or is it in your scale? Or is it anything else that you can point to help us better us better understand that dynamic?

Not really. The only difference is we are seeing larger deals and our own relationship with our clients are growing. And I think that is part of the growth itself. We are a much larger company today. The perception of risk, the perception of the clients about the company is changing. That's the only thing I can think of. The rest are in terms of new services growing faster, new markets growing faster and the investments. Those are the kind of things. But the only difference I would say is the scale is much larger. The comfort is much better and risk perception is reduced. That's all. David Grossman - Thomas Weisel Partners: And just looking at the pricing trends. Obviously they have been a fairly robust for the last several quarters. Is any of the pricing increase that you are seeing coming from the change in the rupee or other factors that are driving prices, like wages etcetera?

No. I think the pricing and currency is not directly related. It is indirectly related in the sense that we can use that as a factor when we negotiate with our clients saying that the costs are going up. But it is a negotiated price. Even though in the contracts, we have certain clauses, which can be triggered. The cost of the long-term nature of our relationship with our clients is always a negotiated price. This allows us to go back to our client and negotiate, renegotiate. When the time comes for the negotiation, we don't do out of term negotiation, etcetera, because we want to build the long-term relationship with our client. That's the most important thing. There is a lot of volatility and we don't want to keep going back and forth with our clients saying that you need to change the pricing because currency is fluctuating. V. Balakrishnan: If you look at the per capita revenues last quarter, it went up on a blended basis by 1.7%. And if you look at the segment information, Europe is almost same. Last quarter it was 26.8%, and in March quarter it was 26.6%. So, most of the price increases we have seen in the last quarter mainly came from multiple things like business mix, new customers growing faster, and some other customers valuating some kind of a price increase. David Grossman - Thomas Weisel Partners: And Bala what was the hedging gain in the quarter? V. Balakrishnan: As of March end, we have a hedging position of $470 million. In last quarter, we had something around $360 million. In the March quarter, our translation impact has almost netted off the impact we have seen on the currency. So net-net on the non-operating income side, the impact due to currency is very minimal. We believe that we have sufficient hedges at this point of time. Our policy always was to cover our next two quarters’ net inflow and we'll continue to do that. David Grossman - Thomas Weisel Partners: So the hedging gain and the non-operating income offset the impact on the gross margins from that side? V. Balakrishnan: Yeah on the non-operating side, we have two impacts. One is your currency impact and second is the translation because we have certain foreign currency assets sitting in the balance sheet, if need to be mark-to-market how the currency rate is as of the period-end. So in March quarter, typically the translation benefits wouldn't offset the currency impact. So net-net, we are not seeing any big impact on the non-operating income because of currency. David Grossman - Thomas Weisel Partners: Oh, I see. And that was for the March quarter? V. Balakrishnan: Yes. David Grossman - Thomas Weisel Partners: Yeah. And then just finally, I think I heard you say that you expect your tax rate to be roughly 12% next year, is that correct? V. Balakrishnan: See, in December quarter, the effective tax rate was something around 11.7%. It went up to 12.9% in March quarter. It's mainly because of the increase we saw in the non-operating income. Non-operating income is mainly due to investment of the surplus we have. The yield has gone up in the March quarter, something around 7% in December quarter to 10% in March quarter. So going forward for next year, I think the effective tax rate could remain in the same range somewhere between 11% to 12%. It could slightly go up depending on the non-operating income. Otherwise, it should be within the range. David Grossman - Thomas Weisel Partners: And can you just remind us, over the next couple of years how you expect the tax rate to trend based on the change in the tax gain as well as kind of the maturities with different facilities? V. Balakrishnan: The percentage on the tax will also reduce? David Grossman - Thomas Weisel Partners: I'm sorry. V. Balakrishnan: What is your question? Can you please repeat? David Grossman - Thomas Weisel Partners: Sure. If you could just give us a sense for where you see the tax rate going over the next couple of years? V. Balakrishnan: I think, in India, we have a ten-year tax holiday. It goes off by end of fiscal 2009. We also have a new scheme called Special Economic Zone scheme, which gives something around 15-year tax holiday. So, then maybe around 5% of our revenue comes from SEZ scheme, rest of it comes from the old STP scheme. So, till the end of 2009, the effective tax rate could remain within the range. In 2010, it could spike up. There will be [state] function. But again, it depends on how much of our revenue comes from the new scheme at that point of time. It's very difficult to predict. At least till the end of 2009, the effective tax rate could be within this range. David Grossman - Thomas Weisel Partners: Okay. So when you get into 2010, is there any chance that once you see that spike that we come back to the 11% to 12% range? Or do you think it will normalize at a higher level? And if so, can you give us just a range of where it would normalize?

What is the range for the tax rate? V. Balakrishnan: I think, as I told you, till the end of 2009, the effective tax rate could be somewhere between 11% to 12%. It could slightly go up depending on the quantum of non-operating income. Beyond that, it actually depends on how much of our revenue comes from the new SEZ scheme. How much comes from STP scheme is very difficult to predict now. So, we have to move forward and see what is the proportion of revenue is coming from the new scheme at that point of time to look at the rates. David Grossman - Thomas Weisel Partners: Okay. Great, thank you. V. Balakrishnan: Thank you.

Your next question comes from Bryan Keane with Prudential. Bryan Keane - Prudential: Hi. Just wanted to clarify a couple of things. In the Financial Services segment, it's growing at double-digit sequentially for each quarter, and I am not sure if I account this, but during the quarter, obviously it only grew 1%. So it grew below the company's sequential growth for the quarter. Why did it? I just don't know why it fell like that? Why did it grow below the company's average? In other words, was there a client loss or did clients for some reasons spent less than the others?

Typically, the budgets are placed in the first quarter. And if there is a delay in release of the budget, a particular client maybe growing slightly slower. Now when you look at the yearly number, as I said before 49% growth for the year. And we feel comfortable in saying that there is still growth. One of the projects which we were expecting just got signed off now. So, you should see continuous growth in the BFSI space. Bryan Keane - Prudential: And then, so what should we model or what you guys expect for fiscal year '08 growth in that financial segment?

We cannot give you a segmented growth rate. We have given you our guidance for the company, which is 28% to 30%. We cannot give you segmented growth rates and things like that. It is the largest segment. We have details client-by-client, etcetera, but that's too much detail to give out at this point. Bryan Keane - Prudential: Okay. I was just hoping for, was it far below or above kind of where you would be tracking for 28% to 30% for the fiscal year '08? Just trying to get some color around that.

No. I cannot give you anymore on that at this point. Bryan Keane - Prudential: Okay. And then on the maintenance side, that also sequentially had dropped a little bit. I just wanted to know if there was anything in there, in particular one-time items. The color around financial services was helpful. But how about maintenance, was there anything in there that sequentially grew a lot less than the company average? Just trying to make sure I understand that.

I think you have to go more with client-wise growth, because we are trying to sell multiple services to a particular client. Development, Reengineering, Infrastructure, Management services, BPO services, Independent Validation Services, Consulting, Package, Implementation etcetera. And that's how we grow our clients. Now, maintenance may be just steady state. There are no more applications being transferred to Infosys for the test study. In this quarter, Development grew, Package Implementation grew etcetera. So again, quarter-upon-quarter, don't focus on a particular service. Look at annual trend. Maintenance has grown 39% annually, Development grew 49%, and Package Implementation grew 55%. Now those are numbers, which probably are easier to explain because there is a trend there. We can see where it's going. But quarter-upon-quarter it's slightly difficult to say, because it depends then on what happens within a particular client, etcetera. Bryan Keane - Prudential: Okay. And then just on the guidance, what percentage of your fiscal year '08 guidance is already signed or already committed from your clients? And then, is there a percentage that you have to go out and win during the year to hit that guidance, or is it already kind of contracted?

When we look four quarters out, typically, we have visibility of 65% to 70% of the revenue. 93% of our business is repeat business. Next year also we expect 90% to 95% of our business to be repeat business. So, when we say visibility, either we have signed contracts or we have visibility into the budgets of the clients. They necessarily don't translate to signed contract. But we have good visibility and reasonable assurance of happening. Now, when we look at one quarter out, then we have almost 95% visibility typically, and that's how we manage our business, one quarter out 90% plus; three quarters out, 65% plus; four quarters out, 65% plus. Bryan Keane - Prudential: Okay. And then just finally, I know you don't have price increases in the fiscal year '08 guidance. If you do get the price increases, I guess you've seen here over the last couple of quarters, is there a way to quantify the impact how that will help the operating margins by any price increases you do get? V. Balakrishnan: I think to get a price increase, most of it flows down to the net income. But it depends on where you get, if it is onsite, the flow to the net income will be lower, but if it is offshore, it will be higher. So net-net, for every one percentage point increase in prices, the impact could be somewhere between 3 to 50 basis points on operating margins. Bryan Keane - Prudential: Okay. Thank you very much.

Your next question comes from Trip Chowdhry with Global Equity Research. Trip Chowdhry - Global Equity Research: Thank you. Two questions, first is on the Visa, what is the situation right now? And how many did we apply last year? And how was it this year? V. Balakrishnan: Well, the situation is that the Visa close within two days, you know that. We've applied for adequate number of Visas to meet our growth for later part of this year and the next year. We received a message saying that they are getting ready now to look at all the people, who filed, and make a random selection and inform them. So, waiting for people to inform, it's going to be a random selection like a lottery. So, we'll wait and see. And obviously, if we don't get what we need, we have to look at other alternatives, as it is we are hiring people locally, that scheme is going on. And we are also looking at other ways to make sure that we are not impacted in any manner. I am sure, that with people like you talking about the short of the Visas, there could be some action in [capital] too. Trip Chowdhry - Global Equity Research: Perfect. The second question is regarding the Vista rollout, are you seeing any more up-tick in the testing part of the business or maybe infrastructure services because of Vista, or you are thinking it's little early to take that as a positive momentum yet?

XP rollout has been a very successful service from Infosys. We received various awards et cetera for our XP rollout service. We are ready with a service for Vista, which includes testing, which includes downloading the images in an automated manner, zero-touch download and things like that. So, we have the service ready. But it's too early at this point to see any significant revenue opportunity. But definitely we are going to market with this. We are one of the large partners with Microsoft on this, when Vista was launched. Trip Chowdhry - Global Equity Research: Perfect. And the last question again, I'll try to get little bit more insights into the Visa situation. Has our guidance factored for the best case scenario or the most probable scenario in terms of the costs associated with processing of Visas?

Well, we normally are right in the middle of these issues near overtly optimistic, not overtly pessimistic, because we take a very realistic view. And I think that there will be enough in the system to make sure that we need our numbers. Trip Chowdhry - Global Equity Research: Perfect. Congratulations on good execution.

Thank you very much.

Your next question comes from George Price from Stifel Nicolaus. George Price - Stifel Nicolaus: Hi, thank you very much. First question is, some of my industry checks indicate that Infosys has now indicated a willingness under some circumstances to entertain taking over people and even assets that may come with some of these larger deals. My questions on that, one, is that correct? And if so, how do you view that from a margin impact perspective? S. D. Shibulal: This is Shibulal. On the first one, on people takeovers, we have done a little bit of that. And today we have the scale to acquire people while acquiring business because if you look at us today, we have 9,000 people plus outside India. So, if you go for a deal, which is, let's say whatever size, then you have to takeover 100 people, that's a very small number compared to the number of people whom we have on-site. On the utilization front, it is actually good, because these people already have worked. And they are working at the customer site, which also means that we have to send less number of people from India. So, if you have a 300-people project then that means 20% of that, that is, 80 people are authorized, 60 people are on site and we take over 30 people, we only have to send 30 people from here. So, it will workout all around as long as the GDM model is applied. But in another situation, if you takeover 300 people and that means you have to apply GDM to it, 200 people will have to be reassigned. Even that is not a large number, given the current business model and the number of people we have on-site. As far as the infrastructure piece is concerned, we are etched to do it. We do not have any plans to do it in a large scale at this point. George Price - Stifel Nicolaus: Okay. Just I heard you correctly on the assets. So in small cases you will do it, but nothing that you expect have any material impact. Is that fair? S. D. Shibulal: On the asset side, I don't think we even do it in small scale. We may do it in the future, and even then it will not have any material impact, it will be quantitatively small. George Price - Stifel Nicolaus: Okay. And given your comment just now on in terms of utilization, I mean, is it fair to say that that's one factor driving your willingness may be to drive the utilization higher in fiscal '08? S. D. Shibulal: No. I think these are two different things, because mostly the people takeover issue comes on large deals, which are multimillion dollar deals. The utilization, we are very comfortable with high 70s, and currently it is below 75. So these are definitely deal-linked issues. We will do both, given the right business opportunity, we will take over people. But irrespective of that, we will drive the utilization up. George Price - Stifel Nicolaus: Okay. And then just to go back to the margin headwinds, the 300 basis points from wage inflation, about a 150 bps from currency, I think on the last call you talked about, if you move the utilization into the upper 70s, you could get maybe a 150 basis points benefit from that. And correct me if I am wrong. You said you are not building in any benefit from pricing. Infosys Consulting may be gives you 50 bps, I think, I missed some of the other subsidiary expectations, but that is probably somewhat comparable. May be you have a 100 bps in SG&A. I still kind of feel like I am falling a little short of the 450 basis point offset. Can you help me out? What am I missing? S. D. Shibulal: There are multiple levels to that. Bala is going to take that question. V. Balakrishnan: We are saying that there will be some 300 basis points impact on the margin because of wage increases. Rupee could impact something around 150-160 basis points. We are saying it could get offset by the benefit we see on the G&A of something around 150-160 basis points. But utilization, we always wanted to be at the low end of the range. Today, we are ending March at 74% utilization. We are comfortable somewhere between 76% to 80%. So, we could take up the utilization up, and it could give us some benefit because in every 1 percentage point in utilization, you could see an impact of 40 basis points on the margins. On the subsidiary, especially the Consulting, in fiscal '07, they made a loss of $25 million. Next year, we are expecting them to make a loss of $4 million. That could give us some 50 basis points. So, what we are saying is, these are indicative things, which we can use to offset the margin. There are several levers. We use some of them at some point of time, or all them at some point of time to offset the margin. What we are saying is, in spite of the wage increase, in spite of the rupee impact, we should be able to maintain the margins by using some of these levers. George Price - Stifel Nicolaus: Okay. And then last question would be what happens to the margins, if the rupee happens to reverse, maybe some of the liquidity concerns going on over India from a currency standpoint reverse? Or if the rupee starts to reverse and depreciate against the dollar, do you reinvest that, do you let it flow through, how would you treat that? Thank you. V. Balakrishnan: The same thing what happened in the first quarter of last fiscal will happen. The margins could improve, the rupee could depreciate. But we could reinvest some of the margins back into the business, if required. George Price - Stifel Nicolaus: Okay. Thank you very much.

You next question comes from Andrew Steinerman with Bear Stearns. Andrew Steinerman - Bear Stearns: Hi. Thanks for taking my question. It has to do with seasonality of sequential revenue growth. And even the March '07 quarter recorded for 5% sequential revenue growth, compared to the full year revenue growth of 28% to 30%. In other words, the company anticipates higher sequential revenue growth in some of the latter quarters of fiscal year '08. But when I go back and look at the history of Infosys, the March quarter tends to be the second and sometimes the first best sequential revenue growth quarter seasonally. So, my question comes down to, why is that the March sequential revenue growth more than 5% and why the confidence that some of the later quarters will be higher than 5%?

Last year also we started giving a guidance of about 6.1% growth or something like that. So, the guidance was lower, and then we accelerated. Andrew Steinerman - Bear Stearns: Right.

And we are saying that this is going to happen. But we give the guidance based on the data we have at this point. We are prepared to accelerate growth. We are ready for acceleration, because we have the bend et cetera. And then as the year progresses, we can fine tune this. We are giving guidance four quarters out. So, we can fine tune it. Now, what happens is, there is certain assumption of growth, which determines ultimately, what is a maximum growth we can get in any particular year. And that's what we need to really adjust given the environment. But this 28% to 30% growth is what we are seeing today that we are comfortable with and that's what we have given as guidance. Andrew Steinerman - Bear Stearns: Right. But then if I just ask, don't you agree with me that the March quarter is usually one of your best sequential seasonal quarters, and is there anything that you are taking into account when you gave 5% that makes you seem like this will be something different than a typical seasonal quarter?

Yeah, typically you are right. The third and fourth quarters are slow quarters for us, third quarter because of more holidays, fourth quarter because of new budgets being created etcetera. But those are factored at this point in our guidance. Andrew Steinerman - Bear Stearns: Right. Okay. Thanks for your help.

Your next question comes from James Friedman with Susquehanna Financials. James Friedman - Susquehanna Financials: Thanks. Most of my questions have been answered. I just have one quick question for Bala though. What operating margin guidance is contemplated for Infosys BPO Progeon for your fiscal '08 assumptions? And at what point do you see Infosys BPO achieving corporate-wide operating margins? Thank you. V. Balakrishnan: Essentially, for the BPO, let me ask Amitabh to answer this question. Amitabh is here.

Our guidance for the next year is $215 million, and we are talking about keeping our margins at the same level. If you take out the -- we had in our margins this year a stock compensation charge. So, if you take that out, we had margin of 23% for this year. James Friedman - Susquehanna Financials: Okay. Thank you very much.

Your next question comes from Sandy Notardonato from Robert W. Baird. Sandy Notardonato - Robert W. Baird: Hi. Thank you. Just two questions. First, can you talk about what you are seeing for FY '08 rate in terms of the more discretionary spending as a part of your business, perhaps custom application development and IT consulting? And then I have a follow up.

Clearly, this quarter we saw Development going up. We saw Consulting going up. We saw Package Implementation is going up. Discretionary spend is happening. We also believe that companies need to transform themselves to take advantage of globalization, to compete better. So that means that they will have to look at new technologies, new geographies, new sourcing strategies and things like that. So that's something, which we see right now in the environment. Sandy Notardonato - Robert W. Baird: And you expect that to continue in FY '08 in areas such as financial services as well?

We do see that some of these services, especially Package Implementation, Consulting, etcetera to continue to be strong. Sandy Notardonato - Robert W. Baird: And stint of financial services as well?

Yes. We don't want to get into too much narrow in terms of details. But definitely, financial services being one of the largest industry verticals for us, we do see growth in financial services. Sandy Notardonato - Robert W. Baird: Okay, good. And follow up question is, can you talk about your plan for employee training, the investments that you are making in FY '08 in dollar terms versus FY '07 and also what your CapEx plans are for FY '08?

We're claiming in this year, in FY '07, we spent about $140 million. But then we trained a larger number of people. I think going forward for the next year at this point of time, we have to train about 25,000 people and I would estimate that the cost will remain around the same level, give or take $5 million, $6 million, because the $140 million was for about 30,000 people. Normally, we'll have more lateral training, but lateral training costs less than fresher training. So, this will be the number. On the CapEx, I'll just give you the dollar figures. Bala will give you the figures. V. Balakrishnan: On the CapEx, we spent around $336 million in fiscal '07. Our guidance for fiscal '08 is somewhere between $420 million to $440 million. Sandy Notardonato - Robert W. Baird: Great. Thank you very much.

My friends, this brings us to the end of this conference call. I would like to pass on the proceedings back to Bangalore.

I want to thank all of you for coming on this call. I think we have ended a very good year, and we look forward to the next year with confidence. We believe that we have a clear goal. And as every year goes by, I think, our strategy, our story, our position in the market is solidifying. And we hope to continue to perform on that basis under the new leadership that we have. Thank you very much. See you next quarter.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. TRANSCRIPT SPONSOR :

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