Sandeep Mahindroo - IR Dr. Vishal Sikka - CEO and MD M. D. Ranganath - CFO Pravin Rao - COO Mohit Joshi - Vice President and Head, Financial Services Europe S. Ravi Kumar - President

Joseph Foresi - Cantor Fitzgerald Moshe Katri - Wedbush Securities Rod Bourgeois - DeepDive Equity Research James Friedman - Susquehanna Financial Edward Caso - Wells Fargo Keith Bachman - BMO Capital Markets

Ladies and gentlemen, good day and welcome to the Infosys Earnings Conference Call. As a reminder, all participants’ lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Sandeep Mahindroo. Thank you, and over to you, sir.

Hello everyone, and welcome to Infosys earnings call to discuss Q3 FY17 earnings release. This is Sandeep from the Investor Relations team in Bangalore. Joining on this call today is CEO and MD, Dr. Vishal Sikka; COO, Mr. Pravin Rao; CFO, Mr. M. D. Ranganath, along with other members of the senior management team. We’ll start the call with some remarks on the performance of the Company by Dr. Sikka and Mr. Ranganath. Subsequently, we’ll open up the call for questions. Please note that anything which we say which refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risk the Company faces. A full statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I’d now like to pass it on to Dr. Sikka. Dr. Vishal Sikka: Thanks, Sandeep. Hello everyone, and welcome to our earnings call, and Happy New Year. You will recall that in October, we have mentioned that in addition to the seasonal headwinds in Q3 on account of furloughs and lower working days, we also have additional headwinds on account of RBS ramp down, impacting our Q3 revenue growth. RBS impacted Q3 revenues by about 1%. After taking into account the above, our Q3 revenue performance was broadly in line with our expectations; Q3 revenues declined by 0.3% in constant currency terms and 1.4% in reported U.S. dollar terms. In terms of growth nine months of the fiscal year over the first nine months of the last fiscal year, our revenues have grown by 9.4% in constant currency terms and 8.3% in U.S. dollar terms. We also marked the significant achievement of crossing $10 billion in revenue on an LTM basis during calendar 2016. I want to thank all the employees from past and present, founders, board members and all those who have helped us achieve this significant milestone. Net employee additions were 5,719 in the first nine months of fiscal ’17 compared to 17,196 in the first nine months of fiscal ’16, which is a significant reduction. We continue our relentless focus on introduction automation across our projects in the backdrop of pricing pressure in traditional services, and we expect this to reflect in our future hiring. On the margin front, we have made progress by progressing on operational efficiencies. The first nine months margins are at 24.7%, which is in the upper half of the 24 to 25 margin band that we had given from the year. While some operating metrics are lower in Q3 as compared to Q2, it should be seen in light of the RBS ramp down, which impacted these beyond the normal Q3 seasonality. Ranga will provide more color on the operational efficiency parameters and margins. We continue to sharply focus on strong execution of our strategy in terms of large deal when it’s top client growth, new services momentum, automation, operational efficiencies and talent engagement. We had eight large deal went in Q3 with the TCV of $664 million. This comprised of $436 million of committed value deals and $228 million of claim work deals. Our talent attention, both at our senior level and overall organization level, has been healthy. Attrition in Q3 came down to 14.9% compared to 15.7% in Q2. Among high performers, we continue to see attrition at consistently lower levels, and I believe this is due to our ongoing investments, our employee equity program, differential rewards for high performers, talent engagement to the Zero Distance, and giving high performers and challenging opportunities to grow into new roles. At the management level, we have a strong committed and stable senior management team. In any large scale transformation, we have to bring in new external talent and promote top talent from within as we did today with the announcement of Ravi as the Deputy COO. Coming to the business outlook for fiscal ‘17, based on our year-to-date performance and our current assessment, we have revised our constant currency guidance from 8% to 9%, to 8.4% to 8.8% for fiscal ‘17. Over the next three months, we will focus on strengthening our foundation for fiscal ’18 with a strong Q4. On the new administration taking office in the U.S. next week, while we are closely watching the development as they unfold, in the absence of visibility on the outcome and the timelines involved in any visa reform, it is difficult to assess the impact of such possible developments on our business. Now, to the execution of our renewed new strategy and our culture of learning; on revenue per employee, if we exclude RBS, we can see that the revenue per employee is improving, despite significant ongoing pricing pressure. I believe this points to the benefits of automation and our efforts in Zero Distance kicking in and our move towards higher value work. In addition, we see the evidence of our strategy execution in our client survey results at their highest levels since we started the survey 12 years ago. And, in particular, at the highest level ever at the CXO level, with the staff improvement over the last two years, 22 points increase at the CXO level. In my personal interactions with clients, artificial intelligence is now at the forefront of everyone’s thinking along with driving digital transformation becoming more agile and bringing ongoing innovation. And clients now view Infosys as increasingly a strategic partner in these fundamental areas. In renew, in Q3, we continue to make progress in key areas. Zero Distance, our program to drive grassroots innovation in every project, continues to thrive and evolve. More than 95% of projects are now covered by Zero Distance as we are -- and we are starting to see this program to monetize into the terms. Key Zero Distance examples include LexisNexis, Arizona Public Service and ABN AMRO, among others. Going forward, our focus would be on collaboration and learning across the Zero Distance streams, and on looking for bigger problem to solve, breakthrough opportunities that can have a significant impact for clients. In our mainframe modernization service, we are seeing continued demand across verticals and are already working with 25 of the top 50 Infosys clients in moving their mainframe and legacy landscapes to the cloud. Clients see clear value in moving their mainframe workers to the cloud, saving as much as 35% of the run cost through Infosys services and through our partnership with the AWS and Microsoft. And in the case of DBS Bank, the move to the cloud improved their database performance and more than 100 times compared to what they were using before. Internally, we are leveraging our own automation solutions to drive greater efficiencies into all of our service lines. In Q3, we estimate that we how of 2,650 FTEs lots of effort, primarily in application maintenance, package system maintenance, BPO, and infrastructure management. Zero Bench, our program to engage employees in value creation while they are between projects, has created more than 31,800 work packets with more than 15,000 work packets already completed through the end of Q3. In new areas, Q3 was a healthy quarter for us in all the new software capabilities. And we saw tremendous client adoption and excitement around Mana, Skava, Panaya and Edge, each of which have their best quarter ever. On Mana, we saw client adoption more than double compared to previous quarters. What is particularly encouraging is that in Q3 Mana was adopted as much for automating IT services work as its solving lot of business problems like reducing contracts to shelf time for apparel companies, driving fraud and risk management for banks, et cetera. Key new Mana clients include Kraft Heinz and AMD. On Skava, we saw a strong Black Friday on retail e-commerce side where volumes are up more than 30%. We also saw great interest from conversion from CPG companies for their direct to consumer strategies and interest from customer services companies on loyalty management from telecom companies to broaen their client engagement and in many other areas. [08.33] for example, have selected Skava to power all of their e-commerce. The EdgeVerve business delivered solid results with 18 wins and 21 go-lives from both Finacle and Edge. At this stage, our leading platform in the so called robotic process automation space has its best quarter ever. And key highlights for EdgeVerve this quarter was a launch of a pilot blockchain network for the Emirates New Business Development Bank in the UAE and ICICI Bank. Panaya had its best quarter ever, both in terms of bookings and revenue. Overall, the new software line of business grew much faster than the Company, more than 33% faster, and we expect software to continue to amplify the work of our teams. In Design Thinking, we continue to work with clients in their key strategic areas. Just one example in Q3 was a rewarding Design Thinking engagement with Fudan University School of Management in Shanghai to help them to re-imagine the learning experience and design their new digital campus of the future. In addition, we are actively piloting an online marketplace, initially leveraging our bench resources for outside work. In culture, learning continues to be our main focus. We have now trained more than 125,000 employees in design thinking. We are accelerating thereof an agile training to up-skill in-demand areas with 50% of our project managers and 7,200 overall employees already trained on these techniques. And we continued to focus on the core competency of new trainees with every pressure now required to be trained in the minimum of three programming languages simultaneously. 10,400 people with this requirement in this program have already been trained, and brought into delivery. To nurture further the future development talent and high performers, we continue to invest, as I mentioned at the beginning, our employee equity program, Zero Distance, our new apprenticeship program, the Stanford Executive Education Program now with 130 of our leaders as a part this program. And the leadership blueprint, all are critical to this and we will continue these efforts. Looking beyond business, in India, the Infosys Foundation has invested in several impactful programs across wide spectrum areas, including rehabilitation, art and culture, education and rural development. Some of the key initiatives of the quarter include the curation of the Infosys Foundation Anupu Festival, sponsorship of a kitchen in Hyderabad in partnership with Akshay Patra Foundations, and an endowment to Sahapedia, an NGO for the development of an online interactive web module on arts, culture and history of India. Development of an sustainable village in Madhya Pradesh through Shiv Ganga Samudra, Gram Vikas Parishad along with many other investments. In the U.S., Infosys Foundation USA celebrated completed a science education week, announcing multiple grants to enable underrepresented students across nine states that had core Computer Science and coding. The foundation also renewed its partnership with Code.org, one of the most active CS education advocacy organizations worldwide. The Foundation honored 10 Computer Science teachers with awards of excellence in partnership with ACM and CSTA, and also launched a new cycle of the entry maker awards for this year. As of September 30, 2016, the Foundation has had significant impact on Computer Science education by enabling more than 134,000 students includes the 2,500 schools across all 50 states to gain access to Computer Science and maker education. This was made possible by supporting more than 2,500 teachers with critical resources such as Computer Science teacher training, new classroom technology, and teaching aids, and Makerspace. In addition, the 179 coding workshops, hackathons, and coding clubs were held during the after-school were also supported by the Foundation. We have continued to build on all of these in Q3. We continue to see many promising signs that we are executing along our strategy, and indeed our longer-term path to thrive in the times of AI. Do not become displaced by automation, but indeed to become a Company of innovators where the AIs of our creation solve the great business problems that we find. Our results and the voice of our clients provide the proof points around there, and we will continue to build on this. I will now hand it over to Ranga to provide more details on our financials. Thank you. M. D. Ranganath: Thank you, Vishal. Hello everyone, Ranga here. Let me start by saying that in Q3 we continued to focus on improving the operational efficiency of business, and maintaining healthy cash flow generation. As you know, Q3 is a seasonally soft quarter due to preloads and lower working days. In addition, as we have stated earlier in October, this time we had additional headwinds on account of RBS ramp down. In dollar terms, our revenues in Q3 where $2,551 million this is a growth of 6% when compared to Q3 of fiscal ‘16. On a sequential basis, revenues were down 1.4%. On a year-on-year basis, when compared to Q3 fiscal ’16, revenues have grown 7.3% in constant currency terms. Sequentially, our revenues in dollar terms were down by 0.3% on constant currency terms. Impact on revenues on account of RBS ramp down was over 1% in Q3, in reported terms. If you look at the first nine months of this fiscal over first nine months of last fiscal, revenues have grown by 8.3% in dollar terms and 9.4% in constant currency terms. Volumes grew by 0.2% during the quarter. On quarter-to-quarter basis, on-take volume increased by 0.6% and offshore volume increased by 0.1%. The ramp down in RBS impacted volume growth by over 2% during the quarter. Realization for the quarter declined by 2.2% on reported basis and 1.1% on constant currency basis as compared to Q2 of ‘17. As you know, there will be quarter-on-quarter fluctuations, hence, and more appropriate indicator of realizations would be nine months of FY17 over nine months of FY16. On this measure, realization declined by 2.8% in reported term and 1.8% in constant currency terms. As Vishal mentioned earlier, this quarter's operating parameters should be seen in the light of RBS ramp down as they were impacted beyond the normal Q3 seasonality. Our utilization, excluding trainees, was 81.9%. Similarly, utilization, including trainees, went up to a healthy of 77.8%. Utilization, excluding trainees, has been consistently above 80% over the last seven quarters due to better talent planning and talent supply chain. Onsite mix stands at 29.8% during the quarter. If you look on a nine month basis, utilization, excluding trainees, improved to 81.6% as compared to 80.7% for the corresponding period last year. This is again an increase. Onsite mix increased to 29.8% in nine months. Likewise, on a nine month basis -- likewise, Subcon expenses were 5.6% of revenues in Q3 in comparison to 6.3% in Q3 of last year. DSO for the quarter was 69 days compared to 64 days in Q2 of '17. This was primarily due to unbilled revenues, which declined by $82 million during the quarter. Coming to operating margins, our operating margins for the quarter was 25.1%, increase of 20 basis points over Q2 of '17. During the quarter, rupee depreciated by 1.2% against U.S. dollar, which helped operating margins by 30 basis points. However, this was offset by 30 basis point decline due to the cross currency impact. Our standard cost declined during the quarter by 130 basis points due to savings on account of lower variable pay and lower leave cost. Lower leave cost was primarily in account of higher leave utilization in the quarter, leave lapsing in certain on-site countries and increasing interest rates. This was offset by decrease realization, which impacted the margins by 30 basis points; increase in CSR contribution, which we have to make in India mandatorily, which impacted margins by 40 basis points; and increase in third party software and other comps of 40 basis points, leading to an overall expansion of 20 basis points in operating margins. Our emphasis on the healthy operating cash flow generation continued this quarter. We generated operating cash flow of $547 million in Q3 compared to $474 million in the last year same quarter. Operating cash flow, as percent of net profit, was 100% this quarter, which reflects healthy cash generation. Our cash and cash equivalents as of December 31st was $5,255 million compared to $5,349 million last quarter. During the quarter, you may recall that we paid interim dividend, including tax of $453 million. We added 9,120 gross employees during the quarter, while the employee count declined at the group level by 66. As Vishal said earlier, our net employee addition in the first nine months of this quarter was 5,719, which is significantly lower than 17,196 in the first nine months of last quarter -- last year. The quarterly annualized attrition on a standalone basis has decreased by 80 basis points to 14.9%. Likewise, at the group level, also annualized attrition declined to 18.4% now it gains 20% last quarter. Q3 saw volatility in cross currency, especially due to changes in political landscape in the U.S., increasing interest rates in the U.S. and expectations of further upward rate revision. We managed to navigate the volatility effectively. On a period end basis, U.S. dollar appreciated by 5.3% against British pound, 5.6% against euro, and 5.2% against Australian dollar. Our hedge position as of December 31st was $1,215 million. We expect near-term volatility in cross-currency and rupee, and we continue to manage the same through appropriate hedges. Yield on cash balances was 7.7% in Q3 ’17 compared to 7.8% previous quarter. We expect yield for fiscal ’17 to be approximately 7.5% as compared to 8.6% in financial year ’16 due to continuing reduction in interest rates in India in the backdrop of demonetization initiative that was effective November 16th. The effective tax rate for the quarter was 28.1%. Full year effective tax rate projection for fiscal ’17 is expected to be around 29%. Our net margin during the quarter was 21.5% as compared to 20.8% in Q2 ‘17. Our EPS for the quarter was $0.24. EPS grew 4.4% on year-on-basis, and by 1.5% on a sequential basis. EPS for nine months this fiscal grew 5.1% in dollar terms. Coming to margin expectations, we will continue to optimize the operational efficiency levers on an ongoing basis. In October, we had indicated that the margin guidance for fiscal ’17 to be in the range of 24% to 25%. For the first nine months of fiscal ‘17, our actual operating margins were 24.7%, hence, we have kept the margin band unchanged at 24%, 25% for fiscal ’17. With that, we will open the floor for questions.

Thank you very much sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Joseph Foresi from Cantor. Please go ahead.

My first question is just on IT budgets for 2017, wanted to get your initial impression on what those budgets look like. And any change in the optimism, particularly in financial services, given the new administration here in the U.S. Dr. Vishal Sikka: Joseph, this is Vishal. No significant change, the balance of course changes towards the newer areas, digital, cloud, some of the AI applications, effectively towards operational efficiencies and better customer understanding, customer experience, and so forth. But no particular change. With regard to BFSI, maybe Mohit you can answer.

So I think on the financial services side, there is a degree of optimism that we have about the spend in the U.S. over the next 12 months; it’s obviously, it has a sub-vertical flavor to it. So on the investment banking and on the asset management side, there is still a degree of caution. But overall, we feel that the cost reduction will remain a priority for our clients in the next year. The savings that they get from cost reduction, right those are going to be driven into transmission programs, which will be positive for us. That’s the perspective we have as of now.

And then just the automation question, I think the idea here is that the automation is going to keep pace with pricing, and be able to offset the pressure there. So that margins sort of stay stable. So, I wonder, could you update us on your thoughts on that over the short and long-term? Do you feel like automation is going to keep pace? And also we’ve seen a couple of, I guess, FTEs taken out. Is that pace of FTE takeout consistent pace over the next couple of quarters? Dr. Vishal Sikka: So, if you look at the pace that we have taken out this FTE effort, it is increasing. We have added to it. It was 2,300 or so in Q2, and it’s now 2,650. So, that number is continually increasing. And yet, Mana is still in the early days of its adoptions; so, none of these numbers actually reflect any Mana and option so far. So, as you said, the basic idea of automation is to outperform the declining pricing curve. And as Ranga mentioned, on a quarter-on-quarter basis, the pricing decline was 1.1% in constant currency, and 1.8%, if you look at it over a nine months period. So, this number is steadily coming down, that’s what I have been talking about for the last two and half years. However, it is not enough to simply outperform the downward pace of that spiral pretty soon that will become table stakes. What is even more important is to ensure that the automation continues to impact the deeper and higher level work, such as application maintenance, 31 application developments and brings more productivity improvement to that. And one of the things that I have found that is extremely important as we bring automation to life, in particular with our Mana platform, is that the same, the automation, it’s not for the automation software to apply just to our own IT services, but it is important for that platform also to really enabler of new kinds of applications that were unprecedented that, like some of the examples that I mentioned before. A lot of companies in our industry are bringing automations simply for their own services. And I believe that by doing that one would not be able to build world class automation software that can stand, that can bring the best of what is known outside in other domains. And therefore it is essential for us to apply the automation software also to building standalone next generation breakthrough application.

Got it, okay. And then -- go ahead.

Just to add to that, I think, coming to the impact of automation positive impact of automation on our end, there are couples of, as Vishal said, to the extent that the internal productivity and automation offsets the pricing decline that would beginning to show. One of the leading indicators, probably that we have started to watch closely, but of course we don’t want to call it as a trend line or anything, but we have started monitoring that very closely is really what is the rate of headcount addition into the Company as compared to the rate of revenue growth. If you look at the first nine months of this quarter, this year, the net headcount addition across the group, including BPO, has been 5,700 people. For the same period, last year, last fiscal nine months, it was 17,000. So, there has been reduction in net headcount. So we are kind of internally monitoring how much of this is really on account of the release of people from the projects on account of higher productivity and automation. The important thing to note is also that the automation impact on the P&L would be much more significant if that happens across the pyramid, the pyramids both on-site in India. So that’s something which we want to closely monitor, so that both on headcount release as well as the quality of headcount release, both are important.

And then last one from me, I wanted to see if I can get your early thoughts on the new administration. One of your competitors had talked about already taking a close look at the way that they deliver their services, based on some potentially protections policies here in the U.S. So, if you could just talk about, is that that something you’re renewing? And I know it's early to tell, but any early thoughts on how you address it? Thanks. Dr. Vishal Sikka: So, there are two parts of that. One is that overall, on a longer term horizon, I see that the administration in going to be a business friendly and innovation friendly kind of an administration. The president elect itself is entrepreneurial business man with a very successful carrier around, based on entrepreneurship. So I expect that -- so our view is that, as long as we are able to be relevant to our clients in that kind of a business friendly, innovation friendly atmosphere, we are going to be okay. And the second part, the near term part, is regarding the potential impact due to visa policy changes and thing of this nature; so, obviously, depending on the nature of the policy that is adopted that there could be impact to this so the work that we do. While we don’t know what kind of policies will be going into effect, we are preparing to address different scenarios based on what might happen. And ultimately it all comes down to basically two things; more local hiring, which is something that I have been emphasizing anyways, and tried that two and a half years ago, I am myself a high level U.S. local hire. And so the more that we can bring local talent to work closely with clients, bring the contextual sense of innovation to their work, and bolster that with deep global expertise coming in from the outside the better. And so we are deeply committed to the U.S. economy growth in there and so forth. We have also seen that in other geographies in Australia, for example. And Singapore, Singapore already enacted the 50-50 law that we have been complying with. And so depending on the nature of the policy that is adopted, we will take the necessary measures and that might have some impact in the near term, which we will see depending on the nature of the policy. But ultimately, the solution here is better local hiring, more strength in the local economies and local markets. And there is strong long-term focus on innovation and software-led the delivery of value.

Thank you. We have next question from the line of Moshe Katri from Wedbush. Please go ahead.

Vishal and Ranga, during last quarter a large portion of your TCV came from renewals. Can you quantify the renewal mix this quarter? And then could that be one of the reasons why we’ve seen some of the pricing pressure that Vishal has been talking about? M. D. Ranganath: Moshe, this quarter it was -- the total number was 664, and out of that 436 was committed value deals and 228 was framework renewal deals.

And could the renewals, actually be one of those factors that’s actually impacting pricing, the pricing compression that we’re seeing?

So Moshe, this is Pravin here. We normally don’t give that split, because seasonally, there is a renewal that it's a net new expense. So, it’s difficult to figure out how much is pure, and even then how much is new. But this time I think we had as compared with last quarter, we had much more new than renew in this quarter.

Can you give us some color on pricing? Could that be one of the reasons impacting pricing for the business? Dr. Vishal Sikka: No, I don’t think so, Moshe. This is independent of that. The pricing decline is something that we see across the industry. We have -- we checked it out in early days, a lot of people used to doubt that may be there is probably something that this was something only we saw. But now we have seen that it is a consistent industry-wide trend, and it applies renewal of existing deals, ongoing projects and so forth. The new services, or both the new software-led services and the new services in general, continued to be highly valued, highly profitable. Some of the things I talk about, for example, around migrating mainframe systems to the cloud, new digital services, AI-based applications, the Mana, Skava, Panaya based services these are all services that have significant margin potential.

And then the digital mix, can you kind of quantify that for the quarter, and what sort of growth rates are we looking at? Dr. Vishal Sikka: So maybe Ravi, Ravi, the question from Moshe is about that the digital mix. Perhaps you can answer that?

Yes. So actually, benchmark or baseline with a market on the digital ecosystem because everybody measures it differently, I have digital services and the digital experience unit which is 100%. The Skava services and the Skava ecosystem is 100% digital. Then there is a part of cloud packages, cloud package applications, which is literally in the digital world because is it is a part of the digital ecosystem, and there is integration services to the backend and digital, which is again digital. So, in effect, every service line has something related to digital. What we do internally is we kind of look at metrics to see whether we are moving up, and are we growing in line with the market spend. And I actually believe that we are seriously competitive in that space, as well as we’re winning a lot of the new spend. Our entire proposition of amplifying human experience by digitizing corporations, primarily through innovation and automation, and that has actually resonated very well with clients. So I really don’t want to put a number on-board, because it would just confuse you because the base lines for each company are very different on how you measure digital. But I actually believe that this is growing significantly faster than the Company, and it is in line with, or rather in line -- and we are a market leader in the space of leveraging digital spend in the market.

And I just want to speak in the last one. So Ranga, your utilization rate was fairly high 81.9%. Are we -- are these sustainable levels for the near-term, I guess, continuing to push utilization rate above 80%? M. D. Ranganath: Well, coming to utilization, if you were to collect last four-five quarters, we’ve being seeing that due to better supply chain management and current planning, we aim to be moving that upwards. You should expect that till about six-seven quarters ago, it is to be consistently below 70, usually just to be between 77 and 80. So, we had this reorganization about with little over five quarters where we consolidated all the service lines in delivery under one umbrella. So that’s the moment of people from one set of each line to another became much easier, we thought that, which is boundaries. Then we also strengthened the planning and the supply chain. So, I think steadily this kind of started inching upwards. So if you look at last seven quarter, in each of the seven quarters, it has been consistently above 80, currently, this quarter 81.9. And if you recollect couple of quarters ago, we have had close to 83, 82.7 to 83. We do believe that around that level, between 83, 84, that level in the near to medium terms is something that we want to plan. And the second one on the utilization is also a denominator effect, which essentially is also equally important, so a combination of these two. Yes, we want to kind of optimize, certainly, above 80 and there is some legroom that we want to do it in the medium term.

Thank you. We take next question from the line of Rod Bourgeois from DeepDive Equity Research. Please go ahead.

I want to ask about Infosys’ longer-term strategy here. Given the increasing role of software-led business in your strategy, what’s your general view on how much of Infosys’ revenues should stem from software assets as you look forward, perhaps to the 2020 timeframe that you guys have talked about? Dr. Vishal Sikka: The, so would have mentioned. So that Rod, there is the impact of software in amplifying the existing services where the software itself may not be monetized, and may become a part of the overall fix price offering or the overall solution that we put together for the client. And the other one is the standalone software business itself where the software is monetized as a service and that could either be licensed an AMC and so forth. When we talked about 2020, $20 billion number, our idea was that 10% of the revenue would come from new services, including software. And currently, it's approximately 5% of our revenue. And we mentioned this is in the fact sheet if you look at it, you’ll see the products and the platform revenues, and they are highlighted at around 5%. So, we are looking -- the game plan is over the next two years to double this thing. And as I mentioned Mana, Skava, Edge, and Panaya together had the best -- each of them had the best quarter ever individually. And Mana’s option has been doubling. We are selling Mana now pretty much exclusively as a service. And Skava is available both as a service and as an upfront license, similarly the Edge product. And Panaya is also exclusively as a service. So, one of the things that we are going to work on over the course of this quarter is how to better -- and then provide to you one more color and the final granularity on how the software businesses evolving. And other thing that we are thinking about over the course of this quarter and in the times ahead is how to expand the go-to-market of this beyond the relatively small number of clients that you think are from a software point of view that a services company has. So our total number of clients currently is about 1,000, and typically it's on a software business you have a much larger client base. So these are things that we are thinking about.

And have you updated your 2020 financial targets, or are they the same as they were when we were speaking about those about a year or so ago? Dr. Vishal Sikka: So the 2020 is an aspiration, we don’t actually have a business plan or a financial plan to get there. We make the plan on a yearly basis, and at a Company level. And individual businesses do have multiyear plans and so forth. But the 2020 is an aspiration that we have kept for ourselves to help shape our thinking, whether it is the renewal of our existing services and business, the kind of new mixes and new horizons to add into that, as well as the bringing in inorganic revenue and investments and so forth through acquisitions and investments. So there isn’t a tangible plan for 2020. But the business plans exist for the individual service lines and at a Company level we do it for the year.

Well, maybe one final point on that. I mean, when you think about that aspirational plan for 2020, what has changed in your mind in the last year based on what you’ve seen in the market and based on the experience you’ve had with rolling out automation. What's changed in your mind relative to those aspirational targets? In other words, are you more confident in the margin target, are you less confident? Are you thinking differently about the mix of revenues that you’re going to pursue for 2020. What's the big change based on the experience you’ve had in the market on how you are thinking today about that aspiration versus where you were a year ago? Dr. Vishal Sikka: That’s a great question. I think that transformation is never easy. And some of the things that we have seen, for example, bringing Mana or automation platforms to life for the existing IT services business is an easier sell, easier for our teams to relate to that and bring that to market. Whereas, brand new solutions on the platform require a different kind of DNA, different kind of a mind set, so we need a combination of both. Similarly, on the pricing front, I would say that ever since I started, I have been talking about the downward pricing pressure. And that has, in many ways, intensified and continued and has intensified. So there is no doubt that this is a secular trend that is heading in a very more fundamental way impacting the industry. And you can see that also and the moves being made by others in the industry. So, there is no doubt that software-led software amplified services strategy is the right one here. And the other part of it is that it has to be, as I mentioned earlier in response to another question, it has to be not only a software-led or a software amplified services strategy for our existing services, it also has to be that the software also brings value for additional use cases. And this means that quickly the software business would need to expand beyond, for example, the top 500 clients that we have. So we have to, overtime, think about additional go-to-market channels and so forth, in bringing that to life. So those have been, as we have gone through this journey, those have been some of the learnings that we have found. Of course in the near term, this is still quite early. In the term, we are busy for the next 12 to 18 months. We are busy bringing these software amplified services to our existing businesses, to our existing services, to our existing clients. And as we expand beyond that, these new strategies would start to play an important role.

Thank you. Next question is from the line of James Friedman from Susquehanna. Please go ahead.

My first question is for Ranga. I was wondering where we are with the RBS journey? I apologize we can’t remember. But are we closer to the end than the middle of that? M. D. Ranganath: If you recollect in August of 2016, we announced, when we announced the ramp down, 3000 people. We had said that much of the impact will not be in Q2, but in Q3 and Q4. But on a sequential basis, we do not see, by enlarge, negligible impact on a sequential basis in Q4. So, that’s where the RBS impact. So if you look at Q3, it was a little over 1.1%.

Just so I heard you’re right, it sounds like we’re done with the RBS transfer? M. D. Ranganath: Very negligible in Q4, very negligible…

So this is Mohit. And I can confirm the largest part of that impact has gone, so this is something that’s just a very small residual piece left in terms of the impact.

And then, Vishal, I know it’s early days. But could help us to think about what some of the factors might be that would encourage fiscal 2018 to grow, either slower or faster than fiscal ‘17? Dr. Vishal Sikka: I think, first of all, we have to deliver a strong Q4 to help establish a great base for the beginning of the year. So, my entire team is here, and just to be absolutely clear. But beyond that, I think that my sense is that, I mean, if you just look at the overall atmosphere around, independent of the seasonal or the event-oriented things, whether it is Brexit or the U.S. presidential elections and so forth, the bigger change that is happening in the world around us is the technology-driven change. It is a change where every industry, every business is going through a very, very fundamental transformation towards software, towards AI, towards technology. And so therefore, my view is a deeper embrace of our strategy at an even more accelerated base is going to be necessary in FY ’18. And I’m really -- what my experience this year has been that every business is looking for advice, every business is looking for strategic partners to help them think about their journey. In many ways, the traditional models of consulting and strategy and so forth don’t really deliver the results. If you think about the Fortune 500 over the last 10 years, ever since the iPhone was launched, I mean, something like 34%, 35% of the Fortune 500 companies are not in the Fortune 500 anymore. Some of them have actually gone out of business. And that seems, the way I look at it, it seems to me to be a profound failure of the source, the strategy, the consulting, the innovation and enterprise. And I think that as companies think about this exponential and deeply accelerated transformation that is happening in the world around us, around technology, they’re looking for new kind of a partner to help them achieve, both their cost savings that can outpace the disruption that comes, as well as in particular going in the new areas and new ways. So, the more that we bring these capabilities, both in our existing services and in our new services to our clients, the better that we become at articulating and monetizing these opportunities, the better off we will be. So these are -- this is going to be, I mean, fiscal ‘18 is going to be a pivotal year in this transformation journey. And I’m really excited. I mean, if you look at our customer satisfaction survey, in many ways, the first survey CSAT survey that I saw when I started came in a month after I joined Infosys. It was really depressing to see that one back then. And ought of the thinking that we put into place, the Zero Distance, the embrace of automation, and in particular the massive roll-out of Design Thinking and creating a culture of grassroots innovation and everything that we do. They’re all motivated by the voice of the customer that I heard at that time. And in two years we have seen a dramatic change in that. We have been doing this survey for something like 12 years, and in those 12 year, this is the highest rating that we have ever had from a client. And our CXO scores, in particular, have jumped dramatically in these last two years. So it tells us that even that is early days and we are still impacted by currency, by the RBS type ramp down, and furloughs and all these things that apply to everybody and the downward pricing pressure, it does tell us that in a very fundamental and deep routed way, the change that we have been putting into place is working.

Thank you. Next question is from the line of Edward Caso of Wells Fargo. Please go ahead.

I’m curious to hear your thoughts on the Indian startup market. From the sense of is it taking away some of your better talent. And also are you looking at it as a source of ideas where you may try to acquire some of these new concepts and roll them into the Infosys portfolio? Dr. Vishal Sikka: Ed, how are you man? You sound very different on the phone. And that’s a great question. I mean, the Indian startup scene is a extremely exciting one that has ton of energy, ton of interest in that. But if you look at the broader context, I mean, the unemployment rate among Indian engineering graduates is super high, it is sky-high. The largest employers of Indian IT graduates are actually companies like Uber and Dominos, and so forth. This is a very tragic situation. If you look at our own thing, what I just talked about what Ranga has just talked about the first nine months of this financial year, we lowered the amount of hiring from 17,500 or so people in the previous year for the first nine months to about 5,700 this year in the first nine months, which means that our ability to hire better talent is in fact improving, not getting worse because of the startup scene. We in fact deeply encourage the startup scene. We want the startup to succeed. We want to be the company that can bring the startups product and services to live, to market, and the goal of the market. And we have been investing, we just invested in a drone company that make autonomous drones for delivery and so forth. We have invested in a startup incubator here, and so forth. So, I think that in many ways as I look back on the evolution of the IT services industry over the last 15-20 years, it has been a great driver of job growth in India. And now a lot of that has happened because of jobs that are increasingly mechanisable, that are increasingly susceptible to automation. These are the kinds of jobs that have moved here. And today the IT services industry employ something 3.6 million, 3.7 million people, but the large number of these are working in jobs that are easier to -- that are more prone to automation. So, these jobs are going to overtime go away. And therefore the long-term future of the Indian employment scene and the Indian high-tech scene has to be in a combination of automation and innovation. It has to be in entrepreneurships. So I think the more that we encourage entrepreneurship within our companies, as well as within the startups, the better.

Can you talk about your hiring plans in the U.S. Obviously, you must be thinking about positioning for, however, the U.S. visa situation, may or may not change. What efforts have you done? And any kind of numbers you can put to that as far as percent of workforce that’s local? Thank you. Dr. Vishal Sikka: So this is an area that we feel that extremely important, over the last two and half years, we have been focusing heavily on this. And now obviously in light of the new policies, this is something that is going to be ever more important. Ravi has been studying this extensively, and perhaps Ravi you can add a little bit of color to this. S. Ravi Kumar: Yes. So, while the legislation and the law, and the bills are passed and it's probably going to take time, irrespective of that, we have being very focused on local hiring for the last few quarters. In fact, we started hiring fresher from U.S. campuses in the past couple of years. So, that will continue. Our focus is to hire local and supplement skills, which are not available with the visa program. Otherwise, the focus is to hire local, both in terms of experienced hires as well as fresher from campus. We are going to step it out with more enablement and training locally, so that we could start hiring adjacent capabilities, wherever we think those specialized crews are not available. We’re also looking for setting up specific hubs, which we have experimented with in the last couple of years. And we want to continue to do that in terms of availability of talent pools and classes of customers where they are available. So, it's a very comprehensive plan of looking at local hiring from campuses to one to four year experienced folks, adjacent capabilities, as I said, to specialized skill training and lateral hiring. So, we will continue to keep that focus and continue to invest. This was being done irrespective of how the legislation takes course.

Hopefully, my last quick question here is the top 10 year-over-year performance was down meaningfully. Is that all RBS or is there anything else among the top 10 clients that are waiting on those statistics for your top clients? Dr. Vishal Sikka: So, Ed, RBS of course is a huge part of that, and then there is seasonality. Some of those companies are high-tech and manufacturing companies, and retail companies that have a significant impact in Q3. So, we have a very deep relationship with our top 25 clients. And as you know year and half or two years ago, that was something that used to suffer, and we spend a lot of time and energy in rebuilding those relationships and strengthening those. So, I am not particularly concerned about the statistics.

Thank you. Next question is from the line of Keith Bachman from BMO. Please go ahead.

I wanted to ask two questions, first one is on pricing. The indicated pricing was a little bit worse this quarter. Where was the variance generated from? And would you insist to pay it if you look over the course of calendar year '17, would you expect pricing to be worse than the little over 1% that occurred this quarter? M. D. Ranganath: Hi, Ranga here. If you look at the pricing, I think, quarter-to-quarter pricing, our realization decline may not be the very accurate indicators, because in a particular quarter, certain project ramp ups happen and that can alter or rather amplify our understate as the case maybe the pricing. Probably the more stable and more, probably a predictable indicator would be, reliable would be on the much longer period of time. So, as I was saying in my script, nine month over nine month, which is on year-on-year basis and constant currency about 1.5% to 1.8%. I think if you look at previous year also, in FY ‘16 or FY ‘15, we had a similar 1.5%. 1.1%, I would say, between 1.1% and 1.5%. So, at this point in time based on what we see on a more multiple quarter basis, we expect that to be in the current level really, around 1% to 1.1%.

My follow-up question relates to something that was commented on previously. And if we look at the growth rate this quarter on a constant-currency basis, a little over 7%, you’re guiding the March quarter to be a little over 6% on a year-over-year basis constant currency. As you think about that growth rate, as you look out over the next 12 months compared to the hiring structure, is there implication that this is the sustained growth rate on your ability to maintain your cost structure and your ability to maintain your margins? Just wondering if you could elaborate a little bit on that? M. D. Ranganath: Sure. I think that’s a good question. Let you just give a comparison between last year and this year itself. If you remember, last year, our constant currency growth was 15.2% and our operating margin was 25%. And if you look at -- and the first nine months of last year the operating margin was 24.8%. So, if you fast forward to this year, the first nine months operating margin is same, 24.7%, and despite the constant currency growth being at least 300 to 400 basis points lower. So what impact has happened is we have kind of leveraged the operational efficiency pieces, the utilization and so on and so forth. So that has happened this particular year. So essentially, even though the constant currency growth for the first nine months was 300 to 400 basis points lower than the corresponding period last year, we maintained the operating margins. Now, coming to the growth rate for the next year is the current, as well as the Q4 how does it indicate. I think, Q4 exit rate is typically very important for that, because of the compounding effect that sets a very good, typically sets a very good pace for the following year. So if you recollect last year as well, we focused on strong execution in Q4, and we grew 1.6%, and unlike the previous several years where, where we very used to be negative, for example, if you look at fiscal '15, Q4 was negative 2.6%, prior to that negative 1%, prior to that negative. Last year Q4 was the first time in more than three years with by focusing on strong execution and being the importance of Q4 for Q4 exist rate for the following year, we had focus. So, I think our endeavor is to focus on execution in Q4, and see how -- what we delivered in Q4 and that gives us much more credible basis for forecasting FY18.

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand over the floor back to Mr. Sandeep Mahindroo for his closing comments. Over to you sir.

Thanks everyone for joining us on this call. We look forward to talking to you again. Have a good day.

Thank you very much, sir. Ladies and gentlemen, on behalf of Infosys, that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.