Transcript Financial Performance – Year ended March 31, 2002

State of the Markets and New Initiatives
Infosys’ response to the developments in the marketplace
© Infosys Technologies Limited 2001-2002
This presentation may contain certain forward looking statements.
The company may not achieve results as expressed or implied by
such forward looking statements. Actual results could differ materially
from those expressed or implied in such forward looking statements
due to a number of factors including those discussed under the head
"Risk factors" in the company's filings with the United States
Securities and Exchange Commission. Do not place undue reliance
on these forward looking statements. This presentation contains
references to findings of various reports available in the public
domain. The company makes no representation as to their accuracy
or that the company subscribes to those findings. They are provided
only by way of information.
June 08, 2002
© Infosys Technologies Limited 2001-2002
Tension in the region
» Visits to India getting postponed / cancelled
» General sentiment about business with India getting
affected
» There is no short term impact, but if situation persists, this
may have a long term impact
» Infosys has a robust BCP
» This is being further enhanced
» We are in constant touch with our clients to reassure them
about the situation
June 08, 2002
© Infosys Technologies Limited 2001-2002
How We Navigated Last Year
© Infosys Technologies Limited 2001-2002
The year that went by…
» Economic slowdown
» Recovery affected by events of Sept 11th in the U.S.
» Met our guidance of 30% growth
» Consolidated and built organizational strengths
» Exercised cost control
» Managing under low visibility
» Operations planning process to align recruitment
» Budgeting on quarterly, not annual basis
» Linked salary hikes to company performance
» Freeze on support department hiring
June 08, 2002
© Infosys Technologies Limited 2001-2002
Managed cost and efficiency
6%
5%
4.3%
4%
3.2%
3%
2%
1.2%
0.5%
1%
0%
-1%
-2%
Q1
Gross savings
June 08, 2002
Q2
Q3
Less increase in H1B compliance cost
Q4
Net savings
© Infosys Technologies Limited 2001-2002
Built competencies
» Strengthened performance orientation
» Focused hiring
» Customer facing and consulting skills
» Built the next generation of leadership
» Won International Corporate University Exchange Award
» Ensured employee loyalty through good times and bad
» ESOPs, No layoffs
June 08, 2002
© Infosys Technologies Limited 2001-2002
Built new drivers of growth
» Created new service lines – ITO, BPM
» Strengthened existing services
» Consulting, Package implementation
» Expanded into new verticals
» Utilities, Healthcare
» Expanded into new geographies
» DCs close to customer & new marketing offices
June 08, 2002
© Infosys Technologies Limited 2001-2002
Awards won
» First rank in the Review 200 – Asia’s leading companies survey
2001, by the Far Eastern Economic Review
» First rank in the Business World’s survey of “India’s Most
Respected Company”
» First rank in the Best Employer Study by the Business TodayHewitt study for 2nd year in succession
» First rank in the Dataquest “Employer Perception Survey”
» Golden Peacock Award for excellence in corporate governance
» Award recognizing contributions in the social area using IT by
Computer World magazine
» Best regional software house award by Financial Technology Asia
June 08, 2002
© Infosys Technologies Limited 2001-2002
Key learnings
» A strong, de-risked business model helps succeed in both
growth and recessionary environments
» Openness and adaptability to change is key
» Cut costs, but focus on sustaining growth even in difficult
times
» Capitalize on opportunities thrown up by the turbulent
environment
» Offshoring opportunities
» Change in competitive landscape
June 08, 2002
© Infosys Technologies Limited 2001-2002
Market Trends
© Infosys Technologies Limited 2001-2002
Industry trends continue to be attractive…
“Base Line Spending Growth”
“Significant Growth in Offshore Outsourcing”
5 Years CAGR
5 Years CAGR
9.42%
Education & training
11.05%
Development &
integration
Offshore
outsourcing
9.87%
Consulting
Business process &
transaction
management
14.17%
IT management
services
Overall IT
services *
13.19%
Software
maintenance
11.99%
13.10%
0%
5%
10%
15%
20%
25%
30%
Current market size – US$ 672 billion
June 08, 2002
26.00%
Data Source: Gartner Dataquest, Goldman Sachs
0%
5%
10%
15%
20%
25%
30%
* Excludes hardware maintenance
© Infosys Technologies Limited 2001-2002
The drivers for outsourcing becoming more
important …
» Focus on “core”
» Financial restructuring
» Maturity of concept
» Accelerating ROI
» Innovation on the supply side
» Advancements in enabling technologies
June 08, 2002
Data Source: Goldman Sachs, and Infosys Team Analysis
© Infosys Technologies Limited 2001-2002
…with offshore outsourcing becoming a compelling
option for the firms worldwide
Drivers
Offshore firms
maturing with
strong value
proposition
Reduce cost &
remain competitive
June 08, 2002
Trends
» Offshore outsourcing to grow by at
least 23% during 2002
» Companies offshoring higher end work
like design and high-level strategy
services, architecture design, etc.
» New services like business process
outsourcing in India to grow by 80%
over the next 3 years
Data Source: Goldman Sachs, Giga and Infosys Team Analysis
© Infosys Technologies Limited 2001-2002
…with offshore outsourcing becoming a compelling
option for the firms worldwide
Drivers
Trends
» Increasing acceptance of Indian vendors
Offshoring related
risks well mitigated
» IT services from India increased by 29% to
Rs.36,500 crore
» Indian companies now service nearly 220
Global 1000 companies
» Nasscom forecasts a future growth of 30%
for FY 2002-03
Skill shortage &
specialist
requirements
June 08, 2002
» Indian quality benefits are understood &
quality is increasingly important to global
companies
» The entry level projects for newcomers to
substantially increase from the existing level of
$ 100,000 to $ 300,000 per project
Data Source: Goldman Sachs, Giga and Infosys Team Analysis
© Infosys Technologies Limited 2001-2002
How are we responding to this
© Infosys Technologies Limited 2001-2002
We understand the opportunities & challenges and
are offering strong value proposition to our clients
A large global organization
…demonstrating consistent performance & profitability
…cost consciousness plays to our TCO strengths
…pricing pressures handled by cost control, improving utilization
An end-to-end business transformation player
…with appropriate brand awareness and positioning which also
ensures participation in large strategic offshoring deals
June 08, 2002
© Infosys Technologies Limited 2001-2002
We understand the opportunities & challenges and
are offering strong value proposition to our clients
Reckoned for creating customer & employee value
…building deep relationships and loyalty
…and belief in excellence in execution
Leveraging the global delivery model
…with sustained excellence in execution as well as educating clients
and prospects about complexity of GDM
…implemented a comprehensive contingency plan to address
risks/client concerns
Managed by talented, best-in-class people
…with a multicultural, strong performance ethic
June 08, 2002
© Infosys Technologies Limited 2001-2002
Infosys’ PSPD model continues to be the center of
our managed growth philosophy
June 08, 2002
© Infosys Technologies Limited 2001-2002
We are offering services from concept to
implementation…
Management Consulting
Prime Vendor Status
Integrated Business - IT Roadmap
Enterprise Architecture Definition
Technology - enabled Business
Process Re-engineering
IT
Outsourcing
Business
Process
Outsourcing
Systems Integration
Package Evaluation and
Implementation
New Application
Development
Maintenance
Re-engineering
Existing Services
June 08, 2002
New Services
Not currently addressed
© Infosys Technologies Limited 2001-2002
…as well as looking at acquiring companies to
broaden our value offering
» Acquisition not just for increasing top and bottom line
» Should add strategic benefit to give competency in new and
desired technology areas
» Enable us to enter the new markets and industry domain
» Bring in the complementary skillsets
» Currently in the process of evaluating potential good acquisition
candidates
June 08, 2002
© Infosys Technologies Limited 2001-2002
We are continuously expanding footprint
across key dimensions
Dimension
Growth in market footprint
Vertical footprint » Expanding into new verticals – Government, Life
sciences, Pharma
» Consolidating our presence in existing vertical
segments
» Significant growth in new vertical segments entered in
last 3 years
» Revenue from Transportation segment increased
from US$ 5.6 million to US$ 14.7 million
» Revenue from Energy & Utilities segment increased
from US$ 6.1 million to US$ 10.9 million
June 08, 2002
© Infosys Technologies Limited 2001-2002
We are continuously expanding footprint across key
dimensions
Dimension
Growth in market footprint
Geographical
footprint
» Increasing revenue from Europe and rest of the world
» Revenue from Europe more than tripled over last 3
years from US$ 30.1 million to US$ 106.2 million
» Revenue from rest of the world increased from US$
11.8 million to US$ 39.8 million
» True global footprint – 35 cities, 10 offshore centers, 6
proximity centers across US, UK and Canada
» Talent acquisition in client geographies
June 08, 2002
© Infosys Technologies Limited 2001-2002
We are continuously expanding our footprint across
key dimensions
Dimension
Growth in market footprint
Service footprint » Expanding services portfolio
» Systems Integration, Business Process
Management and IT Outsourcing
» New services started in last 3 years
» Revenue from package implementation increased
from US$ 12.2 million to US$ 53.4 million
» Revenue from consulting increased from US$ 3.3
million to US$ 22.9 million
» Revenue from engineering services increased from
US$ 4.1 million to US$ 14.1 million
June 08, 2002
© Infosys Technologies Limited 2001-2002
Key new initiatives taken by Infosys over the last
few months
» Progeon Limited - Business Process Management (BPM) venture
» Infosys to invest US$ 5 million. Additional funding of US$ 20 million
from the Citigroup
» Initial focus on transaction processing and accounting services
» Will be offered in multiple forms – business process re-engineering,
shared services platform and business intelligence services
» Frameworks developed on Infosys’ InFluxTM methodology
» Signed a large deal with GreenPoint Mortgage, the sixth largest US
wholesale mortgage lender, to manage its back office functions
» IT outsourcing
» Systems integration
June 08, 2002
© Infosys Technologies Limited 2001-2002
Key deals won by Infosys in recent times…
»Eastman Chemicals expands relationship
with Infosys by designating it as a strategic ebusiness partner
»Working with Cardif, the insurance subsidiary
of BNP Paribas, the largest financial
institution in France to roll out end-to-end IT
systems and developing a core insurance
product
June 08, 2002
© Infosys Technologies Limited 2001-2002
Key deals won by Infosys in recent times…
» Developing an online fund transfer option for Northwestern
Mutual, a leading provider of individual life insurance in the US
» Extending telecom industry expertise to Cable and Wireless
(C&W) subsidiaries by providing service positioning solutions for
client networks
» Helping a major international pharmaceutical enterprise to
design and develop a mail-order pharmacy and durable medical
equipment claims process
» Commissioned by CustomerWorks, a joint venture between two
of Canada’s largest utility organizations, to perform a high-level,
customer-focused risk assessment program
June 08, 2002
© Infosys Technologies Limited 2001-2002
Revisiting the winning formula…
» Strong relationship
»
»
»
»
»
»
model
A wide portfolio of
services
Excellence in
execution
Processes and
systems
Global delivery model
Sustainable margins
Understood the
pressures of the capital
market environment
June 08, 2002
 88% revenue came from repeat






business
New services fill portfolio
Investments in process maturity
Process investments, organization
structure, knowledge investments and
leadership institute ensure growth is well
managed
Infosys pioneered this model and uses it
to the maximum extent – 70% effort
offshore
Net income margins of 30% through the
last 6 challenging quarters
Met or exceeded guidance for the past 9
years
© Infosys Technologies Limited 2001-2002
Thank You
www.infosys.com
© Infosys Technologies Limited 2001-2002