Infosys Technologies (INFY)

Joseph Vafi - Jefferies - Analyst

Hi, good evening gentlemen. A few questions here if we could maybe kind of drill down into some of the new customer signings in the quarter. If the question really is, is if you could maybe generalize or characterize the types of new customers that are joining now versus say a year ago. Do they still for example, have the potential to ultimately grow to the same size as a customer signed a year ago? Are they new to offshore? Are you replacing existing vendors, different verticals or whatever kind of jumps are there, relative to the types of new customers that you are seeing today versus a year ago?

Basab Pradhan

This is Basab Pradhan. The new clients we acquired this quarter, this past quarter are very similar to what we would have gotten a year or so back except that they perhaps reflect the growth rates we are seeing in different verticals which are diverging. We are seeing a lot of growth in communication service providers in that segment and so a lot of these — some of these clients are from CSP. We continue to see growth in our banking and capital markets and some of these clients are from BCM. But I think the one key difference is perhaps the number of client signups from high-tech, which is a sign that the spending is coming back and people are investing in R&D.

Some of our business in the high-tech industry is IT related work and some of it is actually product engineering, so it represents both kinds of work on these client openings.

Joseph Vafi

So if we look at some of these clients relative to their experience in the offshore area, are we still looking at clients in some of these verticals that haven’t really tested the waters that much or verticals that have intend — they are coming in for the first time still?

Basab Pradhan

It’s a mix of both. There is a retailer here who has not done any offshore before and then there is a retailer who has and there is a cable company who has never and then there is a financial services company that has. But again, the way offshore is getting done is fairly different. There are some mature players who do this well and we are one of them and there are some others, other mid-tier players who don’t do this well. So they often dissatisfaction with the way offshore is going, will drive a company to put out an RFP and then seek best of breed players. And that is actually a trend that we are seeing a lot, where companies — they want to get better value and they go out and seek a better company to do it with.

Joseph Vafi

Okay, that’s helpful. If we looked at some of the material you put out on your expected China hiring and the like, how far ahead of the demand curve do you think you are hiring for your development centers in China? And what kind of — what visibility or what kind of commitment do you have from clients to try to increase the mix of services provided out of that geography?

Basab Pradhan

China — We have around 155 people whom we hired there, it is as per the plan. We’re going to reach 200 very shortly, and plans are to hire about — go up to 1,200 this year. As far as the market is concerned we have already started working with some of the multi nationals working in China. Traction seems to be good and we are trying to do global business also from China. This is as per the plan.

Joseph Vafi

Okay. And then maybe one question on — if you look at your top 10 clients today versus a year ago, in terms of their growth potential moving forward or their maturation level, if you could provide some color as to how you see growth opportunities coming out of your top 10 clients today? Maybe the percentage mix of their ability to scale with you, versus other off-shore players or their ability to continue to give you more work as they kind of look to use a portfolio strategy with their IT vendors?

Basab Pradhan

We have a top 10 list that constantly changes because there are companies that do better and then enter that top 10 list, and some of them drop off. But I think the one thing you can say is that the top list, the average account size will continue to grow for a while, that is almost certain. And by definition then you will have a situation where IT spends are generally flat to slightly up. Our share of wallet in those top 10 accounts is going to keep going up. So the question is when are we going to see a slowdown? I think the way to look at this, is the way we’re looking at it, is two different ways. one is, we have to expand the footprint and we have several new services

that can help us expand the footprint and create new opportunities. Our BPO services from Progeon being top of that list. We also have infrastructure management services. And then there’s the whole business value side of things, of how we can help create new opportunities for our clients on the revenue side by using Infosys Consulting, our business solutions. So there’s a lot of focus on our solutions and services in expanding the footprint in these accounts.

The other side of it is how do we actually manage some of these accounts better. And this is not just about the top 10 accounts, but even how do we create those stars in the high growth, but still mid sized accounts, and that requires solid account management, relationship management at the CXO levels. And also, taking our suite of services and giving an integrated view of them in solutions to our clients. So these are the things that we’re working on right now.

Joseph Vafi

Okay. And then maybe one quick one for Mohan. On the Yantra sale, are we expecting any cost savings in the P&L moving forwards, because that business is no longer being funded?

Mohandas Pai

Yantra ceased to impact on costs a long time ago. We just had zero book value for Yantra and we got $11m out of the sale. So there is no cost impact saving going forward, because we have not had any costs from them for quite some time.

Joseph Vafi

Okay. So the business was making money and it wasn’t a cost, it wasn’t an investment center from a P&L perspective?

Mohandas Pai

Yes. It was because a minor minority investment. We incubated the company and it became a minority investment quite some time ago. It had a zero book value fully provided, and we sold it and realized a nice capital gain.

Joseph Vafi

Very good. Thanks gentlemen.

Operator

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