Infosys Technologies (INFY)

Pankaj Kapoor

Fine. Thanks a lot.

Moderator

Thank you very much sir. Coming up next is a question from Mr. Supratim Basu of Deutsche Bank. Hello Mr. Basu?

Supratim Basu

Hi, can you hear me now?

Moderator

Yes sir, please go ahead.

Supratim Basu

I had a quick question on the Sarbanes-Oxley Act and why this is affecting the financial services business. Could you just give us a bit more detail in terms of why this is an issue today as opposed to say two quarters back and why you think that this goes away after a quarter?

Kris

Q4 the growth was 6%, so it has actually declined from the previous quarter. The issue is the pace at which decisions are made on new initiatives and new projects while the senior executives are figuring out the implications, what they need to do, etc. The requirement to comply etc, is being rolled out as we speak, right? So that’s the reason why it is making its impact felt right now.

Supratim Basu

So essentially what you’re saying is that once we are through this June deadline, things get back to an even field.

Kris

Yeah, so that is what we have said. Q2, Q3, Q4 should be better and we are comfortable about the guidance for the year.

Nandan

Yeah. I think also Supratim, what’s happening is that we have a large number of clients who are right now at a more mid-size clients, may be in the $5-20 million kind of range, and we believe that they also have a lot of opportunity for growth. We are focusing and investing in those clients, and we think they will also deliver growth. So I think the combination of some of the compliance, pressure easing, as well as the fact that we think that the organizational things happening with the clients will stabilize, as well as the growth from these mid-size clients, all this we think will start picking in by Q2, which is why we are confident about the guidance we have given for the year.

Supratim Basu

Right, understood. Basab you are confident about that account-by-account plan actually sounds very good, anytime you are willing to share that, we’ll be all ears. Having said that, I was just curious about this client comment that you have made in the morning that one of your top 10 clients are going through a major recast.

What is really the relevance of this data point from our perspective?

Nandan

No I think, we may not go into individual account plans but let me explain some conceptually. See one of the things that we are trying to do with our accounts, Supratim, is that we are tying to build what we call as multilevel client relationships. What that means is that we need to have relationship with the people at the director level, at the VP level, and the board level and so forth, and obviously part of the reason for doing that is to de-risk dependence on one individual. At the same time, what happens is that if a key individual leaves or there is a reorg and the boss changes, there is a period when there is a certain amount of uncertainty and so on, and that’s whether we like it or not, no matter how many multilevel relationships you do, those things do have an impact in the day-to-day basis, and at the end of the day really we are dealing with 90 day segment here called quarters. I don’t know whether we should go into too much of which accounts because also it’s a confidentiality issue for our client. But I think, any organization normally even they do something like this, they quickly put new management in place, so things go back to order very quickly. So we are confident that whatever are those handful of customers where there have been something and it so happened that also I guess in a sense by coincidence they all happen around the same time. We believe that they’ll all stabilize by June and then we will be back to business with usual in those clients.

Supratim Basu

Sure I get that one. My question was a bit different, which is that, why give out the data point about the Top 10 clients being in a reorganization or a recast, if you are not willing to quantify the impact?

Nandan

Why did we say that and we should not going to quantify them?

Supratim Basu

Correct.

Nandan

No first of all, we have not said that this is happening in all of our Top 10, not at all. It is happening in two or three. But more importantly, the reason we are saying that is because we want to be clear about the two or three reasons why we are having a flat quarter and we thought that this will help to throw color on that, at the same time, as you will appreciate, even the individual customer confidentiality we can’t go into details beyond that.

Supratim Basu

Sure. Okay. A final question on the head count and revenue growth expectation. You were talking about 28-30% revenue growth forecast for this year and you’ve got employees going up by about 12,600 people, that’s about 34% growth. Now you have also said that pricing is going to be flat and assuming that utilization is flat as well, there is some level of disconnect between these two numbers. I mean, is that a mix issue or is it something else?

Kris

See 12,600 is for the group, that’s a gross number for the group. Second, currently our utilization is about 76% excluding trainees and 73% including trainees. So we have factored all these in giving out this 12,600.

Supratim Basu

Okay. Thank you.

Mohandas Pai

Supratim, the disconnect could extend differently because you are looking at a 12 month period whereas the planning horizon is slightly larger. For example, we’re going to add 20,000 seats. We are not going to add 20,000 employees this year.

Supratim Basu

No sure, sure.

Mohandas Pai

So these are all data points we’ve seen consistently over a period of time.

Supratim Basu

No, I appreciate. I was just looking at it more from a point of year-end revenue growth target in dollar terms of 30% with employee growth target of 34%, pricing assumed to be flat, and I assume utilization will be flat as well, hence the disconnect, but I understand. Okay. Thank you guys then. Good luck gentlemen.

Moderator

Thank you very much sir. Next in line, we have Mr. Anantha Narayan from JM Morgan Stanley.