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Infosys - A Unique Business Model
Infosys - A Unique Business Model
Infosys - A Unique Business Model
Infosys – A Unique
Business Model
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Safe Harbor
Certain statements in this presentation concerning our future growth prospects are
forward looking statements which involve a number of risks and uncertainties that could
cause actual results to differ materially from those in such forward looking statements.
The risks and uncertainties relating to these statements include, but are not limited to,
risks and uncertainties regarding fluctuations in earnings, our ability to manage growth,
intense competition in IT services including those factors which may affect our cost
advantage, wage increases in India, our ability to attract and retain highly skilled
professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client
concentration, restrictions on immigration, our ability to manage our international
operations, reduced demand for technology in our key focus areas, disruptions in
telecommunication networks, our ability to successfully complete and integrate potential
acquisitions, liability for damages on our service contracts, the success of the
companies in which Infosys has made strategic investments, withdrawal of governmental
fiscal incentives, political instability, legal restrictions on raising capital or acquiring
companies outside India, and unauthorized use of our intellectual property and general
economic conditions affecting our industry. Additional risks that could affect our future
operating results are more fully described in our United States Securities and Exchange
Commission filings including our Annual Report on Form 20-F for the fiscal year ended
March 31, 2000, and our Quarterly Reports filed on Form 6-K for the quarters ended
June 30, 2000, September 30, 2000 and December 31, 2000. These filings are available
at www.sec.gov. Infosys may, from time to time, make additional written and oral
forward looking statements, including statements contained in the company’s filings with
the Securities and Exchange Commission and our reports to shareholders. The
company does not undertake to update any forward looking statement that may be
made from time to time by or on behalf of the company.
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Infosys - An Overview
Continuous Growth
Revenues and Operating Profit
450.0
413.8
400.0
350.0
300.0
(in $ million)
250.0
203.4
200.0
150.0 137.5
121.0
100.0 68.3 60.5
IPO 39.6 35.8
50.0 18.1 26.6
9.5 2.6 4.1 6.3 9.2 13.4
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1994 1995 1996 1997 1998 1999 2000 2001
Revenues Operating profits
2.5
2.01
2
1.5
(in US$)
1 0.93
0.49
0.5
0.22
0.12 0.15
0.05 0.07
0
1994 1995 1996 1997 1998 1999 2000 2001
Earnings per share
450.0
413.8
400.0
350.0
300.0
250.0
203.4
200.0
150.0
121.0
100.0 87.0
68.3 68.0
57.0 57.1
42.0 48.0
50.0 39.6 35.6
25.4
11.4 17.2
-
1997 1998 1999 2000 2001
Per capita revenues (US$ 000) Billed manmonths ('000) Revenues (US$ Mn)
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Business outlook
Investors’ Concerns
Business
Effect of slow-down in IT spending in US on Infosys
Visibility in business
Future revenue growth
Per capita revenues
Ability to increase the per-capita revenues on a go-forward basis
Impact on the per-capita revenue growth rate due to reduced dot-com / venture-funded
businesses
Hiring and Utilization
Ability to attract the best and the brightest
Lower utilization rates coupled with increased hiring
Labor cost escalation due to falling market price of the stock
Margins
Ability to maintain or grow the margins on a go-forward basis
Exposure to dot-com/venture funded companies
Strategic investments and accounts receivable
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Predictability Sustainability
Maintenance Translating clients to partners
Long-term relationship
Offshore Software
Development Centers
Growth
Profitability De-risking
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94.0
92.0
90.0
88.0
(in %)
86.0
84.0
82.0
80.0
78.0
1996 1997 1998 1999 2000 2001
Repeat business (% to total revenues) 91.8 84.1 83.1 90.0 87.6 84.5
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300 90%
80%
250
70%
200 60%
50%
150
40%
100 30%
20%
50
10%
0 0%
FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01
Million $ clients 4 7 9 19 35 42 80
Million $ clients/ total (%) 21.1% 22.6% 13.0% 20.4% 30.4% 21.6% 29.3%
Million $ client revenues / 65.1% 69.9% 57.4% 68.8% 80.2% 81.8% 85.6%
total revenues (%)
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160,000
140,000
120,000
100,000
(in US$)
80,000
60,000
40,000
20,000
-
Q1 FY00 Q2 FY00 Q3 FY00 Q4 FY00 Q1 FY01 Q2 FY01 Q3 FY01 Q4 FY01
Per capita revenues - Onsite 95,511 103,888 103,036 104,028 115,434 135,600 138,400 134,900
Per capita revenues - Offshore 49,536 51,098 53,115 54,756 60,862 64,500 65,200 64,500
Per capita revenues - Blended 62,809 67,975 70,160 71,571 80,959 90,400 89,600 86,200
Per capita revenues - Onsite Per capita revenues - Offshore Per capita revenues - Blended
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Key parameters
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Q1 FY00 Q2 FY00 Q3 FY00 Q4 FY00 Q1 FY01 Q2 FY01 Q3 FY01 Q4 FY01
Gross margin % 48.1% 45.6% 45.3% 43.7% 47.7% 48.7% 47.3% 49.6%
Selling and general expenses % 14.0% 12.4% 12.7% 13.5% 13.2% 14.6% 12.9% 14.8%
Operating margins % 31.0% 30.5% 30.1% 28.1% 32.9% 32.9% 33.2% 33.7%
Excluding one time charge arising on accelerated amortization of stock compensation expense
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Increase employee
productivity by Offer new services
promoting reuse to existing clients
50.0%
80.0%
49.0%
70.0%
48.0%
60.0%
47.0%
50.0% 46.0%
40.0% 45.0%
44.0%
30.0%
43.0%
20.0%
42.0%
10.0%
41.0%
0.0% 40.0%
Q1 FY00 Q2 FY00 Q3 FY00 Q4 FY00 Q1 FY01 Q2 FY01 Q3 FY01 Q4 FY01
Utilization % -IT 75.8% 71.2% 68.1% 76.6% 74.9% 65.4% 66.7% 64.9%
Utilization % -ET 80.5% 81.1% 74.8% 81.5% 85.6% 80.5% 77.6% 73.0%
Gross margin % 48.1% 45.6% 45.3% 43.7% 47.7% 48.7% 47.3% 49.6%
ET – excluding trainees
IT – including trainees
Margins are the key. Bench is for strategic reasons. The cost of
bench is hardly $800 per month per person
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Strategic investments
120.0
100.0
80.0
(in $ Mn)
60.0
40.0
20.0
-
Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01
Capital expenditure 5.0 8.9 10.8 12.2 19.4 25.0 26.8 29.7
Capital commitments (end of quarter) 7.9 14.2 16.0 18.5 26.6 26.4 26.3 34.0
Operating cash flows earned in the next quarter 14.7 14.2 29.0 20.6 43.4 29.0 44.5 -
Cash balances (end of quarter) 102.6 104.1 106.8 116.6 105.8 116.5 110.9 124.1
Capital expenditure Capital commitments (end of quarter) Operating cash flows earned in the next quarter Cash balances (end of quarter)
As of March 31, 2001, we had software development space of 1.66 million sq. ft. capable of accommodating 10,100
personnel and 1.91 million sq. ft. capable of accommodating 8,500 personnel under construction.
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People statistics
12,000
10,000
8,000
6,000
4,000
2,000
-
Q1 FY00 Q2 FY00 Q3 FY00 Q4 FY00 Q1 FY01 Q2 FY01 Q3 FY01 Q4 FY01
Employees (total) 3,943 4,778 4,996 5,389 6,445 7,925 8,910 9,831
Software professionals 3,321 4,122 4,261 4,623 5,594 6,941 7,824 8,656
Added in the quarter 177 835 218 393 1,056 1,480 985 921
In summary
Thank You
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