1. All brand names, product names or logos referenced in this presentation are trademarks or registered trademarks of their respective companies or organizations © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- Implications of the US economic situation for IT services and Infosys

2. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- 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.

3. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- The Seeds of the Economic Slowdown in the US were Sown During the Dot Com Boom… Dot-com Boom Spate of new internet business models High valuations Easy venture capital Free spending to reach scale Infrastructure Boom Infrastructure providers thrive on free spending economy High valuations Easy venture capital Free spending to reach scale E-services boom Massive demand surge in industries like securities, consulting Free spending to reach scale Click & Mortar Race Competitive pressure from Dotcoms Lure of market cap Spending to keep up with the Dotcoms Boom economy Free corporate spending Booming capital markets Greater equity ownership High consumer confidence Free consumer spending

4. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- Easy Dot Com … Easy Dot Go Dot-com Bust Profits matter! Stock Markets crash VC dries up Net creation of Dotcoms goes negative Free spending to No spending Layoffs Stock valuations evaporate Infrastructure Bust Infrastructure demand slump VC dries up Few New players Control of spend Lay-offs Stock valuations evaporate E-services challenge Dot-com bust Infrastructure bust Click & Mortar Survival Top-line challenges Write-offs Lay offs Stock valuations evaporate Click & Mortar Survival No more keeping up with the Dot Joneses Prioritized initiatives Refocusing on ROI Lay-offs Down economy Corporate spending slows Capital markets crash Equity linked wealth evaporates Lower consumer confidence

5. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- How Bad and How Long Will It Be? Opinions vary  Merrill Lynch predicts that the US economy will rebound in H2-01  US will grow by 2.1% in 2001 led by a strong H2  Morgan Stanley predicts a mild recession this year  US to grow by 0.8% with further weakness in H2 of this year  Consensus Economics ( a statistical average of leading economists) predicts a Q4 reversal  US grows by 2.0% in 2001  Gartner predicts that the US GDP growth will slowdown to 2.8% in 2001 Opinions vary  Merrill Lynch predicts that the US economy will rebound in H2-01  US will grow by 2.1% in 2001 led by a strong H2  Morgan Stanley predicts a mild recession this year  US to grow by 0.8% with further weakness in H2 of this year  Consensus Economics ( a statistical average of leading economists) predicts a Q4 reversal  US grows by 2.0% in 2001  Gartner predicts that the US GDP growth will slowdown to 2.8% in 2001

6. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- Is the US Slowdown Contagious? % Of US trade (export + import) as part of total GDP for major global economies Today’s global economy is more interconnected than ever through trade and capital flows Slowdown in the US will have varying but significant effects across multiple interconnected economies Impact to the economies of all major developed markets should be expected - including countries in Western Europe  Based upon Q1 growth rates Europe is estimated to grow by 2% against 3.4% (WSJ, May 23, 2001) Today’s global economy is more interconnected than ever through trade and capital flows Slowdown in the US will have varying but significant effects across multiple interconnected economies Impact to the economies of all major developed markets should be expected - including countries in Western Europe  Based upon Q1 growth rates Europe is estimated to grow by 2% against 3.4% (WSJ, May 23, 2001) CountryEx+Im *($ Bn) GDP ($ Bn) % of GDP Canada40569858% UK8514346% Germany8819224.6% France5013204% Japan21146194.5% China116107010.8% Singapore379141%

7. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- A Slowing Economy means Slower Growth in IT Spend Capital expenditure to be impacted by slowdown  Over 50% of capital expenditure in the US related to IT spend  A portion of IT spend is discretionary Key Results of the C-level study conducted by CIO (Mar-01)  Reduced IT spends (2001 growth in spend = 9% as compared to 14% for 2000)  53.5% of respondents felt that their 2001 IT spend will be negatively impacted by the slowdown  Internet systems will continue to be a priority (% of budget in 2001 = 18% vs 2000 = 14%)  47% of respondents had no revenues attributable to internet commerce in 2000 Greater centralization and control in IT purchase (Robert Baird, Mar 01) Implications Slowing IT spend Pressure on margins Longer sales cycles

8. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- The Current Economic Slowdown Has in It Both Adversity and Opportunity for Infosys Adversity Slowing IT services market Pressure on margins Longer sales cycles Increasing competition from other players Opportunity Opportunity to significantly increase market share  Outsourcing trend is expected to continue  Economic situation may favor offshore Opportunity to create Brand Salience  Marketing spend in IT services industry reduced significantly Opportunity to consolidate  Get ready for next stage of growth

9. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- Our Strategy Is to Contain the Downside While Taking Advantage of Opportunities… Continue to manage costs conservatively Continue Investing in long-term capabilities Consolidate operations to prepare for the next growth spurt Prudently manage costs We intend to: manage costs conservatively. Increases in costs should trail revenue growth. sustain margins with greater offshore work Build Brand Salience

10. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- Our Strategy Is to Contain the Downside While Taking Advantage of Opportunities… Increase focus on brand building We intend to: enter into new verticals and high-end services increase spend on marketing Continue to manage costs conservatively Continue Investing in long-term capabilities Consolidate operations to prepare for the next growth spurt Build Brand Salience

11. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- Our Strategy Is to Contain the Downside While Taking Advantage of Opportunities… We intend to: continue investment in capital infrastructure Physical infrastructure across development centers in India Upgrade technology and information infrastructure increase headcount by 1500-2000 this year Will enable us to take advantage of large revenue opportunities continue investment in Sales New offices in emerging markets Greater penetration in Europe and Asia- Pacific Continue hiring in Sales Continue to manage costs conservatively Continue Investing in long-term capabilities Consolidate operations to prepare for the next growth spurt Build Brand Salience

12. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- Our Strategy Is to Contain the Downside While Taking Advantage of Opportunities… We intend to prepare for the next stage of growth: Readying internal company operations for next stage Strengthening middle and senior management Continuing capital expenditure for infrastructure building Continue to manage costs conservatively Continue Investing in long-term capabilities Consolidate operations to prepare for the next growth spurt Build Brand Salience

13. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- In Summary… The external environment presents challenges, largely in the form of a weak economy of uncertain duration We believe Infosys has a resilient business model  A wide range of services woven around a tried and proven Global Delivery Model  De-risked revenue profile  Across economies  Across service offerings  Well managed operations and costs  Proven business development capability Our strategy to meet the challenges that the external environment faces is to  Continue to manage costs conservatively  Continue to invest in building capabilities  Invest in building brand salience  Consolidate operations

14. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- "Infosys is better positioned to meet the challenges ahead"

15. © 2001 Infosys All rights reserved -------- 20 th Annual General Meeting -------- Thank You