1. The Indian IT story Presented by Sriram Chandrasekaran

2. The Seeds of an IT Boom - Liberalization Of The Economy Abolition of licenses Rationalization of taxes Export thrust Reduction of import tariffs Abolition of wealth tax Foreign exchange reforms Free pricing of IPOs Foreign portfolio investments Employee stock option plans

3. Despite its small size in overall economy, software services are one of the most productive part of the economy helped by multiple enabling factors Supply Side Enablers Large technical manpower – 72,000 engineers a year All English-speaking Government incentives (Technology Parks, tax breaks) Significant entrepreneurial thrust India has the most number of SEI CMM Level 5 certified organizations [80% of all the CMM level 5 companies in the world] Demand Side Enablers Attractive wage structure IT boom Maturity of outsourcing Source : McKinsey

4. u Program Management u Analysis and planning u Design u Onsite testing u Implementation Systems Integration u Project management u Detailed design u Coding u Testing u Documentation Systems Integration u Project management u Enhancements u Non-critical support Ongoing Support Strategy & Solution Definition Client Site & Global Centers Offshore Centers Ongoing Support 70%30% Outsourcing u Infrastructure design u Interface development u Applications mgmt u Strategy / approach u Process change consulting u Outsourcing program mgmt Outsourcing u Project management u Change management u Rapid reaction support Solution Development Critical Success Factors for offshoring Intelligent Work Breakdown. Emphasis on quality and process orientation. Global development centers, communication and information infrastructure. Competency development and knowledge management across the company. People management practices for efficiency in people and resource allocation. Cross Border Software Service Through Global IT Delivery Model

5. India has been able to offer significantly differentiated proposition and remains the leader in offshore space High Low High Singapore Hong Kong Holland UK Australia China Philippines Mexico Ireland India Capabilities Qualifications/Capabilities Foreign languages (primarily English) Quality of work/Work ethic Cost differential Location attractiveness Infrastructure –Communication –Basic infrastructure Country risks/FDI incentives –Attractive incentives –Political environment Time zone attractiveness Size of circle corresponds with number of qualified workers Source: McKinsey & co

6. Offshore Outsourcing Risk Factors Cultural issues/clash Language barriers Time zone differences (can be a plus or minus) Distance to vendor Political instability Telecommunications infrastructure General country infrastructure Management challenges All other general outsourcing risks!

7. Risks Must Be Weighed Against the Benefits: Cost and Quality Quality –ISO certification –SEI CMM certification –Internal, documented QA processes –Track record Cost savings –Between 25 percent and 60 percent –Onshore talent not as cost effective –Other costs must be factored in: Telecommunications costs Travel costs Employee overtime to deal with time zone differences

8. Software Exports

9. Key figures

10. Science capital of India – IISc and other engineering institutes Tax Incentives Cosmopolitan culture Availability of high quality manpower Ability to attract good people from all over India Presence of peers Presence of large number of software companies Growth of Bangalore As Silicon Valley

11. Key Indian Players in the Global IT market

12. Sustainability of this growth is likely to be determined by the rapidly changing global macro and micro economic conditions DD Challenges Pricing Pressure Competition from Other countries Rising Customer Expectations SS Challenges Availability of People Wage Inflation People Management Micro Challenges Organizational Efficiency Branding Product Mix Financial Strength Challenges to Future Competitiveness

13. Conclusions India will remain the dominant destination of choice for global sourcing for foreseeable future Wage inflation is unlikely to be a major determinant of competitiveness as long as current trend of 25%+ growth continues. Growth will allow companies to have financial resources for continued quality, HR and facility investments Competitiveness of India and companies like Infosys will not only be derived from lower wage costs but also from: –Greater value and ownership of solutions –Continual reduction of client cost of “doing business” –Greater organizational efficiencies through Continued “optimization” I.e. application of CMM model Indian organizations are likely to form world-class benchmarks of productivity and efficiency in next 5 years, though they are currently competing directly with Global SIs