The creation of a thousand forests is in one acorn - Ralph Waldo Emerson

© Infosys Technologies Limited Business of Communications State of the Market Subhash Dhar Vice President & Unit Head, Communications Service Providers

June 11, 2005© Infosys Technologies Limited Safe Harbor Certain statements made here concerning Infosys’ 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, 2005 and the Quarterly Reports on Form 6- K for the fiscal quarters ended June 30, 2004, September 30, 2004 and December 31, These filings are available at 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.

June 11, 2005© Infosys Technologies Limited Communications is Changing Content Traditional – Voice Now – Data & Video Medium Traditional – Fixed Line Now – Wireless, Cable & Satellite Players Traditional – Phone companies Now – Cable, Satellite, Media, Power, anyone Communications Traditional – two-way, interactive, real time conversation Now – Real-time and Asynchronous, Multi media, Multi-modal, many-to-many, Private and Public

June 11, 2005© Infosys Technologies Limited Phone is like our wallet We don’t leave home without it We don’t like sharing it … very personal It is one of two personal effects you see everyone pull out of their pockets at airport security Pickpockets want to steal it from us Losing it can cause us lot of inconvenience, frustration, even trauma Phone wants to be our wallet It already has our business card, phone book, family pictures, bills and receipts, discount shopping cards It doesn’t yet have money but it has several payment services elements of mobile banking exist consumers in Austria use cell phones as train tickets; in Finland use phones to pay for car fuel

June 11, 2005© Infosys Technologies Limited Phone wants to be many of these in future Entertainment Centre Travel Agent Shopping Assistant Electronic keys to car, work, home Global Positioning System Health monitor Wealth monitor Etc. etc. So which one will it be? … Actually most of the above … pundits call it CONVERGENCE

June 11, 2005© Infosys Technologies Limited What is Convergence? After wide adoption of Internet, there was a lot effort and money put behind making the Internet Protocol (IP) of communication into a carrier grade one As a result over the past decade, several technologies have been developed making it possible to carry voice, video and data together on a single line or network. This is popularly called convergence and is fundamental to most new and next generation services It promises to save billions for telecom operators (CSPs) in operating costs and also enable several new services and revenue streams However, to take advantage of this, CSPs must make large investments in transforming their networks and support systems

June 11, 2005© Infosys Technologies Limited Major Trends in Communications Markets Worldwide wireless voice time has exceeded fixed-line voice time and gap is widening indicating high and rising demand for wireless Corporations and Internet households are hungry for always-on data connectivity leading to high and rising demand for broadband Deregulation has opened doors for new players in this segment Convergence is arguably the most powerful transformation force this industry has seen

June 11, 2005© Infosys Technologies Limited Trouble for Incumbents … Armed with deregulation & convergent technologies, new entrants are able to cherry-pick high value customers from incumbents and sell them high margin services New entrants are big boys like cable, power and satellite companies and also startups with a bleeding edge technology and nothing to lose New entrants are also large Fortune companies in financial services, retail and other segments who can white label telecom operators offering and build affinity customer groups As they compete with new powerful competitors, incumbents have to also maintain traditional voice services where revenues and margins are constantly declining

June 11, 2005© Infosys Technologies Limited … But Convergence means Opportunities for All Fixed line incumbents can offer data, TV and video services need to rollout high speed broadband network and systems to every home and business and invest in video content Cable companies can offer telephony need to upgrade their network for two way communications and invest in sophisticated billing and customer care systems Wireless companies can offer broadband for data and video need to invest in cutting edge technologies and video content Everyone has to protect home turfs Everyone has to transform networks or pay for transformed networks Everyone has to watch out for nimble footed startups

June 11, 2005© Infosys Technologies Limited Everyone has to re-think operating model Services of future will be many in number, have shorter life spans and will change frequently. Will not make sense to have dedicated networks, systems and organizations for each service as in the past Extensive automation and pushing customers to self help models will be important To better utilize assets and get advantage of scale, best practices and continuous process improvement, CSPs will have to think global operations and global partnerships

June 11, 2005© Infosys Technologies Limited CSPs are thinking global in IT and Operations For domain expertise, they look for partners who understand business rules and emerging technologies For rapid time-to-market, they look for partners with flawless execution and scale management capabilities For building new operating models, they look for partners well endowed and investing in flexibility, learnability and reuse For realizing true potential of convergence, they look for partners who understand the interplay between Network, Systems and Services CSPs’ need is super-sized. Hence they look for scale players

June 11, 2005© Infosys Technologies Limited CSP business at Infosys Was started in October 2003 as part of industry based reorganization Until then, most of our Communications business was outsourced R&D work for telecom equipment manufacturers In a span of two years, CSP has become one of the fastest growing businesses for Infosys with over 5,000 people Growth CSP Revenues Telecom as % of overall revs. 79% 12% Total Telecom Revs.68% $ MillionFY % 295 FY % 176

June 11, 2005© Infosys Technologies Limited CSP business at Infosys Besides Application Development & Maintenance, services bought by CSPs include Enterprise Solutions Process Design Network Design Network & Infrastructure Management Process Management Service Testing 4 of top 10 CSPs of the world are our clients

June 11, 2005© Infosys Technologies Limited Case study – Customer Self Service Top CSP in the US Runs huge customer services costs on its call centers Chose Infosys to build online self-help portal for its customers Online self help costs the company 90% less and also came handy in a widespread union strike Enthused by this, client plans to add a voice portal for self- help

June 11, 2005© Infosys Technologies Limited Case study – Leading ISP becomes a phone company A leading Internet Service Provider in the US Flagship dial-up service under pressure from broadband services of phone companies and from low cost dial-up players However, running over competitors broadband, VoIP offered a new source of revenue to help meet the decline in data business Chose Infosys to build and completely test its VoIP service before launching it successfully in April 2005

June 11, 2005© Infosys Technologies Limited Opportunities & Challenges Help CSPs meet cost imperatives unifying & consolidating systems and processes rejuvenating & sustaining legacy systems leverage GDM for transitioning process and operations challenge of scaling very rapidly Help get new services to market quicker and smarter shared systems architecture automate customer service, portals consolidate process and operations offshore networks and service support centers challenge is acquisition of expertise in new technologies like VoIP, IPTV etc.

June 11, 2005© Infosys Technologies Limited Summary Deregulations and Convergence are driving competition Competition is driving prices down for voice business Wireless and Broadband are growth areas CSPs need to contain costs and invest in new network, systems, services and content They need to think differently as they rollout new services They need partners who can manage scale and speed Infosys has the right strategic focus on this segment

June 11, 2005© Infosys Technologies Limited We believe GDM will be to CSP’s Operating Model what Convergence has been to their Business Model

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