The Next Leg Up Managing Scalability Culture and

The Next Leg Up: Managing Scalability, Culture and Growth Nandan M Nilekani Managing Director, President and Chief Operating Officer Infosys Technologies Limited Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Infosys has grown significantly in the past. . Revenues grew by over 500% and Net profits by over 600% in four years Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

The profile of business is also changing… n Newer technologies have contributed to a greater proportion of revenues n Complexity of projects has increased n Customers have increased from 19 (1995) to 250 (December 2000) n Per capita revenue has grown from $42, 000 (1997) to $89, 600 (December 2000) n Spread of business and operations have widened Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

throwing up a few challenges… n Bureaucracy affecting responsiveness to market n Dilution of work culture n Impact on quality, productivity and customer satisfaction n Attracting and retaining talent Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

making it imperative to… n Scale-up capacity n Maintain agility even while growing rapidly n Create leaders at all levels n Relentlessly pursue operational excellence n Accumulate and enrich intellectual capital n Strengthen organizational planning activities n Manage risks proactively Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

The key aspects of growth are… Key Dimensions Key Drivers Organic Growth Inorganic Growth Increasing No. of Employees Diverse Employees Growth Customers – Increased No. , Size and Diversity Large No. of projects Broader Service Portfolio Acquisitions & Investments Infrastructure Requirements Key Implications Opportunities Threats Leveraging Visibility Bureaucracy Leveraging Capabilities Loss of agility Key Challenges Expectations Employee Morale Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 Scaling Up Alignment Organizational response Ensuring Excellence © 2001, Infosys Technologies Ltd.

Managing growth implies managing… n Scalability challenges - Workforce Infrastructure Processes Technology n Risk n Customer expectations n Investor expectations Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Workforce Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001,

Scalability challenges - workforce Employer of Choice Acquiring Talent Innovative Expansion of Pool Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 Scalability © 2001, Infosys Technologies Ltd.

Scalability challenges - workforce Employer of choice: The Business Today-Hewitt Study, to find out which companies have really charged the 'emotional and intellectual energy' of their managerial employees, rates Infosys as the Best Employer of India in a survey of a hundred and fifty five companies Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - workforce Expanding our pool: n Focus on learnability n Shift gear - engineers with 1 -3 years of nonsoftware experience willing to switch to s/w development n Alternate pools - CAs and MBAs n Domain experts in areas like finance, insurance, telecommunications, CRM etc Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - workforce Scaling up: n Moving closer to the talent pool - Local DCs - Global PDCs n Quarterly testing model ( 10, 000 candidates tested on the same day across 10 locations ) n Increased efficiency through systems n Distributed recruitment model Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - workforce Learning Value Add Enhancing Retention Emotional Value Add Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 Financial Value Add © 2001, Infosys Technologies Ltd.

Scalability challenges - workforce “Learning value add” implies: n Multiple assignments in different technologies n Continuous learning n Global clientele n Gaining domain expertise n Empowerment and decision making n Continuous performance feedback Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - workforce “Emotional value add” is achieved by: n Creating a campus like atmosphere n Providing opportunities for individual talent demonstration n Organizing inter DC meets n Skip level meetings n Top management 1 on 1 n “Voice-of-the-youth” programme n An atmosphere of care Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - workforce “Financial value add” implies: n Competitive compensation n Asset creation n Wealth creation Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - workforce Enhancing management depth n Broad-basing the board to attract high quality multi-faceted managerial talent - Induction of four non-executive directors in fiscal 1998, one nonexecutive director in fiscal 1999 and three non-executive directors in fiscal 2001 - Induction of three employee directors in fiscal 2001 n Empowering and preparing employees to take decisions for managing growth - Induction of managers younger than 30 years of age in the Management Council - “Voice of the Youth” n Deepening the management levels - Project managers empowered to take operational level decisions over budgets Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Infrastructure Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001,

Scalability challenges - infrastructure n Adequate physical infrastructure capacity to support the growth in personnel - Existing capacity: 10, 300 seats (1. 55 million sq. feet) n Building ahead of requirement - Building capacity for 8, 500 seats (1. 43 million sq. feet) - Acquired land in Bangalore (100 acres) and Hyderabad (30 acres) to construct new software development campuses n Significant training capacity created - 1200 people in Bangalore and 700 more in other locations n Telecommunication links being substantially enhanced from ~15 mbps to ~27 mbps Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - infrastructure Goldman Sachs IT Services and Software Symposium March 14 -16,

Scalability challenges - infrastructure n Scaling up to projected manpower levels: - India - Overseas - Telecommuting n Non campus options - Leasing/renting out office space where required - Increasing the capacity of the existing buildings at various campus n De-centralization - Decentralized execution model n Benchmarking Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Processes Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001,

Scalability challenges - processes n Create, maintain and enhance processes - Improve quality and productivity n Benchmark against best-in-class processes n Reduce project risk: schedule, cost, functionality and quality n Provide assurance to management Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - processes n Deployment across the globe, with diverse nature of projects n Alignment across functions n Forecasting and servicing at the point of need n Measuring and improving performance across functions n Managing growth with minimum overheads n Effectively utilizing technologies Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - processes Strategy for managing delivery challenges n n n n Knowledge management initiative Develop new mechanisms Automate and enhance - IPM on the Extranet New QA model Quality focus during trainings Reward and recognition Multi-lingual QS and trainers Outsourcing Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Technology Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001,

Scalability challenges - technology n Rapid business process changes n Rapid changes in technology n Emergence of technology intensive business models n Business process standardization and integration across organizations n Reduced time-to-market for new services, products “Today’s business problem is actually a business-IT problem” Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Presence across various points in the technology curve Scalability challenges - technology Browser -asplatform Voice Recognition Wireless LANs Web-Enabled Mobile Phones PCs Comfort Partner with technology leaders in product Challenge development ERP Notebooks Client Server JAVA PDAs Partner with enterprises to leverage technology for business advantage XML Growth Mature Emerging Market Maturity Stage Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 Declining © 2001, Infosys Technologies Ltd.

Scalability challenges - technology Managing technology challenges: n Build a vision of tomorrow's technology, business n Harness specialist knowledge n Innovate, incubate and disseminate software engineering, technology practices and domain expertise n Build knowledge assets and reuse across projects Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Scalability challenges - technology Cash Mgmt Banking Utilities Focus areas Retail and Distribution Manufacturing Supply Chain Object/Component Technologies Performance Engineering Commodities Risk Mgmt Securities Agent Technologies Software Methodologies Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 Loyalty DCG Insurance e. Business Technologies Mobile Commerce Technologies Architectures SETLabs Security © 2001, Infosys Technologies Ltd.

Knowledge Management Infrastructure Scalability challenges - technology Domain specific Trends Methodology Research Publications Sales and Marketing PU Projects Patterns and Frameworks Concept Application Customers I. T & Tech Trends Business Models Package Analysis Reference Implementations Research and learning output Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Risk Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001,

Managing risk n Business portfolio n Monitoring concentration of services, clients, vertical domains, geography and technology n Legal and statutory n Internal processes Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Managing risk – business portfolio n Business risks - Careful choice of startup clients based on analysis of business plan, promoter’s track record, quality of VC backing, etc n Project execution risks - Iterative solution delivery methodology and use of SEI CMM 5 processes n Legal risks - In-depth analysis of legal issues relating to contracts, to protect Infosys’ interests Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Managing risks – monitoring concentration n Monitoring concentration of revenues from: - Service offerings Vertical domains Technology Geography n No client to account for > 10% of revenues - Wide base of clients serviced - Monitoring revenues from start-up clients Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Managing risks – legal and statutory n Contractual liabilities - Review and documentation process - Adequate insurance cover n Statutory compliance - Internal legal team - Periodic monitoring of compliance across geographical jurisdictions - Compliance officer - Advice of legal counsel, if required Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Managing risks – internal processes n Project execution - Risk management guidelines for identification and mitigation of risks - Body of knowledge - dissemination of methodologies - Encouraging a culture of knowledge sharing n Disaster prevention and recovery - Adherence to ISO 9001 and SEI CMM 5 standards ensures that Infosys has a robust disaster prevention system n Technological obsolescence - Evaluated on an ongoing basis - Continual investment in emerging technology infrastructure n Internal control systems - Well defined roles and responsibilities of operating managers - Clearly documented authorization policies Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Customers Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001,

Managing customer expectations Objective n “Customer-first” is seen as a ethos and a strategic advantage for Infosys in the global market place Coverage through programs for: n Developers n Project leaders n Project Managers and above Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Managing customer expectations “Customer delight” programme n To strengthen and widen customer oriented awareness in Infosys n To provide a forum for sharing and learning from past experiences of customer interface Activities n n Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 Sharing of success stories Interaction with customers and receiving feedback © 2001, Infosys Technologies Ltd.

Managing customer expectations Key account management n Improving our ability to acquire, retain and grow large accounts n Developing a differentiated management approach for three types of accounts: n Large n Potentially large by next financial year n Plateau but with potential to be large by next financial year Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Investors Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001,

Managing investor expectations n Announcing financial results within a reasonable time of the close of the financial period - Reducing investor uncertainty n Recasting financial statements in accordance with internationally accepted accounting principles like US GAAP n Clear and concise discussion and analysis of business condition and results of operations n Inform shareholders of material changes in the company or its operating environment which could have a impact on its functioning and profitability including state of preparedness for the future n Treating all our investors fairly without discrimination: - Avoiding selective disclosures Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 © 2001, Infosys Technologies Ltd.

Managing investor relations The Infosys example: n Timely reporting n Leveraging the power of the internet n Web-casts n Analysts n Investor services n Innovations in financial reporting Goldman Sachs IT Services and Software Symposium March 14 -16, 2001 http: //www. infy. com/investor-relations/ © 2001, Infosys Technologies Ltd.