Infosys Ltd (INFY) 2002 Q2 法說會逐字稿

Good morning, Ladies and Gentlemen, and welcome to the Infosys Technologies call for the quarter ending 2002. Later we will conduct a question-and-answer session. Participants who have any objections to such a recording may disconnect at this time. I would now like to turn this call over to G.R. Ganapathy Investment Relations Officer. Sir, you may begin.

Thank you, Christine. Hello. Good morning, good evening, and good afternoon, everybody. And thank you for joining us for the quarter that ended September 30th, 2002, which is the second quarter of our fiscal year 2002-2003. I will handle investment relations from Fremont, California. Joining me is Mr. Narayana we'll start with a statement and chen open up the session for questions and answers. Before I hand over the phone call, I have a small but important task to perform. First, our outlook for the future is a forward-looking statement that must be taken in the context of the risks that we fate face. A full statement of these risks and explanation of these risks can be found in our filings with the securities and exchange commission. I would now like to hand the call over.

Thank you. And I'd like to welcome everybody to this call. I think Infosys has been able to deliver another quarter of robust revenue growth. And our revenues have gone up to $181.4 million dollars, which is up 32% from the corresponding last fiscal. And earnings have gone up from 31 cents to 36 cents. And this is net off the provision of $3.2 million investment. This quarter, also added 80 new clients, including well-known names like for Shea. And this -- forshay. And we have added a gross number of 2,085 employees and net, 1,086 employees for the quarter. We have decided to increase our guidance for the year, both on the revenues and earnings side. So far our revenues for guidance was $6 -- we now believe our revenue is $708 million. For the year, we have also revised the guidance to between $1.45 and $1.48 for the fiscal year and between 38 and 39 cents for the quarter. So I think though we continue to have an extremely challenging and extremely uncertain economic environment, we believe that our business model is superior and has given us the conference. Our chief operating financial officer to speak a few words and hand over to Mr. Mondas.

Thanks. Just to give you some more highlights, our session has gone up to 84.2% from 82.2%. The total increase of 16% in terms of growth has come from 11.7% in volume and 4.4% in terms of price. The product group in the banking group has done well, and our product revenue has gone up to about five points, 5%. We have increased our investments in sales and marketing in terms of branding and value oat ground. In terms of strengthening our management team -- on the ground. In terms of strengthening our management team on the customer relationship side. We -- we have had some customers, one or two customers, move their product from Europe to the U.S. So we have some days in the percentage for Europe, which is now 16.5%, north America 73.8, Europe 16.5, rest of the world is 7.2. And this is because of the drop in Europe is really because of a shift in some of the products which we're doing to the U.S. Mohan?

Thanks, Chris. Folks, let me talk about the margin. This quarter grew by the top line. The cost of revenues have grown by 13.2% from quarter one to quarter two. The gross margin has grown from 45.6% to 42.8% and has grown by 19.5%, quarter upon quarter. And the growth has come about because of a reduction in the percentage of 5.2% in the first quarter to about 4.9% second quarter, due to greater economy or skill. Travel cost has also come down this quarter. Even though the gross margin has gone up to 46.8%. Our margins have gone up to 14.8% in the previous quarter. This is because of increases in expenditure, particularly because of a banking business unit. And also for expenses which are high are than the -- higher than the previous quarter. Operating costs have gone up. Nonoperating cost income is down to 0.3% because we have made investments of $3.2 million, which is about 1.8% of revenues. Income before income taxes is at 31.8%. Our net income is at 27 points, 25.7%. Tax portioning has come down from 5.6% to 5.1%. Gets for the investment portion that has been done. If you write back the investment portion to the basis, it would be 27.5%, as against 24.7% of the previous quarter. EPS, like I said, is about 36 cents. And approximately 2.5 cents, so you'll get something like 38 cents on a comparable basis. On-site has gone up to 33.5. We've added nearly $40 million of cash in this quarter. That's because capital error is about $9 million, and we have listened to the estimate against for the entire quarter. Thank you.

I think we can now start taking questions.

We're now ready for questions.

Thank you. We will now begin the question-and-answer session. If you have a question, you will need to press the one on your touch-tone phone. You will hear acknowledgement that your question has been placed in queue. Your questions will be queued in the order that they are received. If you are use a speaker phone, please pick up the handset before speaking. Once again, if you wish to ask a question, please press the "1" on your touch-tone phone. Please state your question.

Yeah, good evening, Infosys management, ask congratulations on an excellent performance. I have actually two short questions. One is basically on the view on the IT projection for my clients. What they are likely to spend. And is there a possibility that if the situation worsens, there could be a possibility that it could not be spending and the projects that we saw probably a year back. And second is basically on the layoffs recently, over the last 15 days to a month's time, there have been a number of layoffs again. Do we see a possibility? When there were layoffs and also seeing quarterly news because of that?

I'll request Mr. Hadan, head of worldwide sales to answer that.

Yeah. I'll take the first question and then cross to the second one. As far as IT budgets are concerned, there is uncertainty in the economy and certainly the discussion in that part of the IT budget that is very sensitive to company performance will be suspect. If it takes a turn for the worst. But what you should learn is that a large percent of our business is derived out of outsourcing of baseline sent. And that is something that is not likely to be affected. And we continue to see heightened interest as well as whatever discretionary spend suggest happening. We're comfortable that either way we should be insulated to a certain extent to the vaguearities of -- of I.T. budget. Coming to the other point, I think the difference between last year and this year to my mind, last year, I think people were still getting adjusted to the shock of economic slowdown after 10 years of boom. And I think this year, people have become reconciled to the new reality. And I'm also beginning to understand that this is not an easy -- not only for the next quarter, it's going to take a long, long time. And they get down to start looking at the costs. So I think it is much more focused than last year.

Great. Okay. Thanks.

We have amitt aruHannah.

Hi. Good evening. I'm -- just wondering why we have a record number of new product starts? I'm still unclear as to what is the reason which is holding us back from increasing our guidance on the bottom-line number? Especially given the fact that we are expecting these products to move offshore? I would like to clarify that.

If you look at our margins between the last quarter and this quarter, the margins are almost similar. There's been a slight improvement in the margins this quarter, of course. But if you look at the effort mix. Efforts have gone up 33.5% from 36.2% and revenue has gone up por.6%. And $25 million of increase. Approximately $21 million or so has come about in services, all of which $5 million has come about because Enterprise solutions and approximately 3 million has come out because of increase in consulting. That's about $7 million. And that's about 35% of incremental revenues. Now price solutions and consulting are substantially on sight. In the case of business can consulting -- consulting, about. [ INAUDIBLE ] So that's why we feel if you see the projects moving offshore, it will not be advisable to talk about any margin expansion. We need to see more practicals going off shore. -- more projects going off shore.

I was just wondering, adding about 1800 people essentially would apply that well is a -- there is a fair amount of visibility on these. I'm just trying to understand the margin ratio continuing. And we adding 1800 people in the second quarter. How does one grapple with that?

I think 1800 people is partly because of the pact fact that we hire -- of the fact that we hire off campus. These are ones who have to go through training and they could become fully billable in the fourth quarter of this year. These are high especially for mostly the next year, not in this year substantially.

Okay.

So we have to be prepared. Planning is a medium-term basis also.

Yeah. Also, if you could give us the absolute productivity levels in second quarter for on site and offshore, brong broken down.

Yeah.

Okay. Let me -- huh?

On site is $137,800 last quarter was 34,400. Last quarter 56,700. And the blended productivity for this quarter is $84,600.

Could you repeat the off-shore number?

Off-shore, this quarter is $57,800.

Are the all right. Thank you. My last question was in terms of -- I was just wondering, the net additions that we have added in this quarter were very low. The number is just about two or three if I count right. I was just wondering, is this more of the one of engagements? Or is it more like long-term engagement or medium term engagement getting over?

We have started reviewing the additions and looked at one time transactions and not counted them -- so when we say 18 now, they are clearly long term and medium-term clients. We are comfort believe thatable that they will be there next quarter. -- comfortable that they will be there next quarter. So we have been much more careful.

Okay.

In this contract, we had a 4.4% increase in rate radius going up. And particularly 4.8% the quarter before that. We do think that it happened in this quarter because of increases substantiately -- substantially.

We have a question.

Hi. Congratulations. Exceptionally good numbers in a difficult environment. Last time, when you discussed June quarter, you sort of gave us some sense of high -- .

Can you speak up? We can hardly hear you, please.

Yes. Can you hear me now?

Yes.

I was asking that last quarter, you report the in the previous quarter you gave us some sense of hiring targets for September. I was wondering if you could give us your hiring target for December quarter?

Over the next two quarters, at this point in time, we're looking at about 1,000 joining.

And this would be gross hiring?

Joints yes.

Oh, so yes. Thank you. And how does the billing agreed off these 18 plants who joined us in this quarter, how does this compare with the average for the company?

I think there's no significant difference between the billing rates at which the current plants are joining. You know, as always, one of the key determinants of our profitability is the on-site, on-shore ratio and that's what we're looking at.

And my last question is, sir, if one of you could throw some light on the strong revenue growth and tell us where it came from? New clients added in the quarter? Or clines added in a previous year? Or top 10 clients grew significantly? That's all. Thank you.

Yeah, this is. [ INAUDIBLE ] The growth has come from clients added in the previous quarter and previous year. And we had strong client additions. 95% of the business is repeat business. So, you know, it come from mostly from the clients in the previous year and previous quarters. This terms of the top five, top 10. -- yeah, the top client is about 5.9% of revenues, corresponding the previous quarters by .8. Top five clients constitute 24%. Previous 10. Last quarter 37.9, whereas last quarter it was 39.1. And 5% of revenues. Had is not changed. Active plans 37.8. So in terms of these numbers, percentages, actually, there is not much change. It is actually a change to the better slightly.

So thank you very much.

We have miss Holly Gauche from Merrill Lynch with a question. Please state your question.

Yeah, hi. My first question is on the guidance number, does it factor -- what is the kind of loss that it would be factoring in from progeon? And also in some earlier interview, et cetera, it has been discussed that there are larger iso outposting projects also being bid for, so would it have taken into account revenues from any of these?

The guidance given does not assume any revenue for progeom. In terms of IT, we are just at the beginning of that, and we are looking at a couple of customers and projects. But it's not really discounted in these numbers.

Ask it wouldn't, therefore, include any loss to gmi either?

I would say that, you know, if at all, a very small margin. Nothing significant.

That is excellent. -- that is factored? Did you mention that that is factored in?

Yes. It is factored into the numbers.

Great. Thanks. The second thing I was wondering, what where mentioning earlier that essentially while discretionary spending is down, baseline outsourcing spending is increasing. And looking at your revenue mix this quarter, development and maintenance have both actually gone down as the percentage of total revenues. So do you think you should really expect that to increase going forward? And you know, packages have actually gone up. So would you include packages also as one of the more baseline spending kind of items?

Well, you know, the way we classify development to engineering, you know, on the smaller-sized project developments and the engineering, they are considered to be part of the baseline spending. That's more about refreshing the application so that may not an be a very good indicator. But we do expect that on the large project side, there will be the discretionary maps on the large development, large reengineering projects. Now, what I did say was that because of the trends in the economy, I.T. spends on the discretionary side will be lower. But I also believe our ability to get a higher share of that spend is going to be much better. So I -- I don't think we can conclude that our share from development will go down. And on the other question about the fact of implementation, we classify the fourth -- support of packages also under that service, so that it is sort of mixed between discretionary and baseline.

Just one simple question, like the increasing attractiveness of the offshore model and large clients shifting due to offshore model. Some 304 in companies, being the ones who are getting selected. And the larger U.S.-based offices and not having businesses in India, does it provide some amount of power to deduct three or four companies? In the sense like maybe a quarter down the line? Having more buying efficiency or buying power?

I don't think so. Because I think it's an extremely competitive situation. And everybody has realized that we are seeing the grind in this moment ask that gaining market share will permanently decide the future growth. I don't see any kind of pricing power, as you mentioned.

Thank you. And just to add to that, look at the large globally. There aren't too many players. You have some who create fiercely and create a margin where it's low. So that's unlikely to happen even if we have two or three players in the mix.

Okay. Thanks.

We have Freddie from amro on the line. Please state your question.

Hi. Good evening. I just wanted to know if we have a target utilization rate in mind. Despite the significant operation, these are nearly 80%. I just want to know if you have a target in mind and as I said, it would be a driver in the route. I have just one more question after that.

Yes. Our target for utilization is high 70s, low 80s. So in that sense, 84 is a very good number for us to have. Our event, which is demanding 16% includes multiple thins. It includes multiple things. Also includes the leads, as well as the training, which we do for new employees.

Well, thank you. The question, something slightly Mack row. I just wanted to know this company, you know, maybe might be a multimillion dollar contract over the next six months or 12 months. You know, I'm -- if you look at the plan today, probably you have about customers and analyzing abilities of $30 million. But we do not have any customers with the billing of over $15 million a year. Somebody looking to also $15 million or three years from one of the vendors. What would some of the talents, given that we don't have the customers. And particularly, given that probably we are not inclined to take onto our payroll. Not able to take the access for our payroll. I am just likely to wrote, what is the likelihood of us. [ INDISCERNIBLE ] If you could broadly provide something on this, thank you.

First of all, we need to distinguish between different kinds of outsourcing. When a client give us $30 million a year, he is actually giving us projects that we put with man power at our facility. And total outsourcing can kind of have outpowering to take on the work force of the client company or you do that, plus we take on the data center and all that infrastructure stuff. Now, in those days, they have to be by definition, multiyear deeds. So we should not confuse these different deeds. So if it's $50 million a year for 7 years. But in application outsourcing, you don't have that kind of guarantee, particularly in the contract. It becomes from the customers. So I think we should distinguish that. To your second point, we already have customers who we believe will be. I can think of at least two or three at the moment. And I don't really see any issue by next year. I don't see that as a particular barrier. I also believe that the -- we are entering into the business of taking over employees of some of the customers. We have done that in two cases already. And going forward, I think that we will see more of those kinds of deeds. So I think we are on the road to what you said.

Just one follow-up question on that. You said some is the possibility of not being able to disclose to your level of satisfaction, not to ours. But are those kind of deals. [ INAUDIBLE ] To what you do at the moment? In other words, in getting those deals not willing to take the efforts. [ INAUDIBLE ] If you could throw some color on what is the nature of this deal in which you have been one of the contenders.

Okay. There are different kinds of deals. There are deals where people want to do application outsourcing. And then you use contract employees and move into partners. Those deals are very, very traditional. And those are the deals that we have won quite a few of. The second kind of deals are where people want to do application outsourcing and also handle the employees. In these cases getting a couple we have taken over employees. And there are companies which have been involved with. In the sense, they are not -- they cancel the position. The third kind of deals are where they're handling over the whole thing, lock, stock, and barrel. And we are not playing in that kind of market.

Well, thank you gentlemen.

Operator: Please state your question.

Yes. Thank you. I have two questions. The first is on the number of clients on the quarter. Chris mentioned has clarification of what is counted as a client added. Another effect that I wish to understand is the travel advisories that limited this due to a couple of months ago, which would have had to delay impact. Could you help us understand the effect of that impact, versus the reclassification of what is called an added client and help us understand both of those effects in understanding the number of new clients add this quarter?

Yeah. This is Chris. When I said 18 new clients, and we were a little more selective in adding to the number of clients this quarter is because of, you know, us doing a small transaction. Sometimes we just do a small project for a particular client. We don't expect the client to come back. And the whole thing is over in this quarter. So we don't want to add it and delete it kind of stuff. So, you know, in the past, we -- what had happened was it appeared as a client added it then actually disappeared. So we were very careful to add only clients who we know are going to be there in the next quarter, the quarter after, and things like that. Now, regarding the travel advisory in June, we solved the existing. [ INAUDIBLE ] Fortunately for us, the travel adversity was withdrawn and in some sense forgotten now. And at that point, we thought the impact will be felt quarter to quarter down the line. Right now, we feel that maybe the impact will not be felt because the adversity was there for such a short duration. And hopefully it will be forgotten for us.

Okay. Thank you. The second question has to do with your increase in sales and marketing expense. On the earlier call, mohan provided some breakdown in terms of personnel versus sales commission, et cetera. Could you help me understand a bit more color behind this? Had have you changed the type of person you recruit? Have you changed your composition -- compensation structure? Is it a result of sales and marketing effort? Just some more color to understand why sales and marketings have gone up quite a bit two quarters in a row.

I think we explained last quarter that sales and marketing because of the $1 million spent on grand buildings which is not in the fourth quarter of the year, and nearly $1 million or so because of the declassification of managers and television organization, and the balanced million or so because of the bonuses and other things kicking in. So we had $11.3 million the previous any other, 7.2 of revenues. That's gone up to 7.9 of revenues. $2.9 million of costs. Now, the commission done for banking business unitys increased by $6,000. And the banking business units have done nearly $10,000 this quarter. We are seeing an increase in the organization because last time we had about 50% of people in full-time state. So we have nearly what? 85 or 90 people, our sales people in the television organization under s&m. So that concludes the entire transfer. Our sales and marketing costs have gone up from $9.5 million or $10.66. Or approximately to 300 to 400,000. And the balance is because of other marketing errors that we had. So if you look at it in an entirety, out of the $3 million incremental revenue, in part it has come from sales commission, increase in people, and increase this marketing activities.

When you say "Increased sale commission," is that due to a change in the commission structure? Or because if it were the same commission structure and just actual sales and marking number going up, that wouldn't change the percentage increase in percentage in sales.

You're right. For the sales people, indelibly, there s has been an incentive to line it t in plan with that. Yes.

Uh-huh. So how many quarters before we expect the proportionate increase to each out?

I think it is evening out. We said almost the same thing last quarter, tamashy. But we think it is evening out.

Okay. Thank you.

If I could just add just one thing, the product sales percentage has gone up. And that is the other commission which heave referring to, which is the bank -- he was referring to, which is the banking product.

Okay.

So the change in the product percentage could result in the increase of the whole.

Okay. Thank you so much.

Operator: We have supertin azuon line. Please state your question.

Good evening. Congratulations on a great quarter. I just have a question on the revenue mix. I just want to take a look at the fact that it has increased as a percentage of revenues, significantly over the last two or three quarters. And given the turmoil that is actually happening in this space at this point in time, do you actually see any impact of that in terms of either increased flow, reduced flow from clients you have been dealing with in the past? And are you also seeing new client additions in this space?

Yeah, I think we are seeing both new client additions in the state. And we have been successful in getting a lot of customers in this space on the east coast. And also, this is a space where there is a large number of sources and in these corporations, all of whom are looking at moving a major part of it out here. So I think that's the reason why you're seeing that kind of uptake in the revenues.

Just a follow-up on that, can I take that to understand, then, that we would -- I mean, this is something that is kind of a trend in terms of it increasing in the next two or three quarters a primarily because of this moving to India?

Well, certainly there will be -- I mean, when you look at the absolute revenues of the year, we're talking about 700 million dollars, yes, bsfi will be a part in the 35 to 40% range as it is today. But I think woo also have to realize that there are others. We are seeing growth in the manufacturing sector. Seeing growth in the, you know, in the supply chain area. It is our flat. So I think there are different areas. When you look at these percentages, then you -- the outgrowth tends to be different.

I think the only thing we can say is the bssi is going to show growth and Telecom is not going to show reverse verse growth.

Just a final thing on this, what I've noticed, since you give it broken down between banking and insurance side, we have seen significant growth on the banking side, compared to five quarters back or six quarters back. And is it because of new -- I mean, your older clients coming back and once again increasing orders or specification within the space itself? And if so, which segments?

No. It's more. For example, one of our largest clients today has grown organically over several years. One of new customers last week was Bank of America, which is a new customer on the banking side. So I think it is both growth from existing customers, as well as new customers who are wrapping up.

Thank you, gentlemen.

We have David Grossman from Thomas Weisel partners on the line. Please go ahead with your question.

Thanks very much. Seems like you've become decidedly more positive about the business. Obviously you raised the guidance. I wonder if you could just kind of rank order, what's changed, let's say in the last three months. What's changed the outlook in the business?

I think what we are finding David that I think people have come to realize that the state of the economy is going to be around for a long time. I think that realization has sunk into most of our clients' minds. And people have taken hard decisions on how to reduce the cost base. Clearly one of the key parts they want to reduce is IT spending. And within that, they obviously want to use Infosys styling to do that. So I think we are seeing far more initiatives in the marketing place where people are looking at these outsourcing arrangements. We see that in the deal flow, we see that in customer Wizards being in the meetings. And that has given us the confidence to increase our guidance for the year and generally have a more positive outlook.

Can you give us a sense, you know, for kind of the bookings in a quarter or how they trended over the last four or five month.

Particularly on the more recurrent revenue type of projects?

Not publishing books -- -- bookings or back levels or such. This is not hard-level stuff. For example, if you look at project starts, that would be a good way of looking at it. And last quarter, we had 400 product starts this. Week, we had 200 product starts. So combined, we had 660 project starts. Now, those project starts are going to go initially on site revenue. People go on to get the design and so forth. And then later on, when those projects move off shore, they're going to generate offshore rev flew new. -- revenue. So that will probably be the best metric of how the future revenue will be from these things.

Okay. And just looking at, you know, some of the details from the quarter, looks like packaged implementations have pretty robust sequential growth, which would have surprised me. Can you give us a little color behind what may be going on there?

Yeah. I think -- you see, there are a couple of things. What has happened is that we have found in the last two years, whether people were spending money like there was no tomorrow, a lot of corporations have bought huge number of electricians of packages -- number of packages. They have 20 users in their offices and they actually want to implement 15,000 users. Similar for sap. Similarly for us. What this means that s they will not go back and buy licenses for a long time. They are also extremely satisfied with spending $100 million of high-priced consultants to implement these consultants. So I think a great need to get this to work in the cost of the company in a cost-effective manner. So we are actually seeing very boyant demand for our packaging services.

Okay. And just one last thing. Could you -- I didn't catch all the information you provided on rates both off shore and on site. And you know, can you just give us maybe also a qualitative assessment of what's going on in the rate environment and what you would expect the impact on rates if some of the bigger U.S. or European-based I.T. organizations start ramping operations more robustly than they have historically?

I think the -- there has been downward effect on rates. And productivity. We believe that is because we have more revenue from consulting and packaging implementation. And also, increasingly, we are having consulting-led assignments. And when we are concerning the assignments, that plant enables us to hire for the consulting as well as offshore work. So -- I think the price pressure on our European and Americans is much, much more. There are many cases now where the customer is insisting that there be at least one company, like Infosys in the bidding list. Also, I think customers across the world have now accepted us as being on par with these guys, in terms of quality, knowledge, deliverance and so forth. So I think there is great pressure on these guys to do something in India. But it is merely a business model. So I think they research the option, which is the only way they can truly drive the costs down.

So let me ask you. What is it that you think we'll begin to see offshore companies becoming named as awardees in some of these larger outsourcing deals, like, for example, maintenance represents a fairly sizable component of the broader outsourcing contract.

First, we are going to see large application outsourcing without manpower transfers, which is what is happening today. Then we are going to see application outsourcing with manpower being transferred to Indian companies. And then perhaps total outsourcing. But I think so that is way off and you and I can debate that whenever we want to go through that route at all. But one thing is very clear, David. The market is now at the highest levels. There is a very broad acceptance that companies have come of age. And managements are quite insistent that their I.T. groups will deliver cost benefits to the bottom line.

Great.Thank you.

We have Garish Pai with SSAI. Please state your question.

Yes. I want to know on outsourcing, do you have intentions of partnering? And if so, what would be the structure of the partnership?

[ INAUDIBLE ] Interviews and in the last two quarters. They have usually about a 12- to 18-month time line to implement the full function service. We had contraction. There are some products which have started. They also built a network operations center which is the most. [ INDISCERNIBLE ] At this stage, we are not looking at the last alliance with the outsourcing area. We believe that we have the skills and the capability -- we could -- that's right. We have the skills and the capabilities to do it. But we are looking at loosely a couple of the partnerships with a couple of people in the U.S., which would allow us to have a two-faced operation, one in the U.S. and one in India.

Yeah, okay. The second question is on Chinese in the next couple of quarters. I heard a number of thousand. Is that per quarter or for the second half of the year?

It is for both the quarters.

Okay. Okay. The third question is on manmonth numbers. Can I get the man-month numbers for off shore and on site. That would be most helpful.

Yeah. I'll give you the total support and total man-month. In quarter two, for the entire quarter, we had a buildup for 25,736. And we had a nonbillable, which includes the bench, of 4,823. And this is also including management and the bench. Bevrp is not so large. Bench is about 2 -- bench is not so large. Bench is about 2,500 ore so. Then we had training in 3,074. With the support of 3,351, making a total of 36,289.

Okay. One last question on salary increases. Are you looking at any salary increases in the next couple of quarters?

We had already introduced a performance-based incentive as to company-based performance as part of salary comp. And now that this is a variable comp and based on the performance the individual company. We can move this to, you know, increase, decrease and it's available now. Gives us more flexibility as the business increases. We can pay more.

Yeah. Just one more question on your -- how do you protect yourself from repeat appreciation with the dollar? And is there any cost attached to it? And what was the cost in this particular quarter?

Know I don't think against currency. I think what we have know done is we are so forward in the quarter to what we can bring into India. That's to some extent for the billing rates, we are more or less fully covered. In this quarter, we have adverse effect of 1.63, approximately 325, $330,000. It came about substantially because of a foreign policy. We have now -- and we are slightly insulated. We also had some decline of something like 1% in the dollar as compared to the quarter, compared to the beginning of the quarter. And the impact has been mitigated.

Okay. Thank you very much.

We have another question. Please state your question.

Hi. My question has to do with basically an investor perception. Increasingly, we are seeing a rot of -- lot of global unrest. And one common strain that people fight is the availability of an ar flow. Now, is there a plan to address that issue any time soon? And given the way the laws have changed recently in India to do with is secondary adr offerings, does that change your game plans? Changing your free flow?

We are aware of this issue. And we are studying this issue to find out the wider ramific.

But so you don't have a time frame in mind when this is likely to happen?

No.

Okay.

We have sync with First Boston.

Actually, this is. [ INDISCERNIBLE ] I have one, actually, clarification on a comment made up on television. Which was when asked if Infosys was in one of the big deals which are being talked about, without taking names, though he mentioned Pepsi and abn. And said, yes, 50 to hundred million deeds. I just want to understand whether this n these deals, Infosys was going alone, or was it partnering with somebody else?

First of all, I am pretty sure I didn't mention any names.

Yes, you didn't. The commentator did. Sorry.

Okay. We -- in these deals, for the best part of it, we did not go in with a partnership position from a delivery standpoint.

Right. Just a small follow-up. Were these more of outsourcing deals, or were they just the application also? More a step ahead in ours?

One of them was application outsourcing. The other was total. The other included both application and. [ INAUDIBLE ]

Okay. Thanks.

I'll take over now and just ask a couple of questions that came in by e-mail.

Thank you.

One asks what is the potential of U.S. organizations which do not have an off shore indicator to their services in normal application development it Infosys package and implementation?

I think we can't put a number on it. But I think it's fair to say that as the global offshoring becomes more mainstream, we'll see a larger number ever midmarket and other companies looking at this. So there is plenty proportionately in those markets.

Okay. Second question is on eds and its impact in software sales and industry. What is our read on the situation and the impact of ads and some of their announcements on the industry plans and concerns?

I think, you know, the kind of work that they do is really taking over large outsource -- total outsourcing of both employees and the capital assets of companies. And it's possible that that space of the market is currently constrained by concerns about financial strength and so forth. But I don't think, you know, the space of the market in which we are, which is providing global outsourcing to global corporations at very competitive prices and providing very high value, we don't see that state of the market at all in any way being fkt affected by that.

And the last question on revenues for the bp outfit and future bp serves, what sort of trends have you seen?

I didn't catch the question.

What are the revenues for the bp outfit for the quarter and future of bp services.

There is about 441,000 dllz or so for this quarter. I'm going to estimate guidance does not include revenues from progeon. We have to watch it. [ INAUDIBLE ]

Right. So I think with that, we've come to the end of our designated one hour. And thank you very much, ladies and gentlemen, for joining us today. A transcript of these -- of the Q&A and discussion today will be available on our website, www.infosys.com in three to four days. I will be available at the numbers mentioned in our press release to answer any further questions that you might have. We look forward to speaking with you again next quarter. Thank you.

This does conclude today's teleconference. Thank you for participating. You may all disconnect at this time.