Investor Presentation October 15, 2014

Investor Presentation
October 15, 2014
Safe Harbor
Certain statements in this presentation concerning our future growth prospects are forward-looking
statements regarding our future business expectations intended to qualify for the 'safe harbor' under the
Private Securities Litigation Reform Act of 1995, 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, fluctuations in foreign exchange rates, 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, fixedtime frame contracts, client concentration, restrictions on immigration, industry segment concentration, our
ability to manage our international operations, reduced demand for technology in our key focus areas,
disruptions in telecommunication networks or system failures, 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 or expiration of governmental fiscal incentives,
political instability and regional conflicts, 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, 2014 and on Form 6-K for the quarter ended June 30, 2014. These filings are
available at www.sec.gov. 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. In addition, please note that the date of this presentation is
mentioned at the beginning of the presentation, and any forward-looking statements contained herein are
based on assumptions that we believe to be reasonable as of this date. The company does not undertake to
update any forward-looking statements that may be made from time to time by or on behalf of the company
unless it is required by law.
2
Highlights
• An overview
• Next Generation Business model
• Market opportunities
• Competitive situation
• Strategy and approach to market
• Investments
• Financials
• Challenges
3
An overview
LTM Q2 FY 15 Revenues / 5-year CAGR
$8.53 billion /13.3%
LTM Q2 FY 15 Net Income / 5-year CAGR
$1.94 billion / 8.7%
Employees (Sep-14)
165,411 from 105 nationalities
Market cap (Sep-14)*
$34.7 billion
Global Presence
73 Sales Offices
93 Global Development Centers
Operating in 40 countries
Business Model
To provide integrated end-to-end
outsourcing and consulting services,
products and platforms
* As of last day of the quarter based on closing NYSE price
4
Next Generation Business Model
• New
Engagement
Models
2013
2008
2001
1996
1981
People | Organization | Infrastructure | Process | Quality
Infosys Global Delivery Model
5
Non-ADM services as % of revenue
CAGR – 15.0%
60.0
54.5
56.1
57.0
FY 11
FY 12
59.2
61.3
61.8
FY 14
LTM Q2 FY 15
50.0
40.0
30.0
20.0
10.0
0.0
FY 10
FY 13
33% revenues from Consulting and System integration in FY14 as against 25% in FY 09
6
Resulting in New Clients and Increasing
Revenue Per Client
Large, Growing Client Relationships
550
13
500
30
450
Increasing revenue per client ($ mn)
10.5
10.1
107
400
10
5
16
350
9.7
9.5
9.3
9.3
9.3
FY 13*
FY 14
LTM Q2 FY
15
300
`
75
250
9
200
376
150
234
100
330
526
8.4
8.5
8
50
7.5
0
LTM Q2 FY 10
1-10 mn
10-50 mn
FY 10
LTM Q2 FY 15
50-100 mn
FY 11
FY 12
100 mn+
Execution excellence resulted in high share of repeat business (98.1% in LTM Q2 FY 15)
* revenue per client has decreased due to strong client additions
7
Market Opportunities
Global Mega Trends
Infosys – Transformation Partner
•
Asia – New “center of gravity” for the world
• Differentiated access to highly educated, cost-competitive
human capital
•
“Geography becomes History” with reduced
telecommunication costs
•
Technology – the supreme enabler
• Leading the Next-Generation Business Model and
investing in innovations and business solutions
• Redefining scalability with modular global infrastructure
8
Offshore Outsourcing is a Global Mega Trend
Outsourcing Benefits
Indian IT – BPO Market is Increasing
• Convert fixed costs to variable
• Reduce TCO
• Improve competitiveness
• Indian IT- BPO sector exports to grow 13-15% in
FY 15 and consequently reach $ 97-99 million
• Improve time-to-market
• Enhance ROI
Offshore Benefits
• Deliver high quality at great value
• Highly scalable with a large
resource pool available
• Proven track record
~$60bn
~$31bn
Source: NASSCOM
9
Competitive Situation
High Quality Delivery and Offerings
•
Established track record of exceptional quality
•
Expanded offerings that encompass the entire value chain
Abundant Skilled Resources
•
4.7 million graduates and post graduates pool 1
•
Over 3,000 engineering colleges with a capacity to produce
approximately 1 million engineering graduates annually
Established Industry
•
IT-BPM continues to remain the highest impact sector for India amongst all
service industries in terms of contribution to GDP and exports
•
IT-BPO domestic market to grow 9-12%; industry to add revenues of $ 110113 billion in FY 15
•
Offshore ‘home’ for virtually all the leading technology companies
Strong Government Support
•
“Tax Holiday” schemes
•
Supportive Government policy environment
India – Uniquely positioned
Source:
1. NASSCOM 2014 Performance Review
(includes engineering services and software products)
Significant Benefits
•
Substantial cost savings associated with moving offshore
•
Large intangible benefits such as reduced time to market
10
Competitive Situation
Need to
• Replace resources
• Overcome “offshore-is-cost-center”
mindset
• Combat revenue cannibalization
GDM + Consulting
• Provide seamless sales and delivery
Client Visibility
• Reduce SG&A
Large
Onsite Firms
GDM
Next Generation Business Model
(~1990s)
(~1980s)
Non-GDM
GDM
Client ROI
11
•
Consulting + solution mindset
•
Continue to strengthen brand
•
Strengthen Board-level relationships
•
Thought Leadership
Strategy and approach to market
Strategy
• Have end-to-end service capability, deep vertical penetration, broad geographical
footprint
• Increase revenue productivity and build long-term scalability by creating industry
specific solutions, platforms, IP etc.
• To have superior revenue growth and margins relative to the industry
Approach to market
• ‘One Infy’
• Cross-selling of services
• Vertical focus to create industry specific competencies
• Investing in the business
12
Talent Management : Hiring the Best
• Industry wide preferred employer
– Recognized as one of the ‘Achievers 50 Most Engaged Workplaces™’ in The United
States in 2012
– The most preferred company to work for in India by Business Today magazine in 2010
• Able to simultaneously evaluate 10,000+ candidates across 7 cities in India
• Global hiring
– US, UK, China and Eastern Europe
– Supplementing with experienced local hires
• Tapping non-traditional labor pool
– Employing non-engineers for infrastructure management, testing and BPO
– Proactive assistance provided to India’s educational system to produce engineers with
high quality software skills
13
Developing and Retaining the Best
• Learning support to employees
towards development and
career progression, which
improves long-term retention
and solidifies culture
Advanced
Training
Leadership
Training
Leadership Development
Domain
Training
• Currently able to train 14,000
entry-level recruits at the
Mysore campus
simultaneously
Client-facing
Training
Managerial
Training
Role-Based Development
Foundation
Training
Induction
14
On-the-job
Training
Quality Training
Role-Based Development
Soft Skills
Training
Investing in front-end, services and industries
2012
2013
2014
366
373
431
446
1,132
1,263
1,285
1,740
Infrastructure Management Services
420
510
586
639
Life Sciences and Healthcare
385
437
561
563
Sales & Marketing expenses ($ mn)
Sales & Marketing employees
LTM Q2
FY15
Revenues from ($ mn)
15
Robust, Flexible, Modular Global Infrastructure
• 93 Global Development Centers (“GDC”)*
• 37.7 million sq. feet of total area to house 1,84,005 employees; 5.4 million sq. feet
under construction to house 22,196 employees
• Ability to rapidly scale new engagements
• Flexibility to distribute engagements and capacity across centers worldwide
• Disaster recovery / business continuity capabilities
*As of March 31, 2014
16
Building World Class Systems and Processes
Quality Par Excellence
• Benchmarked to Global
Standards
• Deployment of improvement
techniques
Note:
Award-winning Knowledge
Technology-driven Scalable
Management Processes
Business Processes
• PRIDE: Infosys process
repository
• 2008 Asian Most Admired
Knowledge Enterprise
(MAKE) award
EFQM – European Foundation for Quality Management
CMMI – Capability Maturity Model
PRIDE – Process Repository at Infosys for Driving Excellence
17
Superior Revenue Growth
Revenues
$2,500
2,201
Quaterly Revenue (US $ million)
$2,000
$1,500
1,154
$1,000
$500
$0
Q2
Q3
FY10
Q4
Q1
Q2
Q3
FY11
Q4
Q1
Q2
Q3
FY12
18
Q4
Q1
Q2
Q3
FY13
Q4
Q1
Q2
Q3
FY14
Q4
Q1
Q2
FY15
Sustained, Industry-leading Profitability
$600
35.0%
Flexible cost structure helps Infosys deliver industry-leading margins
511
30.0%
30.3%
26.1%
25.0%
$400
317
20.0%
$300
15.0%
$200
10.0%
$100
5.0%
$0
0.0%
Q2
Q3
FY10
Q4
Q1
Q2
Q3
FY11
Q4
Q1
Q2
Q3
Q4
Q1
FY12
Q2
Q3
FY13
(*) Q2 FY 14, include a provision of $ 35 million towards visa related matters.
19
Q4
Q1
Q2*
Q3
FY14
Q4
Q1
Q2
FY15
Operating Income in %
Quarterly Net Income (US $ million)
$500
Strong and Liquid Balance Sheet
• Highly liquid (Liquid assets including cash and cash equivalents, available-forsale financial assets, certificates of deposits and government bonds stand at
$5,444 mn)*
• Zero debt
• High quality receivables (95% of receivables is either not due or due for less than
60 days)*
• ROCE of 35.9%, ROIC of 61.3% for LTM Q2 FY 15
• Dividends up to 40% of annual post-tax profits
*As of September 30, 2014
20
Challenges
• Economic uncertainty
• Regulatory changes
• Currency Volatility
• Resource availability
• Ability to expand addressable market
• Wage inflation
21
Thank You
© 2013 Infosys Limited, Bangalore, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change
without notice. Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except
as expressly permitted, neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing,
photocopying, recording or otherwise, without the prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document.