“MphasiS Q4FY10 Conference Call Hosted by IDFC

Securities Limited”

November 23, 2010

MODERATORS: MR. GANESH AYYAR – GROUP CEO, MPHASIS.

MR. GANESH MURTHY – GROUP CFO, MPHASIS.
MR. HITESH SHAH – ANALYST, IDFC SECURITIES
LIMITED.

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Moderator: Ladies and gentlemen good morning and welcome to the MphasiS Q4FY2010 earnings
conference call hosted by IDFC Securities Limited. As a reminder for the duration of this
conference, all participant lines are in the listen-only mode and there will be an opportunity for
you to ask questions at the end of today’s presentation. Should you need any assistance during
this conference call, please signal an operator by pressing * and then 0 on your touchtone
telephone. At this time, I would like to hand the conference over to Mr. Hitesh Shah of IDFC
Securities Limited. Thank you and over to you sir.

Hitesh Shah: Good morning everybody. On behalf of IDFC Securities, I would like to welcome you all on the
call to discuss the results of MphasiS for the fourth quarter ended October 31st 2010. We have
MphasiS management with us on the call; Mr. Ganesh Ayyar, the Group CEO and Mr. Ganesh
Murthy, the Group CFO. I congratulate MphasiS’ management on good quarterly results and
invite Mr. Ganesh Ayyar to take the discussion forward. Thank you and over to you Mr. Ayyar.

Ganesh Ayyar: Thank you very much Mr. Shah. Appreciate you taking time to be with us today. Good morning
everybody. Thanks for joining us today. It is indeed a special occasion for us. We have really hit
a significant milestone in the 2010 year. I am delighted to share with you that we have crossed
$1 billion of revenue in 2010 making us one of the 5 Indian IT companies to have achieved this
feat. This is clearly a proud moment for the entire MphasiS family and another significant
milestone that we have achieved this year not to forget the fact that profit after tax has crossed Rs
1,000 crores for us this year. As a special gesture of having achieved this milestone and to share
the success with our employees, the board of MphasiS has decided to grant all MphasiS
employees 10 MphasiS RSUs each. This is subject to shareholder and regulatory approval. So let
me now just move on to talk a little bit about our results.

The Q4 results resonate on quarter-on-quarter growth, which we have delivered consistently

across multiple quarters as you would know. Let me begin taking you through the highlights of
financial performance. Revenue for the quarter was Rs 1,345 crores, up 18.8% in comparison to
the corresponding quarter last year. Operating profit was Rs 283 crores for the quarter. Operating
margin was 21%. Net profit increased by 15.9% to Rs 284 crores. This was possible through
overall operational excellence and financial discipline throughout the year. EPS increased for the
quarter to Rs 13.53 from Rs 11.69 over the same period last year recording a growth of 15.7%.
We are the only Indian IT company of 1 billion category to have positive FOREX gains in every
quarter of 2010 despite a volatile FOREX environment. This speaks volumes of our effective
hedging policy that we have been consistently following for the last 1.5 years and also a great
CFO that I have in Ganesh Murthy.

Let me move on to talk a little bit about the annual view. For the year ended 31 st October 2010,
the group recorded revenue of Rs 5,037 crores, a growth of 18.1% over Rs 4,264 crores that we
recorded in the same period last year. Net profit for the period grew 20% to Rs 1,091 crores as
against Rs 909 crores in year 2009. 177% increase in interest income and other income in 2010
as compared to 2009.

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Move on to talk a little bit about clients. Our client base grew by 85 client additions in the year
2010. This quarter, we added 22 clients. We achieved this through our increased focus on direct
sales as well as through partnership with HP. Little bit on top clients; as of Q4 FY10, 14 clients
now account for an annualized run rate of greater than $20 million revenue and 23 clients with
an annualized run rate of $10 million and above. New clients acquired through HP channel
include in the area of banking, healthcare provider and manufacturing vertical.

Quick comment on lines of business. Let me start with Applications. Applications business
reported total revenue of Rs 874 crores, up 20.8% from the previous financial year. Gross profit
was 30.9% of revenue. Applications business contributed 65% of total group revenue. This is in
relation to the quarter. During the quarter ended 31st October 2010, application business added
18 new clients. This year the application business recorded a net headcount increase of 3,053 to
take the total number of employees to 15,940.

Let me move on to talk a little about the Infrastructure (ITO) business. ITO business reported
total revenue of Rs 310 crores, up 45% over the previous financial year. Gross profit was 34.9%
for the quarter. ITO business contributed to 23% of total Group revenue. During Q4 FY10, ITO
business added 4 new clients. This year, the ITO business recorded a net headcount increase of
3,254 to take the total employee number to 8,629.

Move on to Business Process Outsourcing. BPO business reported total revenue of Rs 162
crores. Gross profit was 17.4% of revenue. BPO business contributed to 12% of total Group
revenue. This year, the BPO business recorded a net headcount decrease of 977 to take the total
employee number to 15,393.

A quick comment on cash. MphasiS generated Rs 151 crores in cash for the last quarter.
MphasiS ended the year with Rs 1,638 crores of cash or the equivalent approximately $369
million.

Move on to talk a little bit about some of the key highlights. We opened a Near Shore Center in
TM -
the University of Wollongong Innovation Center in Australia. Javelina MphasiS is a web
based platform for healthcare segment successfully went operational for our second client
Keenan, one of the largest brokerage companies in the U.S. The product has also been judged as
the product that hosts the greatest market potential in 2010 healthcare IT summit held last week
in Washington DC.

Let me comment quickly on our strategic direction. This has been an important year for
MphasiS. It has taken 12 years for us to reach this landmark of $1 billion and now we are ready
and excited to reach the next billion dollar and obviously we do not plan to take 12 years to reach
the next billion dollars. We want to do it much faster. In order to do that and more in line with
increasing our value proposition to our customer, we are doing a significant transformation and
at an appropriate stage, we will be sharing the details of that transformation We have
reconstituted our board this year and this new board brings depth and breadth of expertise across
industry and geographies. As members of the board, we are steering the company to think about

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the next goals and longer journey ahead and I did comment a little bit more about transformation.
The objective of the transformation is to have a well-balanced approach towards both channels,
HP and direct, stay in chosen verticals and countries to establish leadership position. Here the
focus is to distance ourselves from the competition in areas of strength. The third element is to
maintain a good balance of developed and emerging countries; have IP and surround IP led
offerings to drive nonlinear growth. We see 2011 as an important year for us, a year of
transformation. Our aim will be to grow our direct business faster than the market. Our strategy
is designed to benefit our business by sharper focus on sales by increasing the number of market
facing units and ensuring tight alignment of sales incentive with excellence in delivery. There
will be an increasing focus on verticals such as banking, capital market, and insurance in Wave-I
and we hope to add at least one more in Wave-II. We will continue to hire aggressively in the
market place while encouraging innovation, incubation of new business areas.

To conclude, this indeed has been an exciting year for the industry and more so for MphasiS. We
have clearly crossed that milestone a billion dollars in revenue and now we have a clear strategy
in place to reach the next billion dollar and that strategy is leveraging on we being small, but at
the same time bringing the depth and breadth of being a large company. So what we say
commonly is retaining the soul and smile of a small company and the opportunity of a large
company. We thank all of you for your continued support to all our endeavors. I also want to
draw your attention to the first ever analyst meet that we are holding on November 25, 2010 in
Mumbai. We have received record number of confirmations for this event. We will be sharing
more details about our go forward strategy during this event. Hence I certainly request you not
only to join us there, but at this point of time probably confine your questions relating to 2010
and Q4 results so that we can have an active discussion during the analyst meeting. Thank you
very much for your participation and it has been as I said a great year. Over to the moderator for
any questions that you may have.

Moderator: Thank you very much sir. Our first question comes from the line of Anand Bhaskaran from
Spark Capital. Please go ahead.

Anand Bhaskaran: Revenue contribution from the top client seems to have decreased on a quarter-on-quarter basis.
Is this due to ramp downs or just wanted to understand dynamics here?

Ganesh Murthy: The number of clients who are contributing has come down by one that is because of our internal
work that we do for HP. As you know it used to contribute 11% last quarter, now that
contributes 10% of our revenues and this is the process where HP has integrated that internal
BPO work that we used to do with their own internal set up and this has been going on for the
last 4 quarters. Now we have reached a conclusion of that decline and as we mentioned earlier,
doing this particular internal work for HP is not really our focus area and we are looking at
serving HP customers.

Anand Bhaskaran: Basically the de-emphasis of the rate card business and more emphasis over to market basis, this
will be right?

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Ganesh Murthy: Yes.

Anand Bhaskaran: Okay fine and secondly what is the dynamics that are going on in the ITO particularly on pricing
and utilization, there seems to be a bit of an aberration on both, just wanted to get a bit of color
on that?

Ganesh Murthy: There is no change in the pricing. Pricing has remained stable between Q3 and Q4. The reason
for the $1 drop in the realization is because there were one time revenues in Q3 which we had
mentioned. The reduction in the utilization is primarily because we have made a conscious
decision to deploy a capability pool. We have an active bench averaging over 200 people and
this is to improve our service excellence in the area of ITO and to capture new opportunities. So
this is the reason why we had consciously taken a decision to lower our utilization. It is also
important to realize that despite having an increased bench, we are still maintaining very good
margins in the ITO business.

Anand Bhaskaran: Okay I understand basically in anticipation of demand that is what is it?

Ganesh Murthy: And also to improve our service levels.

Anand Bhaskaran: And lastly although you answered in the analyst meet, but you had mentioned last quarter that
you intend to be more aggressive on the direct business, so is there any update on this at this
point in time or will you take it later?

Ganesh Murthy: We will go into more detail of what we are planning to do on 25th, but just to give you a quick
highlight. Our direct channel has grown by 8% in this quarter sequentially and in fact our ratios
also increased. So now currently 30% of our revenue in quarter 4 comes from the direct channel.
Last quarter, it was 29%. So we can already see the momentum building up in our direct channel
strategy.

Anand Bhaskaran: Okay that is it from me. Thanks a lot.

Moderator: Thank you. Our next question is from the line of Bikram Mahajan from Bay Capital. Please go
ahead.

Bikram Mahajan: Have we arrived at the renegotiated rates with HP for the next two quarters?

Ganesh Ayyar: Not yet. We are in midst of discussion and as of now, we have not arrived at any specific
renegotiated rates.

Bikram Mahajan: How much of our business with HP is rate card driven?

Ganesh Murthy: About 30%.

Bikram Mahajan: So I believe that as we increase our focus on the open market business, what would be the
expected margin decline as I believe our SG&A may increase disproportionately.

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Ganesh Ayyar: As I said earlier, if we are discussing about our strategy and move ahead, because we are going
to give you a detailed look, it would be good for us to have that discussion during our analyst
meet on November 25.

Bikram Mahajan: Fine and your growth is from the telecom vertical this quarter, was it a function of the system
outage in the telecom facility that happened previously and resulting in deferment of telecom
revenues will it realize this quarter or is it something else?

Ganesh Murthy: The telecom vertical showed a significant increase in the revenues primarily due to a
combination of couple of factors. One is that: one major new client was added. Secondly there
was one time penalty and one time infrastructure issue that we faced in Q3 FY10, thankfully this
did not reoccur in Q4 FY10.

Bikram Mahajan: How much of the deferred revenues did we realize this quarter because of the system outage
previously?

Ganesh Murthy: It is not deferred revenue. We had a loss of revenue in Q3 because of the outage that we
experienced. We have recovered. So as compared to Q3, we are seeing a growth.

Bikram Mahajan: What was the exact quantum that we recovered?

Ganesh Ayyar: It is not recovered because in Q3 due to outage, it hurt our run rate of revenue. We are back to
normal in Q4.

Bikram Mahajan: Just wanted to understand the breakup between the revenue increase from telecom vertical in
terms of the new client addition and because of the normalization of revenues that has happened?

Ganesh Murthy: Totally about Rs. 120 million was because of the penalty and the outages and the balance was all
growth.

Bikram Mahajan: And lastly just wanted to get a sense on amalgamation accounting treatment of merger with
MphasiS FinSolutions?

Ganesh Murthy: We acquired it in September last year and the plan was not to have a separate legal entity but to
merge it into MphasiS Limited so that we can accomplish certain synergies and we achieved this.
We had applied to the High Court and based on the High Court’s directions, we have charged off
the goodwill against the retained earnings and so this is as per the directions of the High Court
and the normal accounting practice.

Bikram Mahajan: There was a goodwill write-off I believe of around Rs. 170 million?

Ganesh Murthy: Correct. Once you merge the companies as per the High Court directions, you are supposed to
write-off the goodwill; you can’t show the goodwill separately because the distinct entity does
not exist.

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Bikram Mahajan: So this is as per accounting standard 14 or is it a prudent policy that you followed because just
within a year of acquisition, you are writing off the goodwill.

Ganesh Murthy: This is as per the High Court directions and because we have merged the company that is why
the goodwill cannot be shown because there is no separate asset in the balance sheet. It has got
merged into MphasiS in the group financials.

Bikram Mahajan: Thank you so much, that is all from my side.

Moderator: Thank you. Our next question is from Kunal Sangoi from Edelweiss. Please go ahead.

Kunal Sangoi: My question pertains to the incremental revenues. Most of the Rs 60 crores of increase in
revenues has come from telecom vertical. It then helps reconcile the same within the client
buckets, top 2 to 5 clients, 6 to 10, and beyond 10. Is the increase in revenue in all these client
buckets also from telecom because ideally one would have expected it would be spread across
verticals?

Ganesh Murthy: It has spread across verticals. So we are seeing about Rs 11-12 crores from the banking and
financial services. I agree that the largest share in the growth is from the telecom vertical, but
there have been increases in the banking vertical also.

Kunal Sangoi: Okay. The other question is on the ITO side. You did mention that you want to create an
employee capability pool and improve the service excellence. So does that mean that from a
delivery perspective, you would require higher number of people or in terms of delivery side is
there some change probably from say last one year where we used to operate at almost high 70s,
early 80s and now the level of utilization the bench requirement has gone up particularly from
delivery side?

Ganesh Murthy: No, I do not think this is permanent feature. This is more of a one-time item. May be it will go in
for couple of quarters primarily because of trying to improve service excellence with also taking
advantage of new opportunities. If you see our volume growth, in ITO the volume growth has
been the highest. Overall revenue has grown by 6.5%, but the volume growth or effort revenue
has actually grown in ITO by 7.7%. So we need to continue to take advantage of these growth
opportunities. Kunal Sangoi: So nothing related to creation of any platforms from the delivery
side right?

Ganesh Murthy: We already have an existing platform when we acquired Fortify. We are leveraging on that.

Kunal Sangoi: Last question from my side with regards to any renegotiation that we are having with HP at this
point in time. What is the HP demand in terms of where the pricing should go, any color on that?

Ganesh Murthy: I think it is too premature at this point of time to discuss that. One thing we have made pretty
clear is that whatever we do, it will be a combination of various factors including volume
increases and so on.

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Ganesh Ayyar: It is too early to comment right and in any negotiation what is important is we conclude the
negotiation without too many people trying to help us in that negotiation. So at this point of time,
I would say it is too early to add any color.

Kunal Sangoi: And basically just to clarify, it will be effective from 1st of November right?

Ganesh Murthy: No, nothing has been worked out. So again it is completely premature to comment.

Kunal Sangoi: Thanks a lot.

Moderator: Thank you. Our next question is from the line of Depen Shah from Kotak Securities. Please go
ahead.

Depen Shah: If you could just fill us in with the volume growth in all the three businesses, ITO you said had a
7.7% volume growth, how about applications and BPO if any?

Ganesh Murthy: Applications had 4.7% volume growth and BPO had 0.8% volume growth. Overall volume
growth for the company was 4.9%. There was a combination of price and mix of 0.5%. Our
FOREX had a negative impact of 0.2% totaling up to 5.2%.

Depen Shah: The other thing is in terms of the attrition, how much was the attrition and the related question is
any further increments for employees which you are planning in the near term?

Ganesh Murthy: Attrition continues to be a matter of concern and so far as the increments are concerned, we have
our normal process, where we have two increments, one in May and other one in November. So
these are people who did not get an increment in May who would get an increment in November.
So that normal process continues, but it will only cover about 10% of the population and then we
have a normal promotion strategy, but our major increment will happen in the May cycle.

Depen Shah: And the last thing is book-keeping question in terms of the data sheet which you have given, the
number of employees has increased because of the addition of the contractors; however, we are
not able to reconcile the same with the revenue figures because billing rates etc. remain same. So
could you just help us with it, how should we go ahead?

Ganesh Murthy: The number of people has not increased. What we did is, we realized that a large portion of our
population for delivery headcount consists of contractors especially in onsite areas. So then
showing only regular MphasiS badged employees would be incorrect. So what we did is we have
included sub contractor headcount who are billable headcount. We have included that and we
have restated the previous figures also.

Depen Shah: I understand that, but in terms of reconciling the revenues which you have given or the actual
revenues with the employee numbers in the utilization rates, how should we go ahead? Do we
get the separate numbers for MphasiS standalone?

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Ganesh Murthy: We do not look at utilization for contractor separately and so utilization or revenue figures and
so on were always on a total basis and only the headcount that we used to report earlier was only
the MphasiS headcount. That was an aberration there. We have neutralized that aberration by
including delivery contractors.

Depen Shah: So we should make suitable amendments to the utilization, I will just take it offline then, no
issues. Thank you very much.

Moderator: Thank you. Our next question is from the line of Pranav Tendulkar from Brics Securities. Please
go ahead.

Pranav Tendulkar: Any guidance about MAT credit entitlement for the coming quarters because that factor has
reduced the tax out-go this quarter considerably?

Ganesh Murthy: We have MAT credit in some of our companies. MAT credit continues and since the tax
exemption is going away next year, we will be able to utilize MAT credit in the following years.

Pranav Tendulkar: So can we expect it to remain same or will it decrease in coming quarters?

Ganesh Murthy: Coming quarters, naturally the MAT credit will decrease because we will be utilizing it because
the tax will go up since the STPI scheme will be discontinued. Pranav Tendulkar: The
second question was about the clients in the direct channel, the number of clients in the direct
channel seems constant or in fact it has decreased YoY. So any guidance on that or any inputs on
that?

Ganesh Murthy: There is no decrease. We have been adding clients. In this quarter we added 22 clients. Out of
22, 8 were direct clients.

Pranav Tendulkar: And any guidance about how the project pipeline is?

Ganesh Ayyar: The pipeline I would say remains healthy.

Pranav Tendulkar: And any uptake in the demand in the US because US geography has shown almost flat growth
this quarter. So any guidance on that?

Ganesh Ayyar: I do not have guidance by geo as of now.

Pranav Tendulkar: Thank you.

Moderator: Thank you. The next question is from the line of Srishti Anand from Angel Securities. Please go
ahead.

Srishti Anand: My question pertains to the tax rate. As you mentioned that you will be utilizing the MAT credit
going forward. So what kind of tax rate can we really look at for 2011 and 2012?

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Ganesh Murthy: For our accounting year FY11, we are looking at an average effective tax rate of around 18.5%
and 25% in the following year.

Srishti Anand: And can you give some details on the hedge position?

Ganesh Murthy: On the total hedge position, our US dollar hedge is around $536 million. Our Australian dollar
hedge is about $43 million, Pound Sterling $37 million, then we have smaller hedge in Euros,
Singapore dollars and Canadian dollars.

Srishti Anand: But for the US dollar hedge cover, what is the participation rate like?

Ganesh Murthy: You mean the hedge rate, is it?

Srishti Anand: Yes.

Ganesh Murthy: The average hedge rate is 47.66.

Srishti Anand: And what is the tenure for the cover?

Ganesh Murthy: It is an average tenure. It will be extending between 1 year and 2 years.

Srishti Anand: Okay and also in terms of hiring, you mentioned that you plan to hire aggressively. So as of now,
do you have any billable positions open for the next quarter?

Ganesh Murthy: Yes, we have about 800 open positions in ITO and in APPS we have about 1,600 open positions.

Srishti Anand: And this is for the next quarter?

Ganesh Murthy: They are open positions to be delivered.

Ganesh Ayyar: Open billable positions may not necessarily be just restricted to next quarter.

Srishti Anand: Okay fair enough, thank you so much.

Moderator: Thank you. The next question is from the line of Pinku Pappan from Nomura Securities. Please
go ahead.

Pinku Pappan: My question is on utilization levels in ITO, what levels are you comfortable with you mentioned
that you are going to create a bench and you are looking at operating at a lower utilization. So
where is your comfort level?

Ganesh Murthy: We have already initiated a bench in Q4 and that is the main reason why the utilization has
declined from 72% to 66%Ganesh Ayyar: So the zone that we would like to operate in is
anywhere between 70 to 75% there about.

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Pinku Pappan: And could you also talk about your strategy of using contractors, see in your onsite, we have
seen a sharp increase in your ITO onsite staff. So was this mostly contractors and secondly this
increase in staff is related to the Fortify business or is it related to the HP led business?

Ganesh Murthy: I would not treat it as a significant increase. Essentially you are right. I think the major portion of
this is Fortify and also coupled with some HP channel business that we do in Australia.

Ganesh Ayyar: It is not a strategic shift that we are making in this area if I may come back to your question.

Pinku Pappan: So going forward, do you intend to replace your contractors with your own employees or what is
the strategy around there?

Ganesh Murthy: As I said, there is no strategic intent one way or the other because many times you go for
contractors based on the type of talent whether you want to work on it and the duration of usage
that is required, is it a temporary uptake or is it a permanent uptake. So those are the factors
which play a role and we have not made any strategic shift in our usage of contractors in terms of
be the hiring or converting.

Pinku Pappan: I mean just want to press on it a little bit further. Year over year, it has shown an increase. Do
you think this trend is likely to continue?

Ganesh Murthy: The overall onsite portion has increased and first of all there was one major increase because of
the Fortify acquisition, but apart from that our onsite has not increased. If you look at our onsite
volumes, you would see that as compared to other companies, we are at a very low percentage
and now I think this increase is also reflective of our strategy to go for more direct channel
growth.

Pinku Pappan: Also on your verticals, this quarter definitely has been telecom that has led the growth, but do
you think this growth is likely to be broader based going forward. What is the outlook on other
verticals especially the verticals have declined this quarter, manufacturing and technology. So
what is the broad outlook you can share with us on these other verticals?

Ganesh Murthy: I think the growth areas essentially for us continue to be banking and financial services and the
insurance verticals.

Pinku Pappan: And lastly what was the dollar revenue in the quarter?

Ganesh Murthy: We have crossed a billion dollars for the year, $296 million for the quarter

Pinku Pappan: Okay thanks a lot.

Moderator: Thank you. Our next question is from the line of Madhu Babu from Systematix. Please go ahead.

Madhu Babu: Sir could you talk about the ramp up in Sri Lankan facility and what impact will it have on the
tax rates?

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Ganesh Ayyar: Tax rates I will let Ganesh Murthy answer, but let me give you the plan in Sri Lanka. We have
people whom we have ramped up. First of all, we have moved some of our internal IT processes
to Sri Lanka so that we can ensure that there is work. At the same time, we are in discussion with
two customers to take their work to Sri Lanka. So at this point of time, we have 100 odd people
in Sri Lanka and we hope to ramp it up within a short span of time.

Ganesh Murthy: To answer your question about the impact of tax. So as you are aware, in our Sri Lanka
operations we enjoy tax holiday for the next 5 years. So this will have a favorable impact on our
tax rate, but it all depends on the number of hires that we do in Sri Lanka.

Madhu Babu: Sir and now the cash position is around Rs 1,638 crores which is a decent cash balance on the
balance sheet, are we contemplating on increasing the dividend payout ratio or are we looking
for any acquisitions?

Ganesh Murthy: As you know, we have declared a dividend of 40% which is an increase from the previous
dividend of 35%. We have looked at a higher payout to the shareholders and our mergers and
acquisition strategy continues to hold good. We are looking actively at certain acquisitions. In
the last one year, we have done two acquisitions and we would be doing acquisitions in the
future too.

Madhu Babu: Sir, G&A and S&M have gone up this quarter, so what is the run rate we should model for the
next couple of quarters in general and administrative expenses?

Ganesh Murthy: G&A has not really gone up because I had mentioned in the Q3 call that we had a Karnataka
VAT refund. We won a case in the Karnataka VAT and relating to that we had a write back of
about 13-14 crores in G&A in the last quarter. So on a like-to-like comparison, our G&A has
actually remained flat and we hope to continue to maintain this level of G&A in the coming year.

Madhu Babu: Sir last question the debtor days has shot up to 83 days, is that because that open channel is
increasing its contribution?

Ganesh Murthy: No, it was not because of that. Essentially if you look at our breakup of our debtors, it is actually
in the billed debtors. There was some invoicing that we did in the last month of quarter which
has yet to be realized. Obviously they will be realized only after about 30 to 60 days. So that is
the reason for the sudden blip in the DSO.

Madhu Babu: Okay sir thanks a lot.

Moderator: Thank you. Our next question is from the line of Rahul Jain from Dolat Capital. Please go ahead.

Rahul Jain: Can you give some sense on the BPO part of the business considering the actual fall in the total
employee count?

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Ganesh Murthy: The fall in the employee headcount is very conscious decision. If you look at our track record in
BPO over the last two quarters, we have been consistently improving the gross margin from
12% to 14.7 and now to 17% and the way we have achieved this is to link our headcount in line
with call forecast. Many of our customers provide us a call forecast and based on the call
forecast, we managed our headcount and our shift in employee base and we have been pretty
successful in doing that and as a result, we have maintained the same revenue in the BPO as
compared to the last quarter, but significantly improved the margins.

Rahul Jain: Okay and on the license income side, we have not seen any major booking from last two
quarters, anything you can share on that?

Ganesh Murthy: In the license, we have actually implemented two sites. In the last quarter, we implemented
American Postal Workers Union site. In this quarter, we implemented Keenan which is an
insurance brokerage house. So though we have not actually done any license sale in this quarter,
we are active in implementing the licenses sold. Another thing to realize is some of our
customers actually prefer not to buy the license, but to get into a ASP mode in this kind of
services which will ensure that their total cost of operations also is effective and for us also it is
beneficial because we get a continued stream of income rather than getting a one-time license
income.

Rahul Jain: Lastly on the rent cost. If you see the rent cost on a QoQ basis have increased significantly, but
there is no as such trend can you share something on that?

Ganesh Murthy: There is no increase in the rent in actual terms. There has been regrouping in this quarter from
the others since there was certain lease rentals of certain equipment that was classified as others
in the previous quarter. There is Rs. 55 million that has been reclassified as rent in this quarter.

Rahul Jain: Sure and thanks for taking my question.

Moderator: Thank you. Our next question is from the line of Rajat Gupta from Concept Securities. Please go
ahead.

Rajat Gupta: I have a question on utilization rates, can you give us any guidance on the BPO service segment
as utilization rates while it is going up, the overall performance on an annual basis is not very
good.

Ganesh Murthy: I do not agree with you totally because we went through a bad patch in the BPO in quarter 2, but
if you see from quarter 3 onwards, the gross margins have been favorable and they have been
steadily improving.

Rajat Gupta: And are you looking for any opportunities for inorganic growth as the company is sitting on a
very healthy cash equivalent balance?

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Ganesh Ayyar: We are actively scouting but we have not set any timelines order because we need to find the
right target. So as we speak, the M&A team of MphasiS is clearly scouting for potential target.

Rajat Gupta: Okay that is it from me. Thank you.

Moderator: Thank you. The next question is from the line of Grishma Shah from Envision Capital. Please go
ahead.

Grishma Shah: Could you give us some perspective on the CAPEX plans for next 2 years?

Ganesh Ayyar: Our CAPEX plan involves the facilities, the centers that we have taken up, Sri Lanka center, the
Wollongong center, our center in Poland. So all these will involve CAPEX plus we will be
shortly going on taking additional leases in certain SEZs and that will involve our CAPEX, but
nothing very significant.

Grishma Shah: So it would be 100-200 crores?

Ganesh Murthy: We do not really look at that significantly because that is only fit outs and computer equipment
that we have.

Grishma Shah: Okay fine, thank you and good luck.

Moderator: Thank you. Our next question is from the line of Vibha Salvi from Anvil Shares & Stock. Please
go ahead.

Vibha Salvi: I would like to ask one question on utilization ITO, do we see the same moving at the current
level or there would be some improvement in the coming quarters?

Ganesh Murthy: In coming quarters, definitely we like to look at as Mr. Ayyar mentioned utilization band
between 70 to 75%. So we would be looking at improvements there.

Vibha Salvi: And in application services?

Ganesh Murthy: Application services, the same holds good the same band.

Vibha Salvi: And sir any guidance on employee additions?

Ganesh Murthy: We do not provide any guidance on employees.

Vibha Salvi: That is it. Congrats again on good set of numbers.

Moderator: Thank you. The next question is from the line of Sandeep Shah from ICICI Securities. Please go
ahead.

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Sandeep Shah: Just on the EBITDA margin, there could be probable headwinds through billing rate
renegotiation, where we may link it to volume discount or higher investment in the sales and
marketing for the direct channel to ramp up as our target is to go higher than the industry plus we
are looking to, already introduce a new RSU scheme where it may entail RSU expenses. So in
this scenario, do we expect margins would be sustained going forward?

Ganesh Ayyar: Sandeep on that front I think while your observations are fairly logical for us to deal with this
topic in detail since we are talking about 2011 and transformation areas of investments, impact
on profitability and the whole thing, 25th November would be a better date for us to discuss.

Sandeep Shah: And on the BPO utilization, generally we have not seen such kind of utilization in the BPO
where the attrition has always been higher. So 74% to 82% utilization seems sustainable?

Ganesh Murthy: As I said that the movement it starts touching and going beyond 80% obviously it is unhealthy at
the same time the moment it starts dropping below 65% or 70% that is also unhealthy. We would
like to operate it in a particular zone. See the question is how much of work is being done for
dedicated clients and so on, but you are right. It is not something which is desirable once it starts
going beyond 80%.

Sandeep Shah: And there is one loan from HP taken worth close to around Rs. 444 million, what is the nature of
this?

Ganesh Murthy: This loan was taken actually in quarter 3 from HP. It is a long-term loan and primarily we took
this loan to partly finance the acquisition of Fortify, which we acquired in Q3. The reason why
we took a loan even though we have significant amount of cash in our balance sheet is because
of certain tax reasons coming from the US tax side. If we had to remit the funds from India, HP
would have had to pay a tax. So instead they offered to finance this partly through a loan.

Sandeep Shah: And on the hiring on the APPS side, we are still dependent on time and material. The hiring in
this quarter is roughly around 2% of the last quarter base. So going forward looking at the hiring
numbers, will ITO outperform the other two segments in terms of revenue growth?

Ganesh Ayyar: If you look at the numbers that Ganesh Murthy articulated earlier during the call about the open
billable position, clearly APPS has roughly 1,500 odd open billable position and where as ITO is
closer to 800. So that is our billable open position as of now and that probably dictates our
current state of demand.

Sandeep Shah: Thanks and congrats on good set of numbers.

Moderator: Thank you. The next question is from the line of Pratik Gandhi from IDBI Capital. Please go
ahead.

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Pratik Gandhi: Couple of questions. First can you breakup, 7.9% dollar growth in the APPS segment in terms of
volume, pricing, and exchange?

Ganesh Murthy: We will talk about Rupee variance rather than giving you dollar variance. APPS overall grew by
5.8% and out of that, volume growth is around 4.8% and price / mix is around 1%.

Pratik Gandhi: Secondly in terms of Fortify’s contribution in the ITO segment in terms of the revenue and
profitability?

Ganesh Murthy: The Fortify has grown by around 6% from the previous quarter.

Pratik Gandhi: I think last quarter it was 27 crores.

Ganesh Murthy: It is 6% growth.

Pratik Gandhi: How were the margins?

Ganesh Murthy: Margins are averaging the same across the ITO.

Pratik Gandhi: Lastly on the depreciation side, we are seeing depreciation came down by around roughly 7% on
a QoQ basis and I think in the last quarter earnings call, you mentioned that the depreciation
would not come down because you will be adding more facilities the way we added in Sri Lanka
and Australia. So what was the reason behind the lower depreciation in this quarter and how will
it pan out going forward?

Ganesh Murthy: We follow a pretty aggressive depreciation policy as compared to the other IT companies. So we
actually charge of all the IT equipment in laptops and desktops over a two-year period while
others industry usually adopt a 3 to 4 years period. So, one reason is that since many of our
assets are already fully depreciated, there will be lower amount of depreciation coming in even
though we are adding to the capital base.

Pratik Gandhi: Okay thank you so much.

Moderator: Thank you. The next question is from the line of Soumitra Chatterjee from Execution Noble.
Please go ahead.

Soumitra Chatterjee: One small question on pricing. We are working on two models. One is the rate card and second
is the one where we give the revenue shared to HP. If I am not wrong Mr. Murthy, I think HP has
utilized all its contractual levers in terms of pricing in this segment, am I correct?

Ganesh Murthy: That is your view. I do not know whether HP shares that view.

Soumitra Chatterjee: HP share of the rate card I think one of the segment, there is no contractual obligation left in
terms of price cuts.

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Ganesh Murthy: Why don’t you finish it so, I can understand where you are getting at.

Soumitra Chatterjee: In captive and migration, we are working on the rate card model and in the joint Go-to-market
HP retains the part of revenue and passes on the balance to MphasiS.

Ganesh Murthy: That is correct.

Soumitra Chatterjee: So the renegotiation that is going on right now is for which segment, the rate card segment or the
joint Go-to-market model where they retain our shares?

Ganesh Murthy: So let me add some color. Every six months we sit down to discuss about our rates that does not
mean that every rate is being reviewed. It does not mean that only one element of the rate is
reviewed. We also look at the volume projections . As of now nothing has been concluded. So I
am not able to comment that only this element is being looked at or the other element is being
looked at., Two quarters ago, we shared as to what we had Since at that point of time, we had
concluded it. At this point of time, we have not yet concluded and it is hard to comment.

Soumitra Chatterjee: Okay thanks.

Moderator: Thank you. The next question is from the line of Krishna Mahali from Key Note Capital. Please
go ahead.

Krishna Mahali: You have identified the HP internal client as a zero growth area, right?

Ganesh Ayyar: No, I did not say zero growth. We said we do not focus. It is not an area of focus for us.

Krishna Mahali: So what would be the breakdown in APPS, BPO, and ITO from HP internal client?

Ganesh Ayyar: I would say a significant portion of that is BPO and very small portion it will be APPS and ITO.

Krishna Mahali: Okay and the manpower that has been committed to this?

Ganesh Ayyar: We do not measure it in terms of headcount because it is a shared delivery structure.

Ganesh Murthy: In revenue terms, it is roughly around 10% of our revenue. 10% of our revenue is HP as a
customer.

Krishna Mahali: The license revenue model that you have for Javelina product. Can you describe it in detail, how
exactly the annuity flows in?

Ganesh Murthy: Yes. There are two models that we have for Javelina. One is the license model. So like any other
product, any other software product, we charge an initial upfront fee after user acceptance testing
and every year. There is AMC to the license and if you are part of the AMC, then we will
provide product upgrades and patches and so on. Then there is another model and that model is
where we host the application and the user does not buy the license, but he uses the product on a

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number of headcount basis or number of users’ basis. So that is a sort of an ASP model where we
charge based on the number of users.

Krishna Mahali: One more thing I wanted to know about the kind of client engagement that you have with HP
channel, do you have to directly give them deliverable or is it routed through HP or something?
You have some clients with the HP channel. So what is the engagement model like are you
directly answerable to those clients or?

Ganesh Ayyar: At the end of the day when we are doing a channel business, collectively we are answerable to
the client and depending on which we have two models. One is rate card, the other one is Go-to-
market. The responsibility ranging from service excellence to other types of commitments or
accountability or liability varies, but then at the end of the day from a service excellence
standpoint, we are committed anyway.

Krishna Mahali: Final question is in the HP channel, how are the contracts negotiated, if you could give some
description?

Ganesh Ayyar: To be honest on a phone call that is very hard thing to describe because I would highly
recommend that you set up some time so we can describe because it is a fairly exhaustive
discussion that one needs to have.

Krishna Mahali: Okay sir, thank you.

Moderator: Thank you. Our next question is from the line of Ashwin Mehta from Nomura. Please go ahead.

Ashwin Mehta: Just wanted to get a sense in terms of APPS open positions, last quarter we had indicated, we had
some around 2,000 open positions. This quarter, we are talking about around 1,600 open
positions. So has the visibility not improved in terms of our APPS business from quarter-on-
quarter perspective?

Ganesh Ayyar: I think to conclude that visibility is directly correlated to open position, may not be because at
the end of the day having too high an open position situation in my mind is not healthy because
customer is not going to wait forever for you to hire. So from that perspective, your ability to
fulfill customer requirement is important and we have had significant improvement in our ramp
up or recruitment in the last one quarter. So it is more reflection of that rather than flagging
pipeline.

Ashwin Mehta: And in terms of these open positions, these are largely for the HP channel or this would include
the direct businesses as well?

Ganesh Ayyar: Actually it is a combination of both. So it is not just HP channel alone.

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Ashwin Mehta: Secondly in terms of S&M, we have seen almost a 50% jump in S&M over the year and do you
think given our emphasis on growing the direct channel more that would be further investments
in terms of S&M or the current levels in terms of percentage of sales are sustainable?

Ganesh Ayyar: I think we will discuss it during 25th, but fundamentally we are committed to increasing our
presence in front of the customers. Also if you talk about the jump in FY10, in this year we have
spent an additional $1 million on a high decibel marketing spend which we had not done in
FY09. So that also accounts for an increase.

Ashwin Mehta: And just one last thing in terms of our OCI balance, what is the balance of accumulated gains?

Ganesh Ayyar: It is around Rs 65 crores.

Ashwin Mehta: Thanks a lot sir and all the best.

Moderator: Thank you. The next question is from the line of Pratish Krishnan from Bank of America Merrill
Lynch. Please go ahead.

Pratish Krishnan: Can you share the attrition numbers for the 3 segments?

Ganesh Murthy: The attrition in the case of APPS is around 30%. In the case of ITO, it is around 25% and in the
case of the international BPO is around 70%.

Pratish Krishnan: And is it quarterly or annualized?

Ganesh Murthy: We are adopting the trailing 12 months.

Pratish Krishnan: I just want to know price line in terms of the focus on the non-HP side of it, is it because of some
change in the HP off service strategy or do you perceive any pricing risk going forward on the
HP side?

Ganesh Ayyar: Are you saying that our direct strategy is influenced because of our negative sentiments around
HP channel, is that?

Pratish Krishnan: Yeah, I am just wondering I mean the reduced focus in terms of the non-HP business.

Ganesh Ayyar: You mean increased focus on direct business, is that?

Pratish Krishnan: Yes that is correct.

Ganesh Ayyar: Yeah, so I think it has less to do with anything on negative sentiments around HP business. It has
more to do with the fact that we want to have greater positive sentiments around our direct
business. So it’s not because one is not influenced by the other, if you look at our track record
our business through HP channel has been growing at a healthy clip. And we want to make sure
that we have similar vibrancy in our direct channel, it is as simple as that.

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Pratish Krishnan: Okay, I clearly thought that HP is a pretty large opportunity I am just wondering, if it’s a large
opportunity, will you probably be keener to invest more in the HP side rather than the non-HP?

Ganesh Ayyar: Sure I understand, but, even though HP does offer and continues to offer large opportunity for us
you need to ensure that our direct business remains healthy and because at the end of the day we
want to make sure that both engines are firing well and last but not the least while there is
tremendous amount of opportunity, increasing client concentration at some stages can also be
counterproductive.

Pratish Krishnan: Sure. In terms of the current liabilities, you know, there is other liabilities segment I think which
has increased by around 70% year on year. Any reasons to why this has gone up so much? And
what would these be, typically?

Ganesh Murthy: About Rs 640 crores to about Rs 810 crores.

Pratish Krishnan: Yeah, within that, I think the share of the other liabilities has moved from Rs 284 to around Rs
470 crores.

Ganesh Murthy: One major increase is because of the earn-out model that we have for Fortify. When we
acquired Fortify, we had an immediate consideration and then we had an earn-out of $12.5
million that would be paid over the next two years subject to achievement of certain targets. So
that’s the major contribution for that.

Pratish Krishnan: Yeah, can you quantify the amount of like it should be –

Ganesh Murthy: $12.5 million

Pratish Krishnan: Okay, yeah, fine. Thanks a lot.

Moderator: Thank you. Our next question is from the line of Prashant Kumar from Wealth Management,
please go ahead.

Prashant Kumar: You said that you have 1,600 open positions in APPS, how much was it in ITO?

Ganesh Murthy: 800.

Prashant Kumar: 800, okay so that’s slightly up. Can you share some light on what kind of visibility we have in
terms of growth rates over the next couples of quarters?

Ganesh Ayyar: Sorry we don’t provide any visibility or guidance in that area.

Prashant Kumar: Okay. But shall we assume that last year’s growth rate can be replicated over a one year or two
year horizon?

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Ganesh Ayyar: Right, this is the same question you are asking differently the fact is that we don’t give any
forward guidance.

Prashant Kumar: Okay, sure sir. Thank you.

Moderator: Thank you. The next question is from the line of Pankaj Chopra from Shanti Asset Management,
please go ahead.

Pankaj Chopra: How does your sales team approach the market directly, is it seen as a part of HP or a group HP
or is it seen as MphasiS separately and does being part of HP provide that leverage to you?

Ganesh Ayyar: So when we approach, when we talk about directly we have done market segmentation and we
approach them as MphasiS. Now in terms of shareholding, it is obvious that we are part of HP
but we approach them as MphasiS. The advantage which we have is the fact that the expertise
that we have developed working with HP and the access that we have to the technology and not
forgetting the fact that our lineage especially in certain verticals we have developed tremendous
deliverables and capability and track record. So these factors play to our advantage and that’s
how we approach the customer.

Pankaj Chopra: Okay, I understand. My next question is essentially, a comparison of HP as a company which is
$120 billion and we are $1 billion, how important are these to have six monthly negotiations,
who are kind of people involved in getting these negotiations through and why would a $120
billion company have to work on cutting down parts of all getting down the best, you know,
some kind of rates with MphasiS. I would like to have your comments on that?

Ganesh Ayyar: The part of your question you need to direct to HP, the other part which you are directing
towards me.

Pankaj Chopra: Yes.

Ganesh Ayyar: Is to us HP is an important partner? Yes and every negotiation that we have, in that negotiation
we take a view of what is best for MphasiS and that’s how we approach it. Regarding whether
HP should be negotiating, whether we are important to HP, why should they have been
negotiating with us, I think those are the questions that you need to ask them. But let me give
you a different answer to your question, so that goes back to should I be negotiating a rental of
Rs 50 lakhs that we are incurring on a particular site with the land owner. The question is the
same, right? As a billion dollar company why are you negotiating with the land owner where the
rental cost is Rs 50 lakhs or thereabouts.,

Pankaj Chopra: Okay, I get that. There have been certain reports by analysts talking about the HP opportunity
just not being there or it is being extremely small for MphasiS anymore and in some sense there
is linkage that MphasiS is not focusing on or rather focusing outside of HP. So could you give us
your comments on whether the HP opportunity itself is worthwhile from current levels and if it

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is, we would have expected much higher growth levels, so it is demand which is lacking or is it
on the supply side that we are not able to get in that many people to monetize this opportunity.

Ganesh Ayyar You know, you have multiple questions and observations in your question. So let me take you
through. Firstly anybody who is getting a sense that we are defocusing from HP as a partner, that
is a wrong understanding of our strategy. The details we can certainly cover on 25th so that’s
number one. Secondly the opportunity that exists within HP I agree with you that, there is
tremendous opportunity, the question is whether that’s addressable by us and whether it is
winnable by us and that’s how we invest our resources based on that. So the opportunity is
certainly huge and we are working on it. It is not, that we are defocusing from HP as a partner.
We continued to stay engaged and the details you will see on 25th as we share with you our
transformation, our structure and our strategy and analysts who are saying that MphasiS has no
opportunity or low opportunity, I think that’s why they are analysts and I run MphasiS.

Pankaj Chopra: Sure, okay. Thank you very much and all the best.

Moderator: Thank you. Our next question is from the line of Nitin Padmanaban from Indiabulls Securities,
please go ahead.

Nitin Padmanaban: Two questions actually. One is with regard to the total capacity we have for incremental head
count, how much open space do we have?

Ganesh Ayyar: We don’t keep actually significant open space just like that. But we have contracted space at any
point of time, we are always in the process of doing fit outs for certain space that we have hired a
couple of months ago.

Nitin Padmanaban: Where I am trying to get at is because we haven’t seen rentals increase, depreciation also is
coming down. So with incremental growth coming in something should go up, so just trying to
get a sense on it.

Ganesh Ayyar: Okay, I think that’s very valid point. See, the approach that we adopt is first of all if you look at
it while our headcount has gone up our real-estate footprint didn’t go in anywhere in the same
proportion because we focused a lot on seat utilization. Secondly, in terms of how we approach a
future projection is we have an integrated resource forecasting model within the organization
which includes things like real-estate and IT and then we combined it with our ability to do seat
utilization and then we arrive at this. So ultimately increased profitability is a function of how we
are utilizing our existing assets. So I take that as a complement that we have increased our
footprint not increased the rental and I will pass on the credit to the guy who manages the real-
estate.

Nitin Padmanaban: Sure. But what’s your view going forward?

Ganesh Ayyar: We are right now doing some fit out as we speak and once the project is completed that will
come into mainstream. Nitin Padmanaban: Okay. And second would be with regard to the

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attrition number that you just gave us, since it is on an LTM basis, are you a seeing it trend down
and if it is trending down, how significant is it trend out?

Ganesh Murthy: If you really look at the last month or last couple of months we have seen a reducing trend. But
we are not happy with it. It is receiving focus from the senior management and we have plans in
place to arrest this attrition and to bring it lower.

Nitin Padmanaban: So when we talk of the open positions for Apps and ITO, how much of that would be to fill in
the attrition and how much for growth? Or is it totally for the growth?

Ganesh Murthy: It’s a combination of both. Open position means it is a billable position where the attrition has
happened, it could be that or it could be growth too.

Ganesh Ayyar: But a snapshot view would be where its stands today.

Ganesh Murthy: Correct.

Nitin Padmanaban: Sure, fair enough. Thank you.

Moderator: Thank you. As of now there are no further questions.

Ganesh Ayyar: Okay. So, let me conclude, first of all I do want to extend invitation to all of you to our Analyst
event on 25th November. Please reach out to our investor relations if you haven’t received the
invitation or the details because we can provide you that information. I certainly look forward to
further interaction because in many ways as we celebrate reaching the milestone of a billion
dollars that is clearly looking at the rear view mirror. What we are preparing for is the next phase
which is going to be different in many ways continuing to retain the benefit that we used to
extend to our customer as a small company, but also bring the benefit of a large company. This is
a significant transformation we are undertaking. So to that extent, the timing is absolutely
perfect. Your comments, your feedback has clearly helped us and guided us to look into areas
which we may not have thought of. So our success of a billion dollar is a reflection of not only
our employees and customers but including you because the type of questions, incisive questions
that you ask makes us think. So I do want to thank you for your contribution to our success. I
look forward to continued partnership and on that note I hope to see all of you in Mumbai on 25th
of November. Thank you very much and good luck to all of you.

Moderator: Thank you very much. On behalf of IDFC Securities that concludes this conference call. Thank
you for joining us and you may now disconnect your lines.

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