Directors report

20. Human resource management

Employees are our vital and most valuable assets. We have created a favorable work environment that encourages innovation and meritocracy. We have also set up a scalable recruitment and human resources management process, which enables us to attract and retain high caliber employees. We added 6,837 (net) and 18,905 (gross) employees, taking our total strength to 92,688 up from 85,851 at the end of the previous year. Our attrition rate stands at 13.4% compared to 11.1% for the previous year. Over the last year, we received 4,00,812 applications from prospective employees and we continue to remain an employer of choice in the industry.

During the year, we implemented the Infosys Role and Career Enhancement (iRACE) program. iRACE aligns talent management activities with client priorities, business needs and employee aspirations. We are excited about the influence iRACE will have on our future success.

21. Education & Research

We understand the significance of learning and continual education in providing our employees with latest skills and technologies. We believe this will help in creating a challenging, entrepreneurial and empowering work environment that rewards dedication and a strong work ethic for our employees. We have instituted two specialized units, Education & Research and the Infosys Leadership Institute (ILI) to address the learning needs of our Company.

The Infosys Global Education Center, a world-class training facility established at our campus in Mysore, India, is aimed at consolidating the learning requirements across the Company. With a total built-up area of 1.44 million square feet, the Infosys Global Education Center can accommodate the training needs of approximately 14,000 employees at a time.

Our training, continuing education and career development programs are designed to ensure that our technology professionals and leaders enhance their skill-sets in alignment with their respective roles. Most of the engineering graduates we hire complete an integrated on-the-job training module of about 20 to 29 weeks before they are assigned to a business unit.

Our employees also undergo certification programs periodically to develop the skills relevant for their roles. During the year, the total days of training doubled to over two million person-days. In addition, we have been working with several colleges across India through our CampusConnect program, enabling their faculty to provide industry-related training to their students.

As of March 31, 2010, the Education & Research unit employed around 610 full-time faculty members, including 208 with doctorate or master’s degree.

During the year, the Education & Research unit published a compendium of white papers. These are also shared with our partner CampusConnect institutions. The compendium covers domains such as computing model and systems, software architecture and information and theory application in supply chain management. Researchers from the group have also published papers in renowned international publications and conference proceedings.

Several world bodies have recognized our achievements in the fields of knowledge management and continual learning programs. Our Education & Research unit has received the following awards and recognitions during the year :

ILI focuses exclusively on developing leadership skills for our
senior-most and high potential tier leaders. Each tier leader is assigned an ILI counselor for personalized coaching and for planning
self-development programs.

ILI members have published original research papers and made several presentations at global conferences including the prestigious Society for Industrial / Organizational Psychology’s ‘Leading Edge’ forum and other annual conferences. The research topics included succession forecasting, virtual reality assessment, leadership due diligence and intangible asset valuation.

22. Sustainability initiatives

Sustainability for us is a way of conducting business and is an integral part of our Company strategy. Our sustainability journey has reached a critical mass this fiscal year.

The Infosys Sustainability Executive Council (ISEC) oversees the strategic implementation of our business, social, environmental and code of ethics practices. Our sustainability policy complements various other policies in existence across the organization, and is based on our philosophy of maximizing value to our stakeholders – our clients, employees, investors, vendor partners and the society.

As part of the Infosys Strategic Planning for fiscal 2011, sustainability has emerged as one of the key tracks. Our sustainability agenda will focus on the following strategic themes :

Social contract : Social contract for us is the just pursuance of humanism in all spheres of our business. Engaging stakeholders and ensuring that we create a sustainable tomorrow are an important part of this journey. We support and encourage employee participation across various corporate social responsibility (CSR) initiatives. An organization-wide initiative called Spark was envisaged as an employee-driven CSR in August 2008. This nation-wide initiative has reached out to 1,00,000 students in India as at March 31, 2010. This program focuses on disseminating knowledge about advancements in IT, and our role in its growth, thus helping students to gain first-hand exposure to opportunities available for their studies and career planning.

Resource Efficiency : Resource efficiency for us translates as reducing the impact on our environment. Our efforts in ensuring resource efficiency at all our centers involve working toward green buildings, conserving energy, reducing and reusing paper, reducing and recycling water and effective waste management.

Green Innovation : We are committed toward reducing the harmful impact on the environment around us. Our efforts do not stop at re-engineering our processes to align with green goals, but extend to any product / service / process that is new and displaces traditional ways of doing business while optimizing resource utilization and adhering to social contracts. Many of our business units are innovating and building on ideas that achieve resource efficiency. Some of the innovative green ideas that have been deployed for our clients include reducing the weight of an aircraft and introducing smart grids within the organization.

During the previous year, we started a sustainability initiative with specific focus on reducing the carbon footprint involving our Annual Reports. Toward this end, we had stated that commencing fiscal 2010, our printed copy of the Annual Report to shareholders would contain only the statutory details. Accordingly, the Annual Report for the year ended March 31, 2010, contains only those details that are statutorily required to be published in the Annual Report along with Abridged Standalone Financial Statements prepared in compliance with Section 219 of the Companies Act, 1956. Additional details are available on our website, www.infosys.com. Through this initiative, we propose to reduce consumption of paper by about 100 tonnes.

For more details on our sustainability initiatives, refer to our website, www. infosys.com.

23. Employee Stock Option Plan (ESOP)

We had introduced various stock option plans for our employees. The details of options granted under the 1998 Stock Option Plan (the 1998 Plan) and the 1999 Stock Option Plan (the 1999 Plan) are as follows :

  1998 Plan 1999 Plan
Total grants authorized by the plan (no.) 1,17,60,000 ADS 5,28,00,000 shares
Pricing formula on date of grant Not less than 90% of fair market value Fair market value
Variation in terms NA NA
Ratio of ADS to equity shares 1 ADS = 1 equity share NA
Options granted during the year (no.) – –
Weighted average price per option granted (Rs.) NA NA
Options vested as at March 31, 2010 (no.) 2,42,264 1,84,759
Options exercised during the year (no.) 6,14,071 3,81,078
Total number of shares arising as a result of exercise of options 6,14,071 3,81,078
Money raised on exercise of options (Rs. crore) 57 31
Options forfeited and lapsed during the year (no.) 60,424 3,40,264
Total number of options in force at the end of the year (no.) 2,42,264 2,04,464
Grant to senior management – –
Employees receiving 5% or more of the total number of options granted during the year – –
Employees granted options equal to or exceeding 1% of the issued capital – –
Diluted EPS before exceptional item on issue of shares on exercise calculated in accordance with AS 20 Rs. 100.26 Rs. 100.26
Diluted EPS after exceptional item on issue of shares on exercise calculated in accordance with AS 20 Rs. 101.10 Rs. 101.10

SEBI has issued the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999. This is effective for all stock option schemes established after June 19, 1999. In accordance with these guidelines, the excess of the market price of the underlying equity shares as of the date of the grant over the exercise price of the option, including up-front payments, if any, is to be recognized and amortized on a straight line basis over the vesting period.

We have the 1998 Stock Option Plan and 1999 Stock Option Plan, where the options are issued to the employees at an exercise price not less than the fair market value. If the compensation cost on account of stock options granted after June 30, 2003 (as required by the amendment effective June 30, 2003) under 1998 and 1999 Plans was computed using the fair value method, our compensation cost would have been higher by Rs. 1 crore and Rs. 7 crore and our profit would hence be less by Rs. 1 crore and Rs. 7 crore for fiscal 2010 and 2009, respectively. The impact on EPS for fiscal 2010 and 2009 would be Rs. 0.01 and Rs. 0.13, respectively. During fiscal 2010 and 2009, stock options under the 1998 Plan and 1999 Plan have not been granted. Hence, the weighted average fair values of grant during these years are nil.

All stock options under the 1998 and 1999 Employees Stock Option Plans were granted at the prevalent market price on the date of grant. Accordingly, we have calculated the compensation cost arising on account of stock options granted using the intrinsic value method. Hence, the disclosure in terms of Clause 12.1(n) of SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is not applicable.

 
2010
2009
  No. of options Weighted average
exercise price (Rs.)		 No. of options Weighted average
exercise price (Rs.)
1998 Plan
Outstanding at the beginning of the year 9,16,759 904 15,30,447 813
Forfeited (60,424) 1,550 (1,58,102) 1,785
Exercised (6,14,071) 854 (4,55,586) 890
Outstanding at the end of the year 2,42,264 613 9,16,759 904
Vested at the end of the year 2,42,264 613 9,16,759 904
1999 Plan
Outstanding at the beginning of the year 9,25,806 1,248 14,94,693 1,163
Forfeited (3,40,264) 1,968 (1,90,188) 1,814
Exercised (3,81,078) 821 (3,78,699) 620
Outstanding at the end of the year 2,04,464 869 9,25,806 1,248
Vested at the end of the year 1,84,759 735 8,51,301 1,177

24. Infosys Science Foundation

During fiscal 2009, we had set up Infosys Science Foundation, a not-for-profit trust to promote research in pure and applied sciences in India.

The Infosys Prize endeavors to elevate the prestige of scientific research in India and inspire young Indians to choose a vocation in scientific research. It also seeks to boost the confidence of economists, social scientists and other researchers who are already engaged in and committed to advanced research in these areas.

The Infosys Prize categories include :

The jury for each area consists of eminent international personalities selected by the trustees of the Foundation.

The inaugural Infosys Prize laureates were felicitated and awarded prizes at a grand ceremony in New Delhi on January 4, 2010, by Honorable Vice President of India Mohammad Hamid Ansari.The prize in each category comprised a special gold medallion, a citation expounding the laureate’s work and Rs. 50 lakh as prize money.

For more details on the Infosys Science Foundation, refer to the website, www.infosys-science-foundation.com.

Acknowledgments

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.

We thank the governments of various countries where we have operations. We also thank the Government of India, particularly the Ministry of Communication and Information Technology, the Customs and Excise Departments, the Income Tax Department, the Ministry of Commerce, the Ministry of Finance, the Reserve Bank of India, the state governments, the Software Technology Parks (STPs) – Bangalore, Bhubaneswar, Chandigarh, Chennai, Gurgaon, Hyderabad, Jaipur, Mangalore, Mysore, Pune, and Thiruvananthapuram and other government agencies for their support, and look forward to their continued support in the future.


for and on behalf of the Board of Directors

Bangalore
April 13, 2010

S. Gopalakrishnan 

S. Gopalakrishnan
Chief Executive Officer and
Managing Director

 S. D. Shibulal 

S. D. Shibulal
Chief Operating Officer and Director

 

Annexure to the directors' report

a) Particulars pursuant to Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988

Conservation of energy

Building infrastructure

Furthering our commitment to growing responsibly, we are working on reducing the ecological impact of our operations. We are committed to minimizing the consumption of energy and fresh water, preserving natural habitat and reducing waste. Our Green Initiatives team focuses on developing infrastructure directed at conservation of resources. It not only caters to our internal needs but also supports initiatives at the local and global levels. In the last two years, we have been able to achieve more than 17% reduction in per capita energy consumption, thereby cutting down emissions considerably. The new projects in our campuses in India, such as Mysore, Thiruvananthapuram, Mangalore and Hyderabad are being designed as per the Leadership in Energy and Environmental Design (LEED) gold standard. We are also working on providing environment-friendly products and solutions for our clients. Our employees are engaging themselves in various eco-friendly practices through eco-groups formed for raising environmental awareness. We are also working with policy makers to promote renewable energy in India. From services and solutions that reduce our clients’ carbon footprint to converting our employees into environmental change agents, we are working toward all round conservation initiatives.

IT infrastructure

Taking Green IT initiatives forward, during the year we have replaced over 7,000 desktops with newer models that have a maximum power rating of 91W, compared to the older models which were at 120W. We have extended the optimized power management configuration for over 69,000 desktops. This has brought about an estimated 25% reduction in power demand by desktops. An in-house application named ‘Terminator’ has been developed and rolled out on all desktops. This application is designed to ensure that the desktop is shut down either by the user or automatically at a pre-defined time after working hours.

Continuing our efforts toward restructuring the existing data centers and server rooms, we have remodeled eight large and medium-sized server rooms and four dedicated Offshore Development Centers (ODCs) in order to increase the cooling efficiency and effectiveness, using less power. The steps involved have been consolidation of servers, re-modeling of the racks as per cold and hot aisle designs, replacement of older systems with newer ones, room re-sizing and usage of overhead cable trays which ensure better airflow under the floor. As a result, a number of air conditioning units have been de-commissioned to save power in each room, while the usage of newer systems for consolidation led to considerable power savings.

Moving away from dedicated computing infrastructure used for software development and testing, to a shared, secure and virtualized environment, we have built an internal enterprise cloud. This infrastructure is capable of hosting around 3,000 virtual machines and has an easy-to-use ‘Self-Service’ portal with template-based agile provisioning and simplified management of virtual machines.

We are targeting the substitution of additional desktops and servers physically installed in our server rooms and labs with these virtual machines.

In addition to enabling faster provisioning, reduction in build / re-build time and optimal resource utilization, this implementation would save power and cooling since it requires just around 20% of the total power demanded by additional desktops and servers.

Research and Development (R&D)

We continue to invest in the research and development of new technology-driven business solutions and services. Intellectual property creation along with the development of new frameworks, processes and methodologies has led to enhanced quality and productivity and has delivered business value.

SETLabs

Our R&D and innovation unit, SETLabs is at the forefront of research and is organized into various Labs and Centers of Excellence :

The Maintenance Center of Excellence at SETLabs focuses on the development of IP for efficient and effective preventive maintenance, transformation and business impact of large software systems. It continues to leverage its platform-based, knowledge-centric, collaborative process to significantly differentiate our maintenance offering and help us win large deals.

The Microsoft Technology Center, housed within SETLabs, is an innovation incubator, that fosters an environment for early technology adoption and evangelization of solutions based on Microsoft (and related) technologies. The Center anchors the Catalytic IT initiative for modernization of legacy systems. The Center has also developed collaboration tools such as Infosys Buzz that non-intrusively searches, organizes and shares information across groups within an enterprise. Another platform developed by the Center, Infosys Active Desk, is now being used to help Contact Center agents to deliver a consistently superior customer service experience.

We have established an NVIDIA Technology Center at the Bangalore Development Center to develop NVIDIA CUDA™ technology-enabled software solutions.

SETLabs anchored an Infosys-wide innovation challenge event, ‘Ignite’, that provided a platform for all our employees to submit innovative ideas. A brand new Infosys Innovation Co-Creation Platform (ICCP) was used to create an idea pool. The submitted ideas were evaluated by a team of experts and a jury shortlisted 13 innovative ideas for further investment by the Company.

Collaborations with academia

We continue to collaborate with leading national and international universities, product vendors and technology start-up companies to leverage synergies in solution offerings. These collaborations are leveraged toward the creation of platforms and solutions in the areas of distributed software development, infrastructure virtualization, text analytics and wireless sensor networks. We are associated with various universities globally including, Purdue University, IIIT– Hyderabad, IIIT– Bangalore, IIT– Bombay, Monash Research Academy, University of Southern California and the University of Cambridge. We also associate with several industry consortia including the IU-ATC in the United Kingdom (U.K.) and the Smart Services CRC in Australia.

SETLabs organized a thought sharing and collaboration event, ‘Infosys Aurora’, that brought together some of the best academicians, researchers, practitioners and thought leaders at the University of Southern California's Viterbi School of Engineering. The event was a continuing effort to bring together early adopters and visionaries to identify new emerging technologies and the associated engineering challenges.

Benefits

Our efforts in R&D have helped us offer new services to clients in the areas of digital convergence, information management, cloud computing, high performance and grid computing and software engineering. We are developing client-focused business solutions based on the intellectual property developed by multiple research groups. Our R&D efforts have helped us win large deals across industry verticals.

Future plan of action

We will continue to focus on and collaborate with leading national and international universities, product vendors and technology start-up companies. We are creating an ecosystem to co-create business solutions on client-specific business themes.

These collaborations will be leveraged toward the creation of platforms and solutions that enhance the GDM principles of automation, collaboration and assembly. We will continue to focus on research areas such as software engineering, network and device convergence, mobility, grid computing, cloud computing, knowledge engineering, information management, and security and privacy.

Expenditure on R&D

in Rs. crore
  2010 2009
Revenue expenditure 437 236
Capital expenditure 3 31
Total 440 267
R&D expenditure / total revenue 2.1% 1.3%

Foreign exchange earnings and outgo

Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and services, and export plans

During the year, 98.7% of our revenues were derived from exports. We have established a substantial direct marketing network around the world, including North America, Europe and Asia Pacific.

These offices are staffed with sales and marketing specialists, who sell our services to large international clients.

Foreign exchange earned and used

in Rs. crore
  2010 2009
Earnings 21,075 19,836
Outflow (including capital imports) 8,490 8,258
Net foreign exchange earnings (NFE) 12,585 11,578
NFE / Earnings 59.7% 58.4%


for and on behalf of the Board of Directors

Bangalore
April 13, 2010

S. Gopalakrishnan 

S. Gopalakrishnan
Chief Executive Officer and
Managing Director

 S. D. Shibulal 

S. D. Shibulal
Chief Operating Officer and Director


b) Auditors' certificate on corporate governance

The Members of Infosys Technologies Limited

We have examined the compliance of conditions of Corporate Governance by Infosys Technologies Limited (‘the Company’), for the year ended on 31 March 2010, as stipulated in Clause 49 of the Listing Agreement of the Company with the stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.



Bangalore
13 April, 2010

for B S R & Co.
Chartered Accountants
Firm registration number : 101248W

Supreet Sachdev

Supreet Sachdev
Partner
Membership no.: 205385