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Infosys: Infosys loses $1.5 billion deal with global firm


IT major Infosys announced the termination of its $1.5 billion agreement with an undisclosed global company, focused on artificial intelligence (AI) solutions, signed in September.

The Salil Parekh-led IT services giant had announced the $1.5 billion contract for a 15-year period, inked on September 14, 2023.

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“The global company has now elected to terminate the Memorandum of Understanding and the parties will not be pursuing the Master Agreement,” Infosys said in a stock exchange filing on Saturday.

The scope of the now-terminated deal was to provide digital transformation and modernisation of business operations services through Infosys’ platforms and AI solutions. Infosys did not name the global company nor did it mention if it is an existing client.

Incidentally, this comes less than two weeks after the Bengaluru-based company’s chief financial officer (CFO) Nilanjan Roy suddenly resigned after being in the position for around six years.

Large deal wins signal interest in client spend, helping software services firms to grow their revenues. However, the deal loss indicates further pressure on Infosys and possibly other IT companies to tide over the muted business over the past three to four quarters.

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This combined with senior-level management churn with at least eight exits over the last 12 months could be discomforting for Infosys’ future growth trajectory.However, it has made some deal announcements over the past few months.

Last week, Infosys announced it had won a five-year deal from auto parts distributor LKQ Europe. Its other recent large deals include a $1.64 billion deal with London-based Liberty Global for a five-year period, another $2 billion deal with an existing client in July and a $454 million deal with Danske Bank. During the September quarter, Infosys had won its highest large deals worth $7.7 billion in the September quarter.

Reporting a muted revenue growth in Q2 FY24, the software major had also slashed its guidance for the full fiscal year FY24 estimating revenue to grow by 1-2.5% in constant currency terms as compared to earlier projections of 1-3.5%.

Meanwhile, in September, US chip maker Nvidia announced AI partnerships with Indian conglomerate Reliance Industries and the IT bellwether Tata Consultancy Services (TCS) to develop generative AI applications.

On Friday, Infosys shares had closed 1.68% higher to end the day’s trade at Rs 1,562 per share.

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