Infosys, the IT services giant, announced that it has terminated a $1.5 billion contract with an unnamed global company. The deal focused on artificial intelligence (AI) solutions. The contract, signed in September for a period of 15 years, was aimed at providing digital transformation and modernization services Infosys'Platforms and AI solutions.
In a stock exchange filing on Saturday, Infosys said: “The global company has now decided to terminate the Memorandum of Understanding and the parties will no longer pursue the framework agreement.” However, Infosys did not disclose the name of the global company or whether it was an existing customer, an ET report said.
This termination comes shortly after Nilanjan Roy, the company's CFO, unexpectedly resigned after holding the position for about six years. The loss of this deal increases pressure on Infosys and potentially other IT companies that have struggled due to subdued business performance in recent quarters. In addition to significant senior management turnover, which has resulted in at least eight departures in the past year, this could pose challenges to Infosys' future growth path. Despite these challenges, Infosys has recently announced several other deals. Last week the company announced a five-year deal with auto parts retailer LKQ Europe. They have also completed significant deals in the past, including a $1.64 billion deal with London-based Liberty Global and a $2 billion deal with an existing client in July. There is also a $454 million deal with Danske Bank. In the September quarter, Infosys secured its largest deals ever with a total value of $7.7 billion.
However, Infosys reported subdued revenue growth in the second quarter of FY24, which led the company to revise its full-year revenue forecast. They now estimate growth of 1-2.5% at constant exchange rates, compared to their previous forecast of 1-3.5%.
In a stock exchange filing on Saturday, Infosys said: “The global company has now decided to terminate the Memorandum of Understanding and the parties will no longer pursue the framework agreement.” However, Infosys did not disclose the name of the global company or whether it was an existing customer, an ET report said.
This termination comes shortly after Nilanjan Roy, the company's CFO, unexpectedly resigned after holding the position for about six years. The loss of this deal increases pressure on Infosys and potentially other IT companies that have struggled due to subdued business performance in recent quarters. In addition to significant senior management turnover, which has resulted in at least eight departures in the past year, this could pose challenges to Infosys' future growth path. Despite these challenges, Infosys has recently announced several other deals. Last week the company announced a five-year deal with auto parts retailer LKQ Europe. They have also completed significant deals in the past, including a $1.64 billion deal with London-based Liberty Global and a $2 billion deal with an existing client in July. There is also a $454 million deal with Danske Bank. In the September quarter, Infosys secured its largest deals ever with a total value of $7.7 billion.
However, Infosys reported subdued revenue growth in the second quarter of FY24, which led the company to revise its full-year revenue forecast. They now estimate growth of 1-2.5% at constant exchange rates, compared to their previous forecast of 1-3.5%.
Meanwhile, US chipmaker Nvidia announced AI partnerships with Indian conglomerate Reliance Industries and IT giant Tata Consultancy Services (TCS) in September to develop generative AI applications.
On Friday, Infosys shares closed 1.68% higher at Rs 1,562 per share.
