Infosys Ltd risks losing over a third of its $400 million annual revenue from Daimler, one of its three largest clients, as the German auto giant seeks a new vendor for software and equipment following execution delays, according to two people familiar with the details.
India’s second-largest information technology (IT) services provider stands to lose the largest part of the contract under which it procured and provided iPhone cases, laptops, Microsoft 365 subscriptions, and fingerprint readers for the automakers’ back-end information technology (IT) operations, said the people, who didn’t want to be identified as the information is private.
Bengaluru-based Infosys, which ended the previous fiscal ended March 2025 (FY25) with $19.28 billion in revenue, would now need to backfill $150 million, or 0.7% of its business, before eyeing incremental growth when macroeconomic uncertainty, tariff wars, and the rise of automation tools have squeezed client spending.
“It is unlikely that Infosys will see meaningful incremental revenue from Daimler in the near term,” said Phil Fersht, chief executive officer (CEO) of HFS Research, a Massachusetts-based IT research and consulting firm. “Even where renewals occur, pricing pressure and scope rationalization typically offset any expansion. The focus is more on retaining relevance in strategic digital, engineering, and core platform areas rather than growing total contract value.”
In December 2020, Infosys signed a $3.2 billion, eight-year IT transformation deal with Daimler. Under the terms, Infosys would provide services across six business divisions, including network services, cybersecurity, SAP software, data centres, after-sales call services, and workplace solutions or the IT procurement business–the biggest of the six arms.
Daimler had split into Mercedes-Benz Group and Daimler Trucks in December 2021, but both units retained Infosys for IT services work.
“Workplace solutions was supposed to be renewed last year but we are now waiting for June to get a clearer picture. We had floated an RFP (request for proposal) but that was not agreed upon by the client,” said the first of the two people quoted earlier.
According to the second person, the partial renewal of the deal comes amid differences between the two companies over execution and billing delays. As of 12 January, Daimler, including Mercedes and Daimler Trucks, owes almost $47 million in dues to Infosys since 2021.
Mint could not independently ascertain whether large deals have a provision to extend individual segments. However, the cybersecurity and data centre services have been renewed until 2029 under the Infosys-Daimler deal, while SAP, call functionality, and network segments have not been fully renewed yet, said the second person.
Queries emailed to Infosys on Friday went unanswered, while Daimler and Mercedes-Benz declined to comment on “supplier relationships” and “internal processes”.
One of India’s top IT services providers is eyeing a portion of Infosys’ contract with Daimler and has “already made a bid”, said the second person. Mint could not ascertain the name of the company.
Parikh’s mega-deal push
The Daimler contract was one of the dozen mega deals worth over $1 billion that the company has won since Salil Parekh took over as chief executive officer in January 2018, steering the company to outperform its peers in the number of mega deals secured.
According to an executive, Daimler is one of Infosys’s three largest clients, after Apple Inc. and JPMorgan Chase & Co.
Other large contracts Infosys won include the July 2020 10-year deal worth $1.89 billion with Vanguard and a $1.6-billion contract with the UK’s public health provider, the National Health Service, signed in October last year.
The Daimler project is dubbed the ‘twice as fast program’ for Infosys. It helped double Infosys’s revenue from manufacturers to $3 billion last fiscal from $1.3 billion in FY20. During this five-year period, Infosys’s overall revenue grew 42% to $19.28 billion in FY25.
The company, which announces its third-quarter results on 14 January, expects to end FY26 with revenue growth of 2-3% in constant-currency terms, a measure that excludes the impact of currency fluctuations.
Unprofitable deal
Revenue from Infosys Automotive and Mobility GmbH, a subsidiary that the IT giant created for the Daimler project, declined for the first time in FY25. It fell 8.5% over the previous fiscal to $418 million, after growing more than 40% for two straight years, according to JM Financial analysts. The unit has also been unprofitable for four straight years.
“If there is a revenue decline in the subsidiary, it clearly means that revenue from the Daimler account has reached its peak and matured,” wrote JM Financial’s Abhishek Kumar and Nandan Arekal in a note dated 16 June 2025.
Not the first time for Indian IT
Mint had reported on 24 February last year that Infosys was eyeing an early renewal with Daimler with a new AI arm. It now risks losing incremental business if the workplace arm of the deal is not renewed.
Still, ending part of previously signed contracts with IT services providers is not new. Several companies have opened their own back-end tech centres, terminating contracts with existing IT vendors mid-way through the deal.
Transamerica nixed a 10-year IT outsourcing deal worth $2 billion with Tata Consultancy Services Ltd in June 2023, five years after signing the contract. Similarly, later that year, third-largest HCL Technologies and State Street called off their decade-long partnership after the client in-sourcing its tech needs.