Infosys terminates $1.5 billion AI deal with global client

Information technology (IT) major Infosys announced on Saturday, December 23 that the company has terminated its $1.5 billion agreement with an undisclosed global company, focused on artificial intelligence (AI) solutions, signed in September. 

The IT services giant had announced the $1.5 billion contract for a 15-year period, inked on September 14, 2023, according to a report by business daily Economic Times.

Also Read: Infosys hands out salary revision letters to employees, average pay hike below 10%: Report

‘’This is in continuation to the disclosure made by Infosys vide letter dated September 14, 2023, titled “company update” with respect to a Memorandum of Understanding with a global company which was subject to parties entering into a Master Agreement,'' said the Salil Parekh-led firm in a regulatory filing to the stock exchanges.

‘’The global company has now elected to terminate the Memorandum of Understanding and the parties will not be pursuing the Master Agreement,'' Infosys added.

According to reports, Infosys had signed the MoU with the global company to 'enhance digital experiences leveraging Infosys platforms and AI solutions'. The $1.5 billion potential target spend was supposed to be spread over 15 years. The company did not disclose any reason behind the cancellation of the project.

The termination of the deal comes less than two weeks after the Bengaluru-based company's chief financial officer (CFO) Nilanjan Roy suddenly resigned after holding the position for around six years. However, the deal loss indicates further pressure on Infosys and other IT companies in India to drift over the muted business over the past three to four quarters.

Infosys' net profit rose 3.17 per cent to ₹6,212 crore in the July-September quarter of current fiscal, compared to ₹6,012 crore in the corresponding period last year. The IT major had narrowed its revenue growth guidance for the full year at the upper end to 1-2.5 per cent. During the September quarter, Infosys had won its highest large deals worth $7.7 billion.

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. Infosys will be declaring its October-December quarter earnings on January 11, 2024.

In the previous session, shares of Infosys settled 1.68 per cent higher at ₹1,562 apiece on the BSE.