In a significant development, Infosys, the IT services giant, revealed that a $1.5 billion agreement focusing on artificial intelligence (AI) solutions with an undisclosed global company has been terminated. The deal, signed in September for a 15-year period, aimed to provide digital transformation and modernization services through Infosys’ platforms and AI solutions.
In a stock exchange filing on Saturday, Infosys stated, “The global company has now elected to terminate the Memorandum of Understanding, and the parties will not be pursuing the Master Agreement.” The identity of the global company remains undisclosed, adding an element of mystery to the termination.
This development comes on the heels of the unexpected resignation of Nilanjan Roy, Infosys’ CFO, who served in the position for approximately six years. The termination of the $1.5 billion deal further intensifies the challenges faced by Infosys and potentially other IT companies grappling with subdued business in recent quarters. With significant turnover in senior-level management, marked by at least eight departures in the past year, the company’s growth trajectory could encounter hurdles.
Despite these challenges, Infosys has recently secured other notable deals, including a five-year agreement with auto parts distributor LKQ Europe. In the September quarter, the company secured its largest deals ever, totaling $7.7 billion. However, Infosys reported muted revenue growth in the second quarter of fiscal year FY24, prompting a revision of their full-year revenue guidance to an estimated growth of 1-2.5% in constant currency terms.
While facing challenges on one front, Infosys remains active in forging new partnerships and deals, including collaborations with London-based Liberty Global and Danske Bank. The termination of the AI solutions deal highlights the volatile nature of the IT industry, with companies navigating uncertainties and reshaping strategies in an ever-evolving market.
In a separate development, US chip maker Nvidia announced AI partnerships with Indian conglomerate Reliance Industries and IT giant Tata Consultancy Services (TCS) in September, underlining the continued momentum in AI collaborations across industries.