Infosys, one of India’s leading information technology (IT) services companies, recently made a significant announcement about a mega deal with an existing client. The deal is valued at a staggering $2 billion and spans over the next five years, with Infosys providing artificial intelligence (AI) and automation development, modernization, and maintenance services.
As of now, the client’s identity remains undisclosed as Infosys declined to comment further on the matter. This massive deal comes at a time when the $245-billion IT services industry in India is facing challenges due to market weaknesses and uncertainties.
Earlier this year, Infosys’ chief executive, Salil Parekh, projected a 4-7% annual revenue growth rate for the company. However, the company’s growth expectations have been underwhelming due to macroeconomic headwinds affecting tech spending worldwide.
According to an investor note by ICICI Securities, Infosys was expected to report only 0.8% sequential revenue growth for the June quarter, with the following September quarter likely to remain relatively soft due to the absence of significant mega-deal ramp-ups.
However, this $2-billion deal is expected to bolster Infosys’ portfolio significantly in the September quarter. Industry analysts believe that despite the weak forecast for FY24, the company may offer revised upward guidance in the second half of the fiscal year. The June quarter is expected to be challenging for Infosys, as well as for Wipro and Tech Mahindra, with most deals focused on cost optimization, leading to inconsistent billable value translation.
Despite the short-term challenges, analysts remain positive about Infosys’ long-term prospects, thanks to its diverse client base. Additionally, the overall IT sector is anticipated to experience growth in the second half of the fiscal year. Infosys has closed FY23 with an impressive number of $100-million-plus clients and is poised to leverage this recent mega deal to strengthen its position further in the market.
