Infosys loses grip of $1.5Bn AI deal, shares drop
BENGALURU, INDIA — An unnamed global firm has terminated its 15-year, $1.5 billion deal centered on artificial intelligence (AI) with information technology (IT) firm Infosys.
The deal was signed in September 2023 and was subject to a “master agreement,” according to Infosys. The unnamed global company – which Infosys did not specify if it was a current client – terminated the memorandum of agreement.
The IT firm was supposed to upgrade the other company’s digital systems, business operation services, AI platforms, and solutions.
Infosys announced the deal’s termination after trading hours on December 22. When trading resumed on December 26, Infosys’ shares declined by as much as 2.6%.
Constellation Research Chairman and Principal Analyst Ray Wang said the botched deal sheds light on the human workforce vis-a-vis AI tools.
“When you win or lose a deal this big, you traditionally must address the staffing ramp-up or reduction,” Wang said, per Times of India. “But in AI deals, there will be less impact because we are now in a world where we are competing with bots, not humans; and the more automation we deliver, the less humans we need.”
In July 2023, Infosys signed a five-year, $2 billion agreement on AI and automation services with an unnamed client.
Prior to the announcement of the quashed deal, Infosys sealed a five-year agreement with aftermarket car parts distributor LKQ Europe to enhance its tech systems to streamline its day-to-day operations.
Infosys is ranked 8th in the 2023 Time Doctor OA500, an objective index of the world’s top 500 outsourcing companies. The 2024 edition of the OA500 will be released next month.
