Infosys signed a five-year AI and automation services deal worth $2 billion with a client. The agreement includes development, modernization, and maintenance services, as stated in the filing. The deal spans over five years with a target spend of $2 billion. The company will provide AI and automation services to the existing client.
The client’s agreement with Infosys covers development, modernization, and maintenance services.
The company did not disclose the client’s name. The filing said,
“Infosys has entered into framework agreement with one of its existing strategic clients to provide AI and automation led development, modernization and maintenance services. The total client target spend over 5 years is estimated at $2 billion,”
Competition for AI is Growing
Infosys launched Infosys Topaz, a generative AI platform, in late May. The company will report its first-quarter results on July 20.
After ChatGPT’s popularity in late 2022, global firms increased AI investments. The company’s decision follows Tata Consultancy Services’ plan to train 25,000 engineers on Azure Open AI.
Rival Wipro aims to invest $1 billion in AI over the next three years. Companies worldwide are doubling down on AI investments due to ChatGPT’s success. Tata Consultancy Services plans to certify engineers on Microsoft’s Azure Open AI. Wipro’s investment in AI amounts to $1 billion for the next three years.
Financials of Infosys
Days before reporting Q1 earnings, Infosys announced a 7.8% YoY rise in net profit for FY23’s Q4. The company’s consolidated net profit reached INR 6,128 crore in the March quarter.
For FY24, the company gave a 4-7% revenue growth forecast due to macroeconomic uncertainties. The announcement preceded the IT service giant’s first-quarter earnings report.
Wipro, TCS, and HCL Tech posted results below market expectations. In Q4, Infosys’ net profit rose 7.8% YoY to ₹6,128 crore, missing street expectations. The profit declined 7% sequentially from ₹6,586 crore in Q3 due to a tough macro-environment. Peers’ results in Q4 showed challenges amid the difficult macro-environment.
The Danske Bank Deal
Infosys and Danske Bank signed a strategic collaboration deal for digital transformation initiatives. The $454 million deal will be effective for five years, with an option for renewal. The collaboration aims to improve customer experiences, operational excellence, and the modernized technology landscape.
Infosys will acquire Danske Bank’s IT centre in India, employing over 1,400 professionals. The partnership helps Danske Bank achieve strategic priorities for digital transformation. The deal allows renewal for an additional year, up to three times.
Danske Bank seeks better customer experiences, operational excellence, and modernized technology through collaboration. Infosys and Danske Bank join forces for accelerated digital transformation initiatives.
TCS is Also on Growth Track
In June, Tata Consultancy Services secured a $1.9 billion deal with UK’s NEST for digital transformation. TCS reported a 16.7% YoY net profit increase to Rs 11,074 crore in Q1.
The demand outlook remains uncertain due to clients holding back spending on non-critical projects. TCS warned of a soft and uncertain demand outlook for the near term. TCS beat estimates with its strong fiscal first-quarter performance. The deal with NEST is aimed at transforming scheme administration services.
Infosys won a $1.5 billion deal from BP in May, the largest in three years. The deal with BP spans five years.
The software exporter from Bengaluru will acquire the lender’s IT centre in Bengaluru. The IT centre employs 1,400 people and aims to accelerate the bank’s digital transformation. The deal can be extended for three more additional years. It is intended to scale the Nordic-based bank’s digital transformation initiatives.