Infosys loses €300-mn contract; 3,000 jobs likely to be affected
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In a big blow to IT giant Infosys following the Brexit, Royal Bank of Scotland, one of its major clients, announced cancellation of the contract with the company as it plans to open a separate bank in the United Kingdom. The cancellation of the deal is likely to affect about 3,000 jobs at the company.
The contract was for a period of five years valued at Euro 300 million. While it said on Saturday, the company would ramp down about 3,000 employees, it clarified later on Tuesday that there would be no layoffs and the employees will be redeployed in other projects.
“Infosys has been a Williams & Glyn (W&G) program technology partner for consulting, application delivery and testing services, and subsequent to this decision, will carry out an orderly ramp-down of about 3,000 persons, primarily in India, over the next few months,” Infosys said in its statement on Saturday.
RBS is a key relationship for Infosys and the company looks forward to further strengthening our strategic partnership and working with them across other strategic and transformation programmes, the company added.
Analysing the deal cancellation, Sanjoy Sen, doctoral research scholar at Aston Business School, UK said, “The cancellation of the RBS project has little to do with Infosys as a services provider. But it has a lot to do with the sharp fall in deal making activity post Brexit, which in turn is reflective of the sharp fall in business confidence and risk appetite in C-suites.”
“Specifically with regard to the banking sector in the UK, there is now a clamour by businesses for greater transparency in Brexit negotiations and support for the banking sector, where pan – European implications of Brexit are significant. As a result, any form of deal making by larger businesses is generally on hold, although smaller and medium sized businesses continue to look for niche opportunities at favourable valuations,” Sen added.
Following the development, Infosys shares fell by about 1.14% to R1,051.80 per share on BSE.
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