Infosys loses RBS contract, to reallocate 3,000 employees in to other projects

BANGALORE, INDIA: Infosys has lost out on a 5-year deal worth 300-million Euro from Royal Bank of Scotland(RBS) as the bank decides to cancel a project to set up a separate bank in the UK, for which Infosys was a key technology partner.

RBS had announced last week that it will not pursue its plan to separate and list a new UK standalone bank, Williams & Glyn(W&G), citing high costs and risks.

It seems Indian IT outsourcing companies' Brexit concerns are turning to be real. The low interest regime in developed markets is hurting financial services companies. And Brexit is making it worse for many banks, particularly the ones based in UK like RBS. Consequently, the banking verticals of IT services companies are being adversely impacted.

The decision will impact Infosys' revenue in the range of USD 11-13 million on a quarterly basis, according to analyst estimates. Going by the calculation, the cancellation could lead to revenue loss of roughly USD 33-40 million for the rest of FY17 according to Emkay Global Financial Services Ltd. and analysts believe this could even prompt Infosys to downgrade its FY17 growth guidance further.

Besides significant revenue loss, it will also lead to a subsequent relocation plan about 3,000 persons in India, as Infosys issued a statement saying that "Infosys has been a 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."

The employees affected by the RBS project ramp-down will be absorbed in other projects over the course of the next few months, Infosys clarified further.