Infosys shares hit eight-month low after RBS contract loss
IT major to carry out ramp-down of at least 3,000 people, mainly in India, over the next few months, following the cancellation of the contract.business Updated: Aug 16, 2016 14:11 IST
Shares of India’s second-largest IT firm, Infosys, fell 3.25% on the Bombay Stock Exchange on Friday, an eight-month low, after Royal Bank of Scotland said last week it will no longer pursue its plan to separate and list a new UK standalone bank, Williams & Glyn (W&G).
Infosys was W&G’s programme technology partner for consulting, application delivery and testing services.
The domestic IT major also said it would carry out ramp-down of at least 3,000 people, mainly in India, over the next few months, following the cancellation of the contract.
“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,” Infosys said in a statement.
An Infosys spokesperson clarified that these jobs are not being cut and that the employees will be reallocated to other projects.
While Infosys has not specified the impact of the cancellation, market analysts peg it at around $40 million.
The loss of the five-year 300-million pound RBS deal could force Infosys to further downgrade revenue guidance for 2016-17. The company had in July slashed its annual sales outlook, citing weak demand to 10.5% to 12% in constant currency terms, lower than the previously estimated 11.5% to 13.5%.