Infosys Falls After Losing Technology Contract for RBS Spinoffby
Infosys Ltd. was the biggest laggard in India’s benchmark index as the loss of a key contract added to headwinds faced by the nation’s software services companies.
Shares fell 1.8 percent as of 9:58 a.m. in Mumbai while the Sensex Index rose 0.1 percent. Infosys plans a “ramp down” of about 3,000 roles after Royal Bank of Scotland Group Plc scrapped plans for a spin off. The Indian company had been the technology partner to develop a separate IT platform.
The RBS contract was worth about $300 million in revenue annually for Infosys and could cut this fiscal year’s sales by as much $40 million, according to Emkay Global Financial Services Ltd. The company is already facing challenges from Britain’s decision to leave the European Union and uncertainty over the global economy that has seen companies tighten spending on outsourcing services.
“We see risks to Infosys’s revenue and margin outlook given the increasingly negative commentary across players,” analysts at Emkay led by Manik Taneja said in a report. The sector is heading for a “very rough” fiscal 2017 and also into next year, they wrote.
Sarah Vanita Gideon, a spokeswoman for Bangalore-based Infosys, said those affected by the RBS contract will be absorbed into other projects.
RBS abandoned plans to make Williams & Glyn a standalone bank with about 314 branches and 2 million customers.