Infosys’ Vanguard deal has a valuation of about $1.5 billion, say sources 

According to sources, Infosys has bagged a multi-year deal from US investment firm Vanguard that is worth $1.5 billion. The scope of the work could be prolonged to 10 years, with the contract value increasing to over $2 billion. On Wednesday and Thursday, last week, Infosys share price surged on stock exchanges after it bagged its biggest deal so far.

The sources said, “Billion-dollar deals are rare for Indian IT. Infosys won the deal in a hotly contested battle with Wipro in the final lap. Other serious contenders in the race included TCS and Accenture. Infosys is said to have set up a 3,000-seater facility in Electronics City in Bengaluru to service the deal. It combines BPM services and digital transformation work to take Vanguard’s record-keeping services onto a cloud-based platform. The company will initially have 300-400 people working out of the facility and it will ramp up gradually, based on the release timeline”.

According to Infosys, it has got $1.7 billion worth of deals in the April-June quarter excluding the recently signed Vanguard deal. Vanguard holds a nearly 3 per cent stake in Infosys. According to Infosys, ” Around 1,300 Vanguard roles supporting the full-service record-keeping client administration, operations, and technology functions will transition to Infosys”.

Infosys President and BFSI head Mohit Joshi, BFS business head in North America Dennis Gada, president & delivery head Ravi Kumar, CFO Nilanjan Roy, cloud & infrastructure business head Anant R Adya, and BFS sales vice-president Nageswar Cherukupalli have all played a major role in getting this deal done. Infosys’s Verizon contract size increased to over $1 billion, last year.

Analysts are of the opinion that it’s tough to manage such large vendor consolidation deals. Rod Bourgeois, head of research in US-based DeepDive Equity Research said, “An underlying risk on some large deals is difficulty in achieving the delivery and cost expectations and then experiencing margin shortfalls”.

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