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Infosys wins $50 million deal from AT&T

The Economic Times:  May, 2014

Bangalore: Infosys has won a $50-million deal from telecom giant AT&T and an announcement is expected to be made sometime next month, with the Bangalore-based software exporter expecting the telecom player to become its first $100-million customer from Europe and the US in the coming years.

The deal will see Infosys providing support for billing and Web solutions for three years to AT&T on a pay-peruse model, thereby helping Infosys' telecom vertical break into European markets, said people familiar with the development.

This deal win comes at a time when Infosys aims to scale-up its presence in the European continent as the telecoms space continues to witness muted growth in the US. IT services-focused firms, including TCS and Wipro, continue to see weak growth in the telecom business as global telecom companies grapple with rising cost pressures and the disruptive threats posed by We-Chat and Skype.

For the year ended March 2014, revenues from telecom accounted for 8.3% of Infosys revenues of $8.25 billion, significantly lower than the 9.7% contribution it made to Infosys revenues of $7.4 billion revenues for fiscal year 2012-13. Some experts believe that if Infosys is able to realise the potential of the deal, then this could give a boost to the struggling telecom unit of Infosys.

"There are opportunities in Europe as most companies are still smaller than their counterparts in the US," said an analyst at Mumbai-based brokerage. "In the US, since most companies are already big enough, the focus area for telecom operators is more on retaining customers or how to help the customer experience," the analyst said.