JOIN USInfosys has said it will ramp-down about 3,000 jobs following Royal Bank of Scotland’s decision to cancel the project to set up a separate bank in the UK.
RBS announced last week that it will not pursue its plan to separate and list a new UK standalone bank, Williams & Glyn (W&G), for which Infosys was a key technology partner.
“Infosys has been a W&G programme 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 jobs are not being cut and that the employees will be reallocated to other projects. RBS is a key relationship for Infosys and the company looks forward to working with them across other strategic and transformation programmes, it added.
While Infosys has not specified the impact of the cancellation, market analysts peg it at around $40 million. Sanjoy Sen, doctoral research scholar at UK’s Aston Business School, told DH the cancellation of the RBS project has little to do with Infosys as a provider, but a lot to do with the sharp fall in deal-making activities post Brexit.
“Specifically, with regard to the banking sector in the UK, now there is a clamour by businesses for greater transparency in Brexit negotiations and support for the banking sector where pan-European implications of Brexit are significant. As a result, any form of deal-making by larger businesses is generally on hold, although smaller and medium enterprises continue to look for niche opportunities at favourable valuations,” said Sen.
The loss of the five-year 300-million pound RBS deal could force Infosys to further downgrade revenue guidance for FY2016-17. Infosys had in July slashed annual sales outlook, citing weak demand to 10.5-12% in constant currency terms, lower than the previously estimated 11.5-13.5%.