Infosys expects healthy deal pipeline with delayed conversions
Information technology (IT) services major, Infosys Ltd, has pointed out to analysts that its deal pipeline is 'healthier than before', though cost-cutting and cash conservation efforts by clients have resulted to delayed conversions.
“However, Infosys has seen an increase in client discussions, and in the near-term, sees demand in areas of collaboration, cost take-outs and increasing automation," according to a report based on Nomura's interaction with the Infosys management.
The medium term has made the company realize an accelerated shift to digital at clients in areas of core modernisation, cloud migration, network virtualisation and cyber security.
Infosys implied to Nomura that its large deals team is focused on working with clients to overtake their entire IT landscape and facilitate the shift to digital by cost savings in offshoring, automation and analytics.
“While currently clients are reluctant on signing large deals, in the medium term, Infosys sees opportunities around vendor consolidation and large re-badging deals which it can capitalise on given its ability to seamlessly transition to work from home and strong balance sheet position," Nomura said.
The demand upholding from the banking, financial services and insurance (BFSI) sector has witnessed only minor impacts in Q1 given the support from fiscal and monetary stimulus across key markets.
Nevertheless, “Infosys does not rule out potential impacts in Q2 given banks’ profitability is likely to see impacts from higher delinquencies and zero interest rate," Nomura said.
In spite of the short-term challenges, the long-term potential in BFSI around large transformation opportunities remains strong as banks seek to lower operational costs through increased adoption of technology to adjust to lower interest rate environment, Nomura said.