Infosys says AI wins new revenue but pressures existing service prices
Infosys says AI is helping it win new revenue but is also reducing the prices clients expect to pay for existing services. The tension matters because automation could bring in new work while making it harder for the company to grow revenue from long-term customer contracts.
AI revenue rose 29 per cent sequentially and accounts for 10.5 per cent of incoming cash, while overall revenue grew 1.5 per cent year on year in the second quarter. Infosys cut its full-year growth forecast from 1.5–3.0 per cent to 1.0–2.0 per cent, and aims to keep margins near 21 per cent rather than pursue deals that miss its return expectations. It won $8.8 billion in deals in the first half of its financial year, 68 per cent from new customers, but its shares are down more than 25 per cent over the past year.
In short
- AI revenue is rising, but clients expect lower prices.
- Infosys cut its annual growth forecast to 1–2 per cent.
- New deals offer support as spending slows.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
AI is creating new sources of growth for Infosys, with AI revenue rising and a substantial share of recent deal wins coming from new customers. By holding to its margin target instead of accepting lower-return contracts, the company may protect its ability to invest and deliver sustainable returns while clients adopt more automated services.
The case against
The gains may not yet offset pressure on established business: clients expect lower prices for existing services, overall revenue growth is modest, and Infosys has cut its annual forecast. If automation reduces contract values faster than new AI work expands, the company could struggle to grow revenue and reassure investors despite winning new deals.
Explained simply
Infosys is an Indian technology company that provides software, consulting and outsourced business services to organisations around the world. Many clients pay it to run or maintain systems under long-term contracts, so changes in the price of that work can affect revenue over time.
Artificial intelligence can create demand for new services, such as helping companies adopt or build AI tools. It can also automate tasks that clients already pay technology firms to do, giving customers reason to seek lower prices or different contract terms.
The issue matters to Infosys and its investors because new AI work may not fully replace income pressured by cheaper existing services. The company’s growth outlook and its focus on maintaining profit margins show the balance it is trying to strike between winning work and meeting its return targets.
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Originally published by The Register as “AI slows growth for Infosys and keeps it afloat at the same time”.