Infosys weathers the economic downturn winning a huge digital transformation deal with Vanguard Financial

Infosys won a landmark deal with Vanguard, a global asset management firm for technology, operations management and optimization, and digital transformation of Vanguard’s defined contribution (DC) retirement record-keeping business. While terms of the deal were not disclosed, HFS estimates this to be a multi-year and billion-plus dollar deal reportedly competed by many firms.

HFS views this win as notable for the following reasons:

1. Disruption of retirement record-keeping business. Retirement record-keeping has been manual for a long time and challenged with adopting digital capabilities for far too long due to legacy platforms. Vanguard is at the forefront of technology adoption, is doubling down to take a commanding position in the record-keeping business, driven by innovation leveraging data and analytics for delivering self-servicing capabilities. This goes beyond modernization of Mainframe with a focus to drive differentiation through experience. While the end game is to modernize the record-keeping platform, built by Infosys, there are multiple interim enhancements to areas such as customer service and experience backed by automation of operations and application of technology.
2. A broad-spectrum value showcase for Infosys. The engagement highlights Infosys’ technology expertise, Digital Transformation capabilities, operations enhancement, design and build skills, and domain expertise – all enabled by their localization strategy. Infosys is committed to investing in a local delivery center in Pennsylvania, which will also serve as Infosys Retirements Center of Excellence.
3. Level of Vanguard partnership. While role transitions are typical, Vanguard is putting real skin in the game with notable senior execs going to Infosys. This not only drives cohesion for employees but also ensures continuity for Vanguard clients.
4. It is a landmark deal and the timing during the pandemic is notable. While the deal cycle pre-dated the pandemic, the need for resilient digital experiences has been front and center during the pandemic underscoring Vanguard’s decision to go digital for the future of its defined contribution record-keeping business. The deal will also support Infosys’s growth plans in the US through its planned PA innovation hub.
5. Weathering the downturn. As we’re nearing the midway point of earnings season, we clearly see that most of the service providers have been equally impacted by the outbreak of COVID-19, but there are a few that are impacted less so than others. Infosys, for example, experienced a small -0.3% YoY decline in Q2 2020 (Does not include any revenue from Vanguard as the deal was signed in Q3 CY 2020), which compared to some of its peers, is quite good, considering many have reported declines to the tune of 2 % to 5 % for the same period. This also means that the addition of this latest partnership with Vanguard, described by Infosys’ CEO Salil Parekh during their quarterly announcements, should definitely help weather the storm.

Bottom Line: Digital is not dead in BFSI! You just need to know where to look.

In this macroeconomic environment, service providers need to dig deep and go hunting for disruptive deals to help their clients survive and thrive post-pandemic. In its new partnership with Vanguard, Infosys has done exactly that; identified an area that was ripe for digital disruption and worked hard to develop a multi-faceted approach that could completely transform the market and deliver iterative business results in parallel to big bang transformation efforts.