Infosys-Liberty Global's Pioneering Business Model

Infosys wins a mega $2.5 billion contract from Liberty Global, marking one of the most significant transactions in the telecom and media sector lately. But it's not just about the contract value; it's the groundbreaking business model that's reshaping industry benchmarks. Dive in as we unpack the intricacies of this landmark Infosys-Liberty Global partnership.

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Deal Financial Details

The deal with Liberty Global has a Total Contract Value (TCV) of €1.5 billion ($1.6 billion) spanning five years. Additionally, there's an option to extend the contract for another three years, potentially bringing the deal's total worth to €2.3 billion ($2.5 billion). Liberty Global is set to achieve annual cost savings of €100 million ($109 million) through this agreement.

Business Model: Win-Win and Upside Potential for Liberty Global and Infosys

The deal with Liberty Global is structured around tangible business outcomes. We're terming it a 'business model' rather than a mere pricing strategy. This agreement transitions the fixed cost associated with the tech stack, inclusive of services, cloud, and software, into a variable cost structure for Liberty Global. This configuration presents a potential value upside for both entities: Liberty Global and Infosys. Some features:

Subscriber-Driven Scalable Platform As-a-Service Business Model: This strategic framework is anchored to a pivotal business metric: the subscriber count across Liberty Global's various operating entities. By tying technology expenses to this metric, Infosys introduced a variable cost structure for Liberty Global. This approach not only offers immediate cost savings from the existing baseline but also ensures predictable future expenditures based on subscriber growth. Furthermore, this model enhances Liberty Global's operational scalability and agility, laying the groundwork for sustained growth.

Enterprise Solution Monetization Potential: Infosys will support Liberty Global in leveraging its media, connectivity platforms, and intellectual properties, notably Horizon. This will extend its reach to other Infosys media and telecom clientele looking for platform solutions. While Liberty Global accrues licensing revenues, Infosys will benefit from implementation and support fees, presenting a mutual value proposition. Notably, this anticipated upside is exclusive of the deal's primary value.

Subscriber Growth Upside: Presently, Liberty Global has a base of approximately 10 million subscribers, which forms the current deal valuation. As subscriber counts surge across Liberty Global's various operations, Infosys' revenue stream stands to benefit, given the billing model's reliance on subscriber metrics. Importantly, this prospective financial upside lies outside the core deal valuation."

This is industry's first mega digital engineering transaction with Infosys managing the end-to-end responsibility for the entire platform, which includes infrastructure, cloud engineering, third-party software licensing, and overall software engineering for the platforms, influencing over 10 million subscribers.