Infosys McCamish Hit by Ransomware: First Revenue Drop in Eight Years

Infosys McCamish, a subsidiary of Infosys Ltd., has reported its first revenue decline in eight years. According to their annual report, revenue for the year ending December 2023 fell by 4.3% to $442 million.

Analysts View

Analysts from Kotak Institutional Equities, including Kawaljeet Saluja, Satishkumar S, and Vamshi Krishna, pointed to a weak demand environment and a recent ransomware attack as reasons for the decline. A Mumbai-based analyst, who asked to remain anonymous, confirmed that the cyber attack led to the drop in revenue, as the company had to spend money to repair the damages.

This is the first time Infosys McCamish has seen a revenue decrease since the year ending March 2015. The company switched to a calendar year reporting format in 2019, though its parent company, Infosys, uses an April-to-March financial year.

Infosys Acquired McCamish

Infosys acquired McCamish Systems, based in Atlanta, Georgia, in December 2009 for $58 million through its subsidiary Infosys BPO. McCamish specialises in providing insurance process management solutions.

The ransomware attack, reported in November 2023, disrupted services and led to unauthorised access to sensitive customer information. This incident had significant financial consequences. Infosys McCamish’s net profit fell by 69% to $10.7 million, and operating margins dropped by 570 basis points to 3.4%.

Cost of Cyber Attack

The cost of addressing the ransomware attack included using a third-party cybersecurity provider. The company faced expenses related to restoring services, communicating with affected parties, investigating the incident, and legal services, amounting to about $30 million. It remains unclear whether Infosys or McCamish bore this cost.

The attack affected 57,028 clients, whose personal information and social security numbers were compromised. This led to a class-action lawsuit filed in Georgia on 6 March against Infosys. The plaintiffs accused Infosys McCamish of delaying disclosure of the data breach and failing to protect their information. The lawsuit seeks a jury trial. Infosys has not yet responded.

Leadership and Workforce

Infosys McCamish employs over 680 people. Richard Magner has been the CEO since 2017, succeeding Gordon Beckham, who led the company after Infosys BPO’s acquisition in 2009.

Infosys BPO, rebranded as Infosys BPM Ltd. in 2017, is one of Infosys’s largest subsidiaries. Despite Infosys BPM’s revenue growing by 2% to $953 million as of March 2023, it was the slowest growth in seven years.

Infosys reported a total revenue of $18.6 billion for the financial year ending March 2024, with $5.1 billion coming from financial services. However, slow or minimal growth in its subsidiaries resulted in a modest overall revenue increase of 1.9%, the slowest among the top three Indian IT companies, including Tata Consultancy Services and HCL Technologies.