Tata Consultancy Services Ltd, India's largest IT services vendor, has won a 12-year deal worth over 480m pounds ($837.8m) with UK-based insurance provider Pearl Group Ltd.
The two companies plan to set up a joint venture, and according to TCS’s executive vice-president Phiroz Vandrevala, TCS will own the majority of the new company, with Pearl taking a passive minority stake of between 15% and 20%.
The subsidiary will provide business process outsourcing services to companies in the life and pensions industry, beginning with Pearl’s closed-book clients. However, AS Lakshminarayanan, VP and country manager for TCS’s operations in the UK and Ireland, said the company is planning to build a platform that will enable it to roll out similar services globally.
Approximately 950 of Pearl’s current workforce of about 1,100 will transfer to the new operation, with the remainder staying at Pearl. However, all of the revenue generated by the subsidiary will go to TCS.
This deal is unique in TCS’s history because it does not depend on an offshore delivery model to ensure lower costs. This contract is not about offshoring, said Lakshminarayanan.
Mumbai-based TCS was selected by Pearl following a year-long bidding process. While the names of the companies competing with TCS were not revealed, Vandrevala did tell Computer Business Review that no other Indian companies were involved in the selection process.
TCS was therefore not competing against Gurgaon, India-based Genpact, formerly known as Gecis Global. Two months ago, Genpact announced that it had formed a partnership with BPO provider Liberata Plc aimed at offering outsourcing services to the UK insurance and pensions market.
Other major players in the insurance BPO market are Unisys Corp and Computer Sciences Corp. In April 2005, Unisys signed a 10-year contract extension worth 50m pounds ($87.4m) with Resolution Life Group, while in July 2004 CSC opened an insurance BPO facility in Swindon, UK.
As part of the agreement with Pearl, TCS has taken on a portion of the lease for Pearl’s Peterborough, UK site, with the aim of creating a center for its life and pensions BPO offering. The site currently houses just over 1,000 staff, but has capacity for approximately 1,700.