It has been agreed to end the $ 2 billion outsourcing deal between the country’s leading IT company Tata Consultancy Services (TCS) and America’s insurance company Transamerica. This deal was done in the year 2018 for 10 years, but citing economic conditions and business priorities, it has been decided to end it in 5.5 years.
Transition will take 30 months
According to the joint statement, the two companies will end “the administrative arrangement for Transamerica life insurance, annuities and supplemental health insurance and other employee benefit products.” However, both the companies will work together for about 30 months, so that they can go smoothly in the new servicing model.
The low-margin 2017 deal, which required TCS to add about 2,000 Transamerica employees, is expected to have little impact on TCS’ revenue, said a company executive with knowledge of the transaction. . This executive has given this information on the condition of anonymity.
The company changed its strategy
This executive explained that ‘after new CEO Will Fuller joined in March 2021, there was a change in its strategy and Transamerica has opted to bring all IT services within the company instead of outsourcing’
The TCS division that manages Transamerica Outsourcing employs about 3,500 people and has expanded its operations. It won a $723 million deal from the Phoenix Group and a $250 million contract from the Teachers’ Retirement Fund – both UK-based.
The executive said that Transamerica’s 2,000 employees who had switched to TCS would be redeployed across the operation.