TCS bags $848 m UK deal

Posted: Wednesday, Oct 19, 2005 at 0053 hrs IST
Updated: Wednesday, Oct 19, 2005 at 0053 hrs IST

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Mumbai, Delhi, Oct 18: India’s largest software exporter Tata Consultancy Services Ltd (TCS) on Tuesday bagged the country’s biggest ever outsourcing deal with the $848 million (£486 million), 12-year contract from UK’s insurance and pensions major Pearl Group Limited to provide non-voice processing of life insurance and pension policies.

This deal overtakes the $260 million TCS-ABN Amro deal signed just last month. It indicates Indian companies are getting closer to bagging $1 billion plus global outsourcing deals which will put them in direct competition with IT outsourcing majors like IBM, EDS, and HP.

Until August this year, the biggest IT contract any Indian company had ever bagged was the $100 million TCS-GE Medical deal. The contract, which can be renewed beyond 12 years, was awarded on the basis of tenders submitted by 12 companies. It was evaluated over 12 months. TCS has cumulatively bagged $1.5 billion worth deals till date this year.

TCS will also emerge as UK’s second largest BPO in the life and pensions services space after the deal. Revenues from the contract will get reflected in TCS’ consolidated balance sheet from the fourth quarter of the current financial year. About 60% of the revenues will accrue in the first six years of the deal, according to TCS chief financial officer S Mahalingam. This should mean a flow of over $ 60 million a year. To put this in perspective, the largest deals in the BPO industry are close to $20 million to $30 million per year.

The contract involves the entire policy administration and will include evolving and implementing a new systems strategy. Pearl currently has 4 million policies under administration, which will come down to 1.8-2 million at the end of 12 years.

Pearl Of A Deal

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