In one of the industry’s biggest deals, India’s largest software exporter, TCS, is close to signing a Rs 6,150 crore ($1.5 billion) multi-year outsourcing deal with Prudential plc, the UK-based financial services major that sells pensions, annuities, medical insurance, savings and investments schemes to 21 million customers globally.
Prudential, which operates out of its four units in Britain and two in Mumbai, may manage to drive down costs if it clinches the outsourcing deal with TCS, said an IT analyst from a Mumbai-based brokerage firm. “Such a deal will also help Prudential to improve its services,” she added.
If the deal comes through, it would be similar to the Pearl BPO (business process outsourcing) deal that the company bagged in 2005 for Rs. 3,800 crore. Under the deal, TCS formed a subsidiary company in the UK which took over Pearl’s existing operations and 950 employees. “A similar deal can happen with Prudential,” said a source close to the development.
When contacted, a TCS spokesperson said, “We do not wish to comment on market speculation.” TCS CEO S Ramadorai had earlier said that the potential in the UK insurance market was enormous with the country holding about 150 to 200 million policies that require servicing.
TCS got a major headstart over competitors such as Infosys, Wipro after they entered the UK life and pensions market through the acquisition and industry observers feel that another deal of such size would put it way ahead of its competitors. In the 2005/06 fiscal year, BPO contributed 5.8 per cent to TCS’ revenues.
“A billion dollar outsourcing deal in UK, which is the home of insurance would put TCS ahead of its Indian peers,” said Pradeep Mukerjee, managing director of Tholons, a firm that advises clients on offshoring.
“Also, with the rupee appreciating against the dollar, this deal would then strengthen their UK presence further, which would translate into additional deals,” said an IT analyst at a leading Mumbai-based brokerage house.