Diligenta, a subsidiary of Tata Consultancy Services (TCS) and a leading business process outsourcing (BPO) provider in the U.K., will assume administration responsibility for 3.2 million policies for Friends Life, a provider of pensions, investments and insurance. The agreement, effective March 1, 2012, is worth $2.2 billion (around Rs.10,000 crore) over a 15-year period.
The deal will increase the total number of policies administered by Diligenta to just under eight million. Outsourcing much of its customer service and IT functions for its U.K. heritage business will allow Friends Life to focus on its new proposition developments, including its new corporate platform, in its core markets of corporate benefits, protection and retirement income.
Addressing the media, N. Chandrasekaran, CEO and MD, TCS, and Chairman, Diligenta, said, “Our domain-centric, platform-based solutions enable us to help companies transform their businesses. Our strong presence in the insurance segment, track record and the early investments in building products and platforms have contributed to this win. This deal is the second largest one signed by TCS after the $2.5 billion Citi deal some years ago.”
In 2006, Diligenta secured its first 486 million pound sterling deal with the Phoenix Group (formerly Pearl Group) and has since then secured several new clients in the life and pensions sector and today administers around five million policies.
TCS BaNCS platform, developed in 2006, is a scalable platform that provides improved customer service through a high degree of straight through processing.
The deal is a step in the direction of increasing TCS' non-linear revenues and validates TCS' early investment in building platforms according to Mr. Chandrasekaran. “The deal is transaction-based and we will charge the client a fixed monthly fee per policy. It is unique because over the last five years, since the Pearl Group deal, we created a platform in the U.K. to integrate multiple legacy systems on a single platform and this now functions on the cloud paradigm. Since we already have a platform ready, we will shut the legacy platform and migrate the policies of Friends Life to this one over the next 2-3 years.”
He also added that TCS would be keen on taking the BaNCS platform to other markets and was currently in discussion with some clients for the same.
Diligenta and TCS will deliver IT infrastructure and IT services with some policies migrating to TCS BaNCS Insurance, a globally recognised insurance platform.As a result of the deal, around 1,900 Friends Life employees across a number of offices in the U.K. will transfer under existing terms of employment to Diligenta. All of those who transfer will continue to service Friends Life customers.
TCS' CEO said there would be no loss-making period as a result of this.
“Revenues from the deal will kick in from this quarter onwards but the true revenues will come in from next fiscal onwards. The margins will be lower initially but will eventually come to TCS level of profit margins.”
