India\u2019s largest software company Tata Consultancy Services (TCS) said that it has mutually agreed with insurance provider Transamerica to end a $2 billion contract. The company cited reasons including a challenging macro environment. TCS and the US-based Transameria signed the deal in the year 2018. TCS had worked on the deal over a period of five-and-a-half years. As a part of TCS\u2019s 2018 agreement with Transamerica, the company had hired about 2,000 people who were formerly employed by Transamerica in the US.
The agreement was reportedly aimed to lead to annual run-rate savings of approximately $70 million initially and $100 million over time for Transamerica.
Enabled digitisation of policies<\/span>
The 10-year deal was to enable the digitization of more than 10 million policies into a single integrated platform. The IT major worked for Transamerica life insurance, annuities, and supplemental health insurance and other employee benefit products. The companies will now work together to ensure a smooth transition of the administration of these products to a new servicing model. TCS said that policies include life insurance, retirement and investment solutions. The entire process will take about 30 months, TCS said.
TCS faced lawsuit over the deal<\/span>
In 2018, when the deal was announced, CSC had filed a trade secrets lawsuit against TCS, claiming that the software source code for Vantage, an insurance product from CSC, was used by TCS to build its own insurance product. CSC had licensed Vantage to Transamerica, with the company’s employees having access to the software’s code to operate the system. The court rejected CSC’s earlier charge that TCS copied the source code of Vantage One.
\u201cLikely upset about Transamerica\u2019s decision to transition from Vantage to TCS\u2019s BaNCS Platform, CSC appears determined to disrupt the legitimate business relationship between Transamerica and TCS,\u201d said TCS in a filing with US District Court of the Northern District of Texas.
\u201cNot a big impact,\u201d say analysts<\/span>
“It’s more of a sentimental negative rather than a big impact on the financials of TCS,” told Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, to Reuters. “We don’t see a big impact because of this. But yes, it’s a sign that the demand environment is not very good” Khemka added.
Indian IT companies, which draw a bulk of their revenue from the United States and Europe, have flagged a slowdown in the telecom and communication segment as clients contemplate spending cuts and project ramp down to save cash.<\/div>\n