TCS, Transamerica agree to end administration agreement earlier than planned

At the time it was signed in January 2018, this was the largest deal TCS had bagged.

Tata Consultancy Services (TCS) has ended its $2 billion deal with the American arm of Dutch insurer Aegon NV's subsidiary Transamerica Life Insurance Co. The 10-year deal, signed in January 2018, has come to an end as Transamerica plans to cut its dependence on third-party IT services firms such as TCS, an executive familiar with the development told Mint. “TCS will have worked for about 80% of the duration of the contract, and the financial impact should be minimal," the executive said.

The IT major worked for Transamerica life insurance, annuities, and supplemental health insurance and other employee benefit products.

While TCS called this a multi-year deal, a Mint report said that TCS would have worked for eight out of the ten years of the contract, including the period of transition. The report further states that Transamerica is expected to focus on insourcing.

“Considering the current macro environment and respective business priorities, Transamerica and TCS have mutually agreed to end the administration arrangement for Transamerica life insurance, annuities and supplemental health insurance, and other employee benefit products," spokespeople for TCS and Transamerica told Mint in an identical response.

“Transamerica and TCS will work together to ensure a smooth transition of the administration of these products to a new servicing model, which we expect to take approximately 30 months."

This development comes at a time when TCS is staring at a slowdown. This makes it a challenging start for chief executive K. Krithivasan, who only took over as the boss on June 1 after his predecessor Rajesh Gopinathan resigned. At the time it was signed in January 2018, this was the largest deal TCS had bagged.

As a part of TCS’s January 2018 agreement with Transamerica, the IT major had hired about 2,000 people who were formerly employed by Transamerica in the US.