TCS wins $690-mn IT outsourcing contract

THE LATEST DEAL BRINGS $69 MILLION IN NEW BUSINESS, OR 37 BASIS POINTS INCREMENTAL GROWTH, FOR TCS

BENGALURU: At Tata Consultancy Services Ltd (TCS), it is raining deals. India’s largest information technology outsourcing company said on Tuesday that it had won a $690-million, 10-year contract from a unit of British insurer Prudential.

The latest order is the third large outsourcing contract won by TCS in less than a month. It won two over $2 billion, multiyear outsourcing contracts from television ratings measurement firm Nielsen and Transamerica Life Insurance Co., a unit of Dutch insurer Aegon NV, in December and earlier this month.

TCS will use its insurance platform, BANCS and Diligenta, the Uk-based subsidiary of the company, to largely do away with human interventions in completing many of the back-end claims processes of M&G Prudential, the European savings and investments business of Prudential.

TCS won the outsourcing contract from Prudential over British IT outsourcing firm, Capita Plc, which was earlier hired by the British insurance giant.

TCS does not outline any quarterly or yearly growth outlook but 1% sequential growth in the March quarter will help it end the current year with $18.95 billion in revenue, a 7.8% dollar revenue increase in 2017-18. This means TCS will need to improve on its current year’s growth by 220 basis points to achieve at least 10% dollar revenue growth in 2018-19.

One basis point is one-hundredth of a percentage point.

The latest deal brings $69 million in new business or 37 basis points incremental growth for TCS.

TCS stands to make over $200 million in new business or more than 110 basis points in incremental growth from the contract with Transamerica. Additional deal wins from a unit of Lloyds Banking Group, Rolls Royce Group, and Marks and Spencer is expected to bring more than $100 million in new business or over 60 basis points incremental growth in the next fiscal, according to Mint’s calculations, together bringing over 200 basis points in incremental growth.