Blow for TCS! Transamerica Life Insurance cuts short $2 billion contract with Indian IT giant

India’s largest IT services company, Tata Consultancy Services (TCS), has confirmed that its 10-year deal with Transamerica Life Insurance Company, which was signed in 2017, has been ended before completion due to the current macro-economic environment. The 10-year deal was worth $ 2 billion.

The company said in a statement, “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.”

The deal between TCS and Transamerica Insurance was signed in January 2018, as per a release by the IT services company. The deal ensured that TCS earned at least $200 million in annual revenue. The release from January 2018 also highlighted that TCS was signed to simplify the service of more than 10 million policies into a single integrated modern platform.

“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,” they added.

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For the financial year 2022-23, TCS has reported a 14.8 percent year-on-year (YoY) increase in consolidated net profit. The profit for the quarter ended March 31, 2023 stood at Rs 11,392 crore.

The consolidated revenue from operations of the IT company came in at Rs 59,162 crore, up 16.9 per cent, from Rs 50,591 crore YoY. In the December quarter of FY23, it stood at Rs 58,229 crore.

The revenue rose 10.7 per cent year-on-year (YoY) in constant currency (cc) terms. Earnings before interest and taxes (EBIT) stood at Rs 14,488 crore with EBIT margin contracting 0.5 per cent YoY to 24.5 per cent. Net margin came in at 19.3 per cent.

This development comes as the IT services company's new CEO, K Krithivasan, started his term on June 1.

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