Transamericanixes $2bn TCS pact to focus on insourcing

Tata Consultancy Services (TCS) Ltd’s $2 billion, 10-year deal with the American arm of Dutch insurer Aegon NV has been scrapped five-and-a-half years after Transamerica Life Insurance Co. selected India’s largest information technology (IT) services company.

- Varun Sood

Transamerica plans to cut its dependence on third-party IT services firms such as TCS, electing to do much of the tech work itself, according to an executive familiar with the development.

The executive said TCS will complete the transition over 24-30 months, implying the Mumbai-based company will have worked for eight of the planned 10 years of the contract. “TCS will have worked for about 80% of the duration of the contract, and the financial impact should be minimal,” the executive said on the condition of anonymity.

Still, losing a marquee client like Transamerica is a setback for TCS. A case in point is TCS’s partnership with television ratings measurement company Nielsen. Nielsen first awarded a 10-year, $1.2 billion IT services contract to TCS in 2007 and expanded the contract to $2.25 billion in 2017.