The Telegraph
Since 1st March, 1999
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Pearl adds sparkle to TCS crown

Mumbai, Oct. 18: Tata Consultancy Services and the UK’s Pearl Group will set up a new BPO company that could bag orders worth $847 million (Rs 3833 crore) over 12 years.

The single-largest alliance in terms of the size comes close on the heels of the multi-million-dollar deal under which ABN AMRO will manage Tata Teleservices’ IT systems.

TCS and Pearl, a closed fund group in UK’s life insurance and pensions industry, will float a new subsidiary to oversee the entire array of end-to-end business process outsourcing related to four million policies.

“The deal validates our strategy of pioneering the next-generation business process outsourcing opportunities,” said TCS chief S. Ramadorai in a message from the US, where he was holding meetings with clients.

TCS, like its rival Infosys, is concentrating on transaction-based BPO activities, which are considered more high-end compared with voice-based services such as call centres. The move will pole-vault the TCS-Pearl firm to the second place in the local BPO pecking order.

The firm, planned as a subsidiary of TCS, will specialise in BPO services for life insurance and pension businesses, starting with Pearl’s own clients. Later, it will tap other companies that farm out such functions.

The joint venture follows a year-long selection process at Pearl, which pored over tenders from leading companies before settling for TCS. The new firm will have 950 of Pearl’s 1100 employees; the rest will stay back.

S. Mahalingam, chief financial officer of TCS, said Pearl manages four million accounts through 13 different legacy systems. TCS will endeavour to implement a new system that will slash these to just one.

In the company to be floated, Pearl will remain a passive investor, though the final position will be known only after negotiations now under way are through. Its stake could fall if other insurance majors wanting to outsource back-office work join the TCS subsidiary.

TCS’ ties with Pearl go back 14 years. Analysts say that played a big role in influencing the UK major’s choice.

“Our extensive experience in the insurance industry, together with our excellence in technology, will help us emerge as a significant player in life assurance and pensions administration services. This will keep our growth momentum strong,” Ramadorai added.

Last week, the country’s largest software maker reported an 81 per cent increase in its second-quarter net profit at Rs 620.32 crore against Rs 342.19 crore in the corresponding period previous fiscal. The spurt came on the back of a 22.3 per cent rise in total income, which went up to Rs 2,515.73 crore from Rs 2,056.90 crore.

“The significant client acquisitions we had in the previous quarters have resulted in excellent ramp-up and growth during the quarter,” Ramadorai had said after the results.

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