Insurance firm Pearl Group has outsourced its processing
and administration to Indian IT services company Tata Consultancy
Services in a deal worth £486m over 12 years.
Under the agreement TCS will establish a subsidiary company to
employ about 950 of Pearl's 1,100 staff, with the remainder
retained by Pearl to work on its life and pensions business.
Samad Masood, an analyst with Ovum, said the Pearl deal was the
largest example to date of an offshore outsourcing provider taking
on "onshore" staff, and it illustrated the high level of acceptance
of Indian IT services companies among UK client organisations.
Phiroz Vandrevala, global head of corporate affairs at TCS, said
the firm plans to take over Pearl's Peterborough office and
establish a business process outsourcing centre of excellence for
the UK, initially managing four million insurance policies.
The supplier's first target will be Pearl's 13 existing IT
systems, which TCS plans to migrate to a single, fully integrated
platform over the next four years.
Ian Laughlin, managing director of life services at Pearl Group,
said, "The arrangement will provide certainty over a major portion
of the cost base well into the future. It offers very important
protection for policyholders because over the long term the unit
costs per policy will be maintained at competitive levels."
Analyst firm Butler Group expects Indian outsourcing suppliers
to move from offering specific services such as software
development or call centre operations to full-service IT
outsourcing over the coming year.
Mike Thompson, principal analyst at Butler Group, said, "I
expect they will be able to undercut traditional outsourcing
suppliers." Indian companies were likely to offer services such as
business process re-engineering, which has been the domain of
management consultants, he added.
The Pearl Group contract follows Tata's £147m deal last month as
a sub-contractor in the £1.2bn ABN Amro infrastructure outsourcing
contract with IBM, in which it has been tasked to deliver
large-scale application-related offshore services.