Tata Consultancy Services Ltd has agreed to recruit employees and acquire select assets of Pramerica Systems from insurance giant Prudential Financial Inc, aiding the insurer to cut costs in an effort to beat the low-interest rates deal with the coronavirus fallout.
TCS plans to set up a new global delivery centre in Ireland to equip Prudential with a range of business and technology services. Over 1,500 staff of Pramerica Systems Ireland will transfer to TCS and further expand the latter’s global delivery capability. PFI will retain the Pramerica Ireland entity, which will continue to operate from Letterkenny and will focus on providing regional business services, reporting under its global asset manager, PGIM.
Global banks and insurers are stepping up efforts to shed non-core assets, like tech support, as they manoeuvre through the post-COVID-19 volatile economy. The Prudential deal is planned along these lines as shedding the operation is expected to help the insurer cut down on costs, as it aims for $750 million savings by the end of 2023. For TCS, Pramerica will bring in its own perks like multi-year services contracts, strategy expertise and a development centre in Ireland. Under the agreement, which awaits regulatory approval, Prudential will keep the Pramerica Ireland entity.
Prudential Financial is re-pricing services and switching to less rate-sensitive products, the insurer said while announcing quarterly earnings last week. It has put a break to share buybacks, as the onset of the coronavirus outbreak created uncertainty in business. Chief Executive Officer of Prudential Financial, Charles Lowrey said, “At the time, the company would explore potential asset sales and that deal-making would help reshape the business.”
TCS is an IT services, consulting and business solutions organization and reported 7.05% decline in consolidated net profit to Rs 7,475 crore on a 2.97% increase in revenue to Rs 40,135 crore in Q2 September 2020 over Q2 September 2019.
K Krithivasan, President – Banking, Financial Services and Insurance, TCS, said “Ireland is uniquely positioned to play a leading role in the digital economy. This key investment deepens our relationship with PFI and gives us a new delivery capability in Ireland with specialized expertise, that significantly strengthens our ability to meet the growth and transformation needs of our customers globally. We warmly welcome Pramerica’s employees into the TCS family. We are confident they will avail the immense career growth opportunities that TCS offers, and fully realise their potential.”
