India’s TCS, Transamerica end $2 billion contract due to macro environment
2:30 am Friday, June 16th, 2023
BENGALURU (Reuters) -Indian information technology (IT) company Tata Consultancy Services said on Friday it has mutually agreed with insurance provider Transamerica to end a $2 billion contract, citing reasons including a challenging macro environment.
The 10-year contract, signed in early 2018, involved TCS working with U.S.-based Transameria to enable the digitization of more than 10 million policies into a single integrated platform.
Administration of those policies, including life insurance and retirement and investment solutions, will be moved to a new servicing model, which will take about 30 months, TCS said.
“It’s more of a sentimental negative rather than a big impact on the financials of TCS,” said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.
Indian IT companies, which draw a bulk of their revenue from the United States and Europe, have flagged a slowdown in the telecom and communication segment as clients contemplate spending cuts and project rampdowns to save cash.
“We don’t see a big impact because of this. But yes, it’s a sign that the demand environment is not very good” Khemka said.
TCS stock is currently trading 1.3% lower at 3,175 rupees.
(Reporting by Navamya Ganesh Acharya in Bengaluru; Editing by Rashmi Aich and Sonia Cheema)
