TCS bags Rs 4,150-cr deal from UK govt

Tata Consultancy Services (TCS), the country’s largest software exporter by revenue, is to administer the UK’s National Employee Savings Trust (NEST) scheme’s administered services under a 10-year deal, worth around £600 million (approximately Rs 4,150 crore).

The contract, awarded by the UK’s Personal Accounts Delivery Authority (PADA), is divided into two stages, with possible extensions of another five years. The first stage will run up to October 2010, allowing TCS to begin the activity required to set up and administer NEST. Prior to the expiry of the first stage, a decision will be made on whether to proceed with the contract for the remainder of the contract term.

“This is a significant contract, with fixed and variable elements. The value of the contract will vary with volumes, which are inevitably uncertain at this stage. However, we broadly expect it to be in the region of £600 million over 10 years (including VAT and inflation),” said a spokesperson of PADA.

“It is anticipated that the services will be primarily IT-enabled, although certain elements of the services will need to be provided via other channels, including by way of telephone.”

Other than TCS, three more firms were invited to participate in the competitive dialogue: Arbejdsmarkedet Tillaegspension (ATP) Group; Great-West Retirement Services (Europe) and Logica UK.

NEST is a part of UK workplace pension reform that aims at making savings for retirement the norm. The workplace pension reforms are due to take place in 2012. Once implemented, it will mean automatic enrollment of all eligible workers into a pension scheme that meets or exceeds legal standards. “NEST hasn’t been launched yet, and the number of members is currently uncertain, although expected to be between three to six million,” said the spokesperson.

The contract will cover services like employer participation, member enrollment, collection and reconciliation, cash management, accessing pension savings and administration of accounts.

“As we proceeded through our detailed procurement process, TCS emerged as an extremely strong bidder, both in terms of their capabilities in pension administration and in their ability to provide value for money for NEST members. Signing the contract early, in stages, allows us to get on with our work to deliver NEST,” said Tim Jones, chief executive of PADA.

For TCS, this will be an important win, as it makes its hold within the government sector stronger. “This project will make a difference to millions of people in the UK and we are fully committed to it. Our selection as the preferred bidder demonstrates our strong domain and solution expertise and highlights our commitment to the UK public sector,” said N Chandrasekaran, chief executive officer and managing director of TCS.