Pheroz Vandrevala, vice-chairman and managing director of Diligenta and director on board of Tata Consultancy Services (TCS), is in an enviable position. Other than being the second-largest insurance policy administrator in the UK, TCS bagged one of the largest ever deals-worth $2.2 billion from Friends Life, UK-based life and pension insurance provider. This in addition to winning the £600-million National Employee Savings Trust’ (NEST) deal. He talks to Shivani Shinde on the early bets the company took, opportunities after the success of Diligenta and the way ahead. Edited excerpts:
The investments the company made in the UK and to create a platform for the insurance sector seems to be paying out.
We started this journey almost four to five years back. That's when we did the Pearl acquisition. There was a lot of scepticism when we said we would develop a platform. The apprehensions were understandable, because there had been many attempts over the last decade to create and develop a platform for these businesses. Even now some of the platforms used in the industry are old. Besides, the attempts made were not successful. Even for us, it has been a four-year journey. We were clear we wanted to differentiate ourselves and focused on platform-based approach. Our strategy has been validated. In the last 18 months, we have migrated almost four million policies of Pearl on to this platform.
Does the Friends Life win give you bigger canvas to play?
We are very clear about what we want to do. We will focus on opportunities where even the client is looking at a transformational solution and is ready to shift to a new platform. We are not interested in opportunities that are lift and drop.
Even in the Friends Life deal, the initial discussion started 16-18 months before. We went through the usual request for proposal process. There were five players, which went down two, and then it was us. The interesting aspect of Friends Life is that we even get the open book policy. These are new policies the company is yet to close or sell.
What opportunities do you see ahead? Are you in talks with any potential clients?
As we go forward, opportunities would emerge. One to two opportunities have emerged in the US. Within UK, too, we have opportunities. UK has 70-75 million policies, that are legacy area. In the open book policy 35-40 million have already being outsourced or are with companies. But, there is still headroom in the market.
How will you take this platform to other European markets?
Europe is pretty fragmented when it comes to insurance. Unlike the UK market, that has regulatory requirements, the European market is yet to have such measures. We are evaluating two approaches as we enter Europe. One is that of complete outsourcing, like the deals we have done in the UK, where we also inherit some of the employees. The other is the licensing of product and undertake IT support work. Clients can use their in-house team for implementation and get the benefit of the platform.
What about the NEST deal?
We are on track with the work. Some of the companies have joined us for the pilot project and we have started working on policies. In the next 12-18 months the deal will be a significant contributor to the business.