Transamerica and Tata Consultancy Services (TCS) have mutually agreed to end their partnership, representatives from both companies have confirmed.
The plan was announced in an email sent recently to Transamerica employees and confirmed in a joint statement from Transamerica and TCS.
“Considering the current macro environment and respective business priorities, Transamerica and Tata Consultancy Services have mutually agreed to end the administration arrangement for Transamerica life insurance, annuities, and supplemental health insurance and other employee benefit products,” the statement said. “Transamerica and TCS will work together to ensure a smooth transition of the administration of these products to a new servicing model, which we expect to take approximately 30 months.”
According to the email sent to Transamerica employees, as part of the aftermath of the decision to end the partnership, “we plan to add approximately 700 full-time positions, with an emphasis on hiring in Cedar Rapids, Iowa.” There was no indication of a timeframe for those hires.
In the email, titled “Revitalizing our strategic assets and operating model,” Transamerica officials described the decision to end the company’s agreement with TCS as “essential to enabling our growth strategy and restoring Transamerica’s reputation as a market-leading, customer-focused company.”
“The centerpiece of Transamerica’s comeback story is growing our strategic assets and enhancing our customer experience,” the email adds. “…This new operating model will be tailored to our customers’ needs and our growth strategies, not a ‘one size fits all’ approach. We will focus on our core strengths and work with industry-leading partners with proven track records for their strengths.”
TCS spokesperson James Sciales said despite the decision to end the partnership between Tata and Transamerica, TCS doesn’t plan to exit the Cedar Rapids market.
“Cedar Rapids and the entire state of Iowa will remain an important market for TCS, where our associates will continue to serve clients in such industries as financial services, education, retail, manufacturing, and travel,” Mr. Sciales said.
“We are optimistic about Transamerica’s commitment to Cedar Rapids and our local workforce,” Cedar Rapids Mayor Tiffany O’Donnell said. “I am confident Transamerica will continue to keep valued employees in Cedar Rapids and recognize their continued commitment to our region.”
In January 2018, Tata Consultancy Services (TCS) signed a $2 billion deal for a multi-year partnership to serve as third-party administrator for the insurance and annuity business lines of Transamerica’s U.S. operations in Cedar Rapids and other U.S. locations – the largest contract in TCS history at that time.
In the process, Tata became one of the Corridor’s largest private employers.
According to terms of the 2018 deal, TCS offered employment to 882 Transamerica employees and leased two buildings at Transamerica’s north campus at the intersection of 42nd Street and Edgewood Road NE. Transamerica and Aegon formerly operated from those offices before moving to former Hibu facilities on C Street SW in Cedar Rapids, a move that was substantially completed in 2018. The former Transamerica site was sold in an online auction in June 2022, and the buyer is now seeking to redevelop the site and its office buildings.
At the time the deal was signed, TCS administered more than 10 million Transamerica policies, including annuities and life insurance, supplemental health insurance and workplace voluntary benefits policies.
India-based TCS was not a household name in the Corridor prior to the deal with Transamerica, but is known as one of the world’s leading global IT consultancies. As of 2018, the company had a global workforce of 398,880; by July 2022, its headcount topped 600,000 for the first time, with operations in 150 locations across 46 countries. In March, the company reported quarterly revenue of just over $591 billion.
Transamerica leaders said the companies planned to work together in a “multi-year partnership” to modernize the customer service platforms and enhance the digital capabilities used to administer its policies. It was expected to yield annual savings to Transamerica of $70 million, growing over time to $100 million.
The partnership was designed to advance Transamerica’s competitive position and help it achieve growth in all its business lines, then-CEO Mark Mullin said, emphasizing the customer benefits he also expected.
“Transamerica continues to put our customers at the forefront of everything we do,” Mr. Mullin said in a news release at that time. “I’m very excited to embark on this partnership with TCS, whose transformation and technology innovation capabilities will supplement our focus on improving our customers’ experience in a digitally enabled way.”
As of February, Transamerica and its parent company, AEGON, employed close to 2,400 people in Iowa, according to a company spokesperson. But both Transamerica and AEGON have trimmed their local workforce several times in recent years.
In February, Transamerica laid off 42 workers in Cedar Rapids. In December 2022, Transamerica’s affiliate, Aegon Global Services, eliminated 55 positions. In August 2022, Aegon announced it was cutting 59 jobs in Cedar Rapids, 55 from Aegon and another four from Transamerica. The Transamerica figure was subsequently amended to 15 job cuts. In June 2022, Transamerica eliminated 40 positions, including two in Cedar Rapids and 38 employees working remotely in Iowa. And in November 2020, the company eliminated 53 positions in Cedar Rapids.
