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TCS reported its first mega deal for 2020 on Tuesday with US pharmacy retailer Walgreens Boots Alliance expanding its strategic partnership with IT services provider for a 10-year deal, valued at over $1.5 billion.
The deal is part of WBA’s initiative to advance the transformation of its global IT operation to fast-track digitisation and drive efficiencies.
The deal marks a revival for TCS’ retail portfolio, which was lagging in terms of growth during the October-December quarter, a traditionally strong quarter for retail.
During an interview with BusinessLine recently, TCS CEO Rajesh Gopinathan had maintained that retail customers will continue to invest in cost optimisation projects and that the company remained positive on the sector.
Under the Transformational Cost Management Programme of the deal, TCS will take over some of WBA’s staff and run its entire IT operations.
“WBA is building a scalable, sustainable and globally unified IT operating model that is focussed on digital transformation, automation of service delivery and innovation,” said Francesco Tinto, senior vice-president, global chief information officer, WBA. “The TCS strategic partnership will enhance our ability to rapidly address evolving business needs, support large-scale global technology solutions and promote investment in truly differentiating capabilities through a modernised platform.”
Key vertical
Retail is the second biggest industry vertical for TCS, after BFSI, and contributes to about 15 per cent of the company revenues.
During its Q3 earnings announcement, TCS said it signed a total contract value of $6 billion in the quarter, taking the overall TCV to $18 billion for the first 9 months of the fiscal year.
The last major deal announced by TCS was a $2-billion contract with Europe’s largest life and pensions consolidator Phoenix Group to transform the latter’s Standard Life business through the TCS BaNCS digital platform.
For WBA, TCS will launch a new operating model for IT run and operational services, enabling WBA to accelerate its digitisation programme to advance innovation for customers, drive organisational efficiencies across the company and further reduce its cost base.
The expansion of the WBA and TCS strategic partnership is based on WBA’s review of its IT operating model and vendor landscape, TCS said in a statement. As a result, the WBA global IT team will focus on leading and supporting strategic technology projects that create customer value through the development of new digital products and services on its business platforms.
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