Capita Group has won an outsourcing deal worth 722m pounds ($1.5bn) over 15 years with UK life insurance and pensions provider Prudential UK.
The contract win is the biggest in Capita’s history, in terms of total value, surpassing the 580m-pound ($1.2bn) deal the company secured from life insurance company Resolution in May. It caps a run of major wins for Capita in 2007, including a 10-year extension with Birmingham City Council worth 142m pounds ($292.7m) and a 15-year deal with Swindon Borough Council worth 243m pounds ($500.9m).
Under the terms of the agreement with Prudential, Capita will provide customer servicing, new business processing, claims activity, and IT support functions. Some 1,750 Prudential staff currently working in the UK will transfer to Capita under TUPE regulations, including 1,000 employees from Prudential’s office in Craigforth and a further 750 from its Reading branch.
In addition, Capita will take on about 1,250 staff currently providing offshore services for Prudential from India. This part of the deal will involve Capita paying approximately 25m pounds ($51.6m) to acquire part of Prudential’s PPMS division based in Mumbai.
According to a Capita spokesperson, the company currently has about 1,000 staff in India and still anticipates adding a further 1,000 employees in the region, on top of the 1,250 it will acquire through the Prudential deal. The spokesperson said the addition of the Prudential operation would allow Capita to transfer more complex processes to its offshore operation.
Prudential’s trade union, Unite, said it viewed the decision to move 3,000 of the insurer’s staff to Capita as a positive move in order to secure the jobs of Prudential employees. Unite deputy general secretary Graham Goddard said: Unite will be pressing for a commitment from Capita of no compulsory redundancies. We would envisage that redeployment opportunities and careers prospects should be brighter in Capita, which is a growing business.
The contract builds on an already strong relationship between the two parties. In August 2006, Prudential awarded Capita a three-year deal worth 40m pounds ($82.4m) to support the company’s life and pensions operations. As part of that deal, some 450 Prudential staff transferred to Capita’s Belfast office. Capita has also been providing life and pensions administration services to Prudential’s international insurance business since 2003.
The win will also help Capita bounce back from recent setbacks, including losing out to IBM in the race to decide who would run London’s congestion charging project when the current deal runs out in November 2009 and, more recently, the collapse of its proposed 175m-pound ($360.7m) deal with North East Lincolnshire Council.