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Capita loses Prudential life and pensions contract to TCS
Prudential is transferring the administration of its life and pensions business from Capita to Tata Consultancy Services in July as part of a wider customer and technology transformation programme.
Capita said on Tuesday that these operations are expected to have contributed around £80m in revenue in the full year to December 2017.
"During its 10-year partnership, Capita has helped Prudential to achieve and maintain award-winning standards of customer service and delivered operational improvements that provide a strong platform for future development," the group said, adding that it will continue to administer Prudential's international operations.
Capita said this announcement is not related to its discussions with a separate life and pensions client, as previously disclosed in its half-year results.
Prudential has agreed a new 10-year partnership with Tata Consultancy Services.
John Foley, chief executive of M&G Prudential, said: "Strategic partnerships are an important part of our five-year plan to improve customer outcomes through the £250 million capital investment our shareholders are making in the business.
"This partnership with TCS is an essential element of our strategy to create a digitally-enabled business. Our customers will receive a better service - day in, day out - as a result and our colleagues will be better equipped to provide that service more efficiently."
Foley added that TCS emerged as the "clear leader" in a full market review undertaken by M&G Prudential.
Unite, which represents staff working at Prudential and across Capita, has expressed concern following the announcement of the end of the life and pensions contract between the companies.
The union pointed out that around 1,100 staff and 4 million customer policies will be affected by Prudential's new partnership with TCS. In addition, 180 Prudential IT staff will be transferring over to TCS.
Unite regional officer Ian Methven said: "News that Prudential is ending their long contract with Capita has come as a shock to the employees across the businesses. There is legitimate alarm about what this Transfer of Undertaking Protection Employment transfer of staff means for their job security and future employment.
"Unite is calling on Prudential to urgently meet with the union in order to clarify what this new partnership will mean for their loyal workforce who continue to deliver the highest customer service for Prudential policy holders.
"There must be concrete guarantees that this new contract will not merely result in hundreds of jobs being offshored to India or important workplaces like Belfast being simply shut down.
"There has been no evidence that the Prudential appetite for offshoring has delivered any of the cost efficiencies which management have promoted, not to mention improved customer service outcomes."
Methven added that Prudential has worked closely with Capita for more than ten years and the said the decision to transfer work to a new provider brings "understandable fear" about whether this is merely another cost cutting exercise which will only serve to cut service and quality in the pursuit of efficiency.
At 1300 GMT, Capita shares were down 6% to 395.8p.