Information technology (IT) services firm Infosys has signed a multi-year partnership deal with American investment management firm Vanguard to digitally transform the financial services firm’s defined contribution (DC) recordkeeping business.
DC is an employment-based pension scheme in the US, where both partners contribute to the plan.
Additionally, the Valley Forge, Pennsylvania headquartered company will transfer 1,300 employees from its IT division to Infosys, as per a statement. The staffers will be offered the same salary with comparable positions and benefits amid a 12-month transition period, it said.
Martha King, managing director of Vanguard Institutional Investor Group, will also move to Infosys to head the firm’s Mid-Atlantic Retirement Services Centre of Excellence and serve as the Bengaluru-based firm’s chief client officer.
The deal propelled Infosys shares to rise more than 7% on Wednesday morning on the Bombay Stock Exchange, ahead of the company’s first quarter financial results announcement.
Infosys will take over the day-to-day operations supporting Vanguard’s DC recordkeeping business, including software platforms, administration and associated processes, a statement said.
“Infosys has deep expertise serving leading retirement services firms in the US, and as part of this strategic partnership with Vanguard, we will transform the retirement industry while helping clients manage their retirement needs leveraging advanced digital solutions,” Salil Parekh, CEO of Infosys, said. Infosys claims to currently serve half of the top 20 retirement service firms in the US.
The collaboration will also enhance and evolve Vanguard’s full-service DC business to deliver a technology-driven approach to plan administration and reshape the corporate retirement plan experience for its sponsors/employers and participants/employees, the statement said.
“The partnership will embolden our best practices and innovation, enabling a groundbreaking approach to plan administration. Coupled with Vanguard’s increasing investment in advice capabilities and client experience, we will set a new bar for personalisation, ease, and efficiency for sponsors and participants alike,” Vanguard institutional investor group head King, said.
Vanguard, the largest defined contribution asset manager for retirement services in the US, said that it will continue to oversee all aspects of its investment management and guidance for both sponsors and participants. However, participant phone calls will be serviced by both Vanguard and Infosys, it said. Planned enhancements for sponsors include artificial intelligence-enabled analytics capabilities, improved visibility of participant behaviour and operational support, it added.
The US firm is also set to accelerate the development of a redesigned participant website, integrated advice and intuitive technologies for better participant experience. Vanguard will provide a cloud-based recordkeeping platform, enabling better insights and personalisation to deliver better outcomes for nearly five million participants and 1,500 sponsors, the statement said. Vanguard manages more than $1.3 trillion DC assets and has 30 million investors.
“Our platform will create a new standard for the industry as we seek to drastically improve the retirement savings experience for plan participants and sponsors through the use of cutting-edge digital technologies,” Mohit Joshi, president of Infosys, said.
The Indian firm earlier signed up Evansville, Indiana-based Old National Bank to modernise its existing technology infrastructure, which is expected to enhance the bank’s client and employee experience.
Multiple large deal wins saw frontline IT stocks gaining by as much as 16% on Wednesday morning. However, credit rating agency ICRA expects IT firms to post a 3% decline in revenue during the current financial year.