Walgreens Boots Alliance signs on TCS to digitalise IT operations in $1.5 bn deal

Nasdaq-listed pharmacy retailer Walgreens Boots Alliance (WBA) has signed on Tata Consultancy Services (TCS) for a $1.5 billion, ten-year contract to digitalise and transform its IT operations and reduce costs.

This deal comes at an opportune time for Mumbai-headquartered TCS which has been struggling with a growth slowdown in its topline due to lower deal-flows from the retail, banking and financial services sectors. The WBA deal win is one of the biggest for the country's largest software exporter. 

TCS derives around 15% of its overall revenues from the retail sector. 

Read: How the global BFSI slowdown is hurting India’s Big Four IT services firms

The ten-year deal will also see the Indian software services firm modernise WBA’s legacy IT backbone by creating a new operating model as well as vendor management, the company said in a media statement. Deerfield, Illinois-based Walgreens had acquired UK and Switzerland pharmacy firm Boots Alliance in 2014 to create a larger $135 billion conglomerate.

The expanded strategic partnership will advance WBA’s new operating model for ‘IT run and operational' services, enabling the pharmacy retail major to advance innovation for customers and drive organisational efficiencies across the company. As a result, the WBA global IT team will focus on leading and supporting strategic technology projects through the development of new digital products and services on its business platforms, the media statement said.

“WBA is building a scalable, sustainable and globally unified IT operating model that is focused on digital transformation, automation of service delivery and innovation,” Francesco Tinto, senior vice president, global chief information officer, WBA, said. 

Tinto said that the TCS partnership will help the company address evolving business needs, support large-scale global technology solutions and promote investment through a modernised platform.

During the period of transition, TCS will provide managed IT services, including application maintenance and support, infrastructure and security operations. The company will also deploy its artificial intelligence (AI), machine learning (ML) and advanced software engineering to enhance operational resilience and boost productivity, it said.

“We will leverage our contextual knowledge of WBA’s business ecosystem to harness the power of digital technologies to streamline and scale-up their IT operations while helping accelerate transformational initiatives that enhance the customer experience," Ashish Khurana, head, retail industry solutions at TCS, said.

According to WBA, the deal reflects its new IT operating model so that it can prioritise savings to invest to grow while managing costs efficiently under the 'transformational cost management programme'.

During the third quarter of the current financial year TCS) had reported revenue growth of 6.7%, while its net profit remained flat at 0.2% growth.