iGATE wins Rs 590 crore contract from US insurer MetLife

BANGALORE: IGate has won a five-year contract worth $100 million (Rs 590 crore) from insurer US insurer MetLife, a rare large deal in a market generally not conducive for mega outsourcing pacts.

IGate, which lost its CEO Phaneesh Murthy to a sex scandal last month, will provide IT infrastructure support services to MetLife, an existing client.

“This win is a strong validation of iGate’s domain and technology expertise in the insurance industry,” said Sanjay Tugnait, executive vice-president and head of sales for North America. “Our 10-year long relationship with MetLife has given us deep understanding of the company's global businesses and will enable us to achieve definitive business imperatives.”

Shares of the company were trading at $14.79, up 1% in early trade on Nasdaq. Before the announcement of the board terminating the services of Murthy as CEO, iGate shares were trading at $16.40 apiece.

The deal is a shot in the arm for iGate, which sacked Murthy in mid-May for failing to disclose a relationship with one of his subordinates. The company has engaged the services of Russel Reynolds Associates to find a new chief executive. A former Intel executive Gerhard Watzinger has been appointed by the board of directors as interim CEO.

Murthy was instrumental in scaling up the $300 million iGate into a billion-dollar company by acquiring Patni Computers in a leveraged buyout with help from private equity fund Apax Partners in 2011.

Analysts are sceptical of iGate’s ability to bounce back from the loss of Murthy, who was known for his sales prowess and was aggressively pushing the so-called ‘outcome-based model’ where clients are billed based on mutually-agreed business results rather than for labor deployed. As part of differentiating itself, the company ran a multi-million dollar advertising campaign in the US urging corporations to insist on outcome-based billing by clients.

A contract worth $200 million which iGate had won recently slipped through its hands because of delays in commencing the project.