Posted by : varun in (News)
TCS to acquire Citi unit for $505 million
Tata Consultancy Services (TCS) has confirmed that it will acquire Citi’s captive Indian back office division for a cash consideration of $505 million.
Mumbai-based Citigroup Global Services employs over 12000 people in India and expects revenues of around $278 million in 2008.
The US bank, which has been badly hit by the credit crunch, has been looking to sell off the unit for over a year.
Last July it was reported that the bank had shortlisted three bidders - Genpact, Firstsource and WNS - but by this August TCS had emerged as favourite for the unit, edging out IBM.
“I believe they have already subtracted the financial crisis in the banking industry. They will look for larger banking deals as most banks intend to cut short staff strength and sell out their captive BPO units,” said a Mumbai-based investment banker.
Don Callahan, chief administrative officer, Citi, says the sale will help “reduce operating expenses related to business processing and will allow us to focus on our core financial services competencies”.
TCS is a part of the $62.5-billion Tata group that has 96 companies in its fold and has been providing services to Citi since 1992. They hope to conclude the twin-deals by the year-end. TCS expects Citigroup Global Services revenue to start flowing in from the next quarter.