Tata Consultancy Services to acquire Citigroup's BPO arm

by Editor 10/8/2008 3:40:00 PM
Tata Consultancy Services (TCS) has reached an agreement with Citigroup Inc., a global leader in financial services, to buy all the company's interest in Citigroup Global Services Limited (CGSL), the captive business processing outsourcing (BPO) arm of Citigroup, for approximately $505 million.

Citigroup has also signed a deal for Tata Consultancy to provide process outsourcing services to Citi and its affiliates through CGSL. TCS already provides application development, help desk, infrastructure support and other process outsourcing services to Citigroup.

CGSL is a banking sector leader in business processing outsourcing services. The company provides end-to-end process management across the BFS spectrum and a wide range of services to Citigroup's corporate, consumer and global wealth management enterprises around the world. It employs 12,000 people in India and expects to earn $278 million in 2008.

Tata Consultancy Services' chief executive S. Ramadorai said:

"This is a landmark acquisition for TCS, helping us not only acquire new capabilities in the banking domain but also underscoring the importance of our long-term, sustainable relationships with our large customers, including Citi. This transaction will complement our domain expertise and bring new capabilities to TCS that will help drive growth going forward."

Don Callahan, Citigroup's chief administrative officer, added:

"This is a great transaction that benefits all parties - Citi, our customers, our employees and TCS. Our customers require access to increasingly complex processing solutions and this relationship will achieve a 'best in class' technology model that capitalizes on both CGSL's expertise in financial services and TCS's expertise in process optimization. TCS will offer CGSL stronger growth potential and superior continued services to Citi clients around the world. This transaction is expected to help reduce operating expenses related to business processing and will allow us to focus on our core financial services competencies."

TCS' COO M. Chandrasekaran explained the benefits of the acquisition to Tata:

"The acquisition of CGSL has two immediate strategic benefits for TCS. It gives us the ability to offer a comprehensive end-to-end, domain-led solution for business operations of large financial services institutions. It also positions us well to create banking processing platforms by integrating our products and process capabilities. We welcome CGSL professionals into the TCS family, where they will be able to participate in the company's new growth endeavours."

The acquisition is going to be completed in the fourth quarter of 2008.

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