Will provide process outsourcing services to Citi
Transaction is expected to close in Q4
The software major will acquire new capabilities
MUMBAI: Tata Consultancy Services (TCS) and Citigroup (Citi) have reached an agreement for TCS to acquire all of Citi’s interest in Citigroup Global Services Ltd. (CGSL), the India-based captive business processing outsourcing (BPO) arm of Citi, for all cash deal of about $505 million.
Besides this, Citi has signed an agreement for TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates in an aggregate amount of $2.5 billion over 9.5 years. The agreement builds on the existing relationship between Citi and TCS whereby TCS provides application development, infrastructure support, help desk and other process outsourcing services to Citi.
TCS has provided IT services to Citi since 1992 and is now one of the largest IT services partners for Citi, delivering IT and business processing outsourcing services to Citi across its operations in North America, Europe, India, Japan, Singapore and the rest of Asia Pacific.
The acquisition broadens TCS’ portfolio of end-to-end IT and BPO services in the global banking and financial services (BFS) sector, while TCS’ enhanced scale and expertise will provide service improvements to Citi and its customers.
CGSL is one of the largest providers of business processing outsourcing services within the banking and financial services sector, providing end-to-end process management across the BFS spectrum and an array of services to Citi’s consumer, corporate and global wealth management businesses world wide.
CGSL, with more than 12,000 employees in India, expects revenues of about $ 278 million in 2008.
S. Ramadorai, CEO and Managing Director, TCS, 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,” he 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 capitalises on CGSL’s expertise in financial services and TCS’ expertise in process optimisation,” said Don Callahan, Chief Administrative Officer, Citi.
N. Chandrasekaran, COO and Executive Director, TCS, added that the acquisition of CGSL had two immediate strategic benefits for TCS — it gives TCS the ability to offer a comprehensive end-to-end, domain-led solution for business operations of large financial services institutions. It also positions TCS well to create banking processing platforms by integrating its products and process capabilities.
The parties expect to close the transaction in the fourth quarter of 2008. Merrill Lynch acted as advisors to TCS in this transaction.