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Post-RBS deal, Tesco outsources more work to its Indian unit

Post-RBS deal, Tesco outsources more work to its Indian unit
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First Published: Thu, May 27 2010. 10 22 PM IST

Looking up: Sandeep Dhar, CEO, Tesco Hindustan Services Centre.
Looking up: Sandeep Dhar, CEO, Tesco Hindustan Services Centre.
Updated: Thu, May 27 2010. 10 22 PM IST
New Delhi: The India back-office unit of Tesco Plc, the world’s third largest retailer, is increasingly getting more work from the parent unit that offers banking and insurance services, besides selling credit cards.
This follows Tesco’s buyout of Royal Bank of Scotland’s (RBS) 50% stake in their joint venture Tesco Personal Finance (TPF), the unit from which Bangalore-based Tesco Hindustan Services Centre (THSC) is getting back-office and analytics business.
Earlier, all the processes were being handled by RBS in the UK itself, said Sandeep Dhar, chief executive of the unit.
“Currently, the process of transition is going on from RBS to Tesco and we are simultaneously also moving work to India,” he said. Tesco bought out RBS’ stake in TPF in a £950 million deal in July last year.
Though it could take around three-five years for the complete transition of operations from the UK to India, it could add significantly to the revenue of the local centre.
Looking up: Sandeep Dhar, CEO, Tesco Hindustan Services Centre.
Dhar refused to say how much money was involved. “Currently, the operations are very small but we continue to grow our work both on the retail and the banking front,” he said.
For the last six months, the 4,200 people strong captive centre in India has branched out to also provide testing and remote infrastructure management (RIM) services for banking operations while it continues to service and increase outsourcing work from retail operations.
Testing services aim to check the feasibility of applications built for a particular operation, while RIM involves managing computers, data centres and servers remotely from any location in the world. Dhar said the new business could also involve application development.
Consolidation in the banking industry has led to more work being contracted out to India.
“After the several mergers and acquisitions in the banking space especially in the US over the last year, we have seen a lot of shift happening to India,” said Ambarish Dasgupta, executive director, PricewaterhouseCoopers, a consultancy. He added that the trend will continue along with several new areas opening up for Indian outsourcing companies.
TPF has 6.2 million customer accounts across all products and it operates 130 in-store travel bureaus and 2,800 automated teller machines. The bank reported revenue of £860 million and a trading profit of £250 million for the fiscal ended February.
Set up in 2004, currently 50% of THSC’s revenue comes from providing RIM services for retail operations, with the rest from finance and accounting work, design services along with market forecasting and research. The centre also does payroll processing for Tesco’s 470,000-strong workforce.
surabhi.a@livemint.com
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First Published: Thu, May 27 2010. 10 22 PM IST