TCS, India’s largest IT services company and Citigroup, a leading global financial services company, have announced that they have reached an agreement for TCS to acquire all of Citi’s interest in Citigroup Global Services (CGSL), the India-based captive BPO arm of Citi for an all-cash consideration of $505 million.
In addition, Citi has signed an agreement for TCS to provide, through CGSL, BPO services to Citi and its affiliates aggregating $2.5 billion over a period of 9.5 years.
The agreement builds upon the existing relationship between Citi and TCS. It may be noted that TCS has been providing IT services to Citi since 1992 and is currently one of the largest IT services partners for Citi.
The acquisition of CGSL broadens TCS’ portfolio of end-to-end IT and BPO services in the global Banking and Financial Services (BFS) Sector.
CGSL is one of the largest providers of BPO services within the BFS Sector, providing end-to-end process management across the BFS spectrum and a broad array of services to Citi’s consumer, corporate and global wealth management businesses worldwide.
CGSL has over 12,000 employees located in India and expects to generate revenues of $278mn in 2008. Thus, the acquisition will add over 75% to TCS’ FY08 BPO revenues of around $371 million. The transaction is expected to close in Q4CY08.