Citigroup and TCS Sign $2.5 Billion Services Agreement; Complete $505 Million Citigroup Global Services Transaction
MUMBAI, India & NEW YORK, 31 December 2008 -- Tata Consultancy Services (TCS) completed the acquisition of Citigroup's interest in its India-based captive business processing outsourcing (BPO) arm Citigroup Global Services Limited (CGSL), for $512 million in cash.
Citi also executed an agreement for TCS to provide process outsourcing, consulting, and IT services to Citi and its affiliates for $ 2.5 billion over 9.5 years.
According to N.Chandrasekaran, TCS COO and Executive Director, "This acquisition gives us the ability to offer a end-to-end, domain-led third-party solution for business operations to our large financial services clients. We will also work to create platforms for the future and integrate our strong domain expertise in operations along with our suite of products for the financial services sector."
The agreement builds upon the existing consulting and outsourcing relationship between the companies where TCS provides application development, infrastructure support, help desk, and other process outsourcing services to Citi. TCS said in October, when the deal was originally announced, that it has no current plans to merge the Citigroup unit with its operations, and expects to retain the CGSL management team.
The acquisition broadens TCS's portfolio of end-to-end consulting, IT, and BPO services in the global banking and financial services (BFS) sector. TCS says the enhanced scale and expertise will help it provide service improvements to Citi and Citi's clients.
CGSL is one of the largest providers of BPO services within the BFS sector, providing end-to-end process management services across the BFS spectrum and a broad array of services to Citi's consumer, corporate, and global wealth management businesses. CGSL, formerly known as E-serve International, has more than 12,000 employees located in India and anticipates 2008 revenues of approximately $278 million.
TCS has provided IT services to Citi since 1992 and is currently one of its largest services partners, delivering consulting, IT, and BPO services to Citi across its operations in North America, Europe, India, Japan, Singapore and the rest of Asia Pacific.
The deal comes at a time of global financial market turmoil and pressure for Citi to quickly raise cash. On 23 December Wipro reached an agreement to acquire Citi Technology Services Ltd. (CTS), the India-based captive provider of IT services to Citigroup entities worldwide, for approximately $127 million in cash. As part of the Wipro/Citi deal, they plan to sign a Master Services Agreement for the delivery of technology infrastructure, application development, and maintenance services over six years worth at least $500 million.
TCS provides consulting and IT services, business solutions, and business process and IT outsourcing services to global businesses. A part of the Tata Group, TCS has over 116,000 IT consultants serving clients in 50 countries. The firm had revenues of $5.7 billion during fiscal 2008, ended 31 March.