TCS may beat IBM to buy Citigroup BPO

MUMBAI: Citigroup���s attempt to sell its captive BPO arm Citigroup Global Services (CGSL) is gathering momentum. Tata Consultancy Services (TCS) is close to acquiring CGSL (formerly e-Serve) racing past IBM, which was leading the race till recently. The deal size is expected to be pegged at $500-$550 million. An announcement to this effect is likely to be within three weeks.

Confirming this, a source familiar with the development said, the deal would guarantee TCS to get business for CGSL from Citigroup for five years. ET had reported on June 27 that Citigroup had put CGSL on the block as part of its restructuring of the back-end operations in India.



CGSL is mostly into transaction processing and call centre processing which suits TCS. The Tata group company pulled out of Intelenet, a third party BPO backed by Blackstone, as it wanted to exit from the voice-based BPO sector. Its MD S. Ramadorai had earlier said that Intelenet���s focus did not fit into TCS��� BPO strategy which was focussed on transaction processing, e-mail processing and call centre processing.

Both Citigroup and TCS declined to comment on the development. ���At Citi, we follow the policy of not commenting on market rumours and speculation. Accordingly, we are unable to respond to your request.��� said a Citi spokesperson in an e-mailed response. A TCS spokesperson said ���As a policy, TCS does not comment on market speculation.���

IBM was the other contender for the captive BPO unit, said another source. IBM was also believed to be keen on acquiring Citos, the technology and infrastructure outsourcing arm of Citigroup. ��� But Citi intends to sell CGSL first. And IBM found the pricing for CGSL too high���, the source said.

CGSL provides financial BPO solutions in various domains like mortgage, retail banking, capital markets, finance and accounts. It provides transaction processing and customer based call centres to clients across all these domains. The BPO has over 11,000 employees in India while the TCS BPO has close to 8000 employees, with a majority of them in India.

Citigroup has been under financial pressure due to the sub-prime crisis in the US. it has lost about $17.4 billion in the last three quarters and has had more than $58 billion write-downs since the middle of 2007.