Tata Consultancy Services may beat IBM to buy Citigroup BPO

19 August 2008:

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.”