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Wipro is reported to buy Citi's India tech arm for USD 127 million for cash. Citi Tech Services is an India-based captive provider of IT services and solutions and its revenues were approximately USD 80 million in CY08. Wipro, Citi will sign a master service agreement for six years. The agreement provides for delivery of at least USD 500 millon in service revenue over the period of the contract. The transaction is expected to be closed by March 2009.
Citi has 1,650 employees and Wipro will absorb all 1,650 employees of Citi Tech Services.
Jagdish Rao, Citi Tech Head said Citi Tech Services has close to 2000 people with revenues close to USD 80 million this year. According to him, integration with Wipro will provide a larger suite of services and help drive productivity and scale.
Girish Paranjpe, Joint CEO, Member of the Board, Wipro said, "This captive unit in India, they have set it up with a huge amount of thought process and created a world class facility. When Citi was looking to scale up this facility, they figured that it made more sense for somebody like Wipro to help them do this, which is why they asked us to take this unit over, and then help them scale this both in terms of the range of services that get provided and also the sophistication and the productivity that we can give by leveraging our processes and our experience elsewhere. So, it is a great opportunity for both – Citi to get the benefit of Wipro’s scale and flexibility as well as capacity, and for Wipro to get the benefit of deep banking expertise that comes out of this unit, and experience of managing risk and compliance, which is very key in the banking situation."
Soumitro Ghosh, Senior VP- Finance Solutions, Wipro said that the company is trying to see how it can bring in synergy between the BPO business as well as the application business. This will give a huge amount of synergistic play because Wipro would be Citi’s strategic partner practically on the infrastructure side, application side as well as on the BPO side, he added.
Here is a verbatim transcript of Soumitro Ghosh’s comments in a press briefing.
From a Citibank perspective, it is important from three-four perspective. It is important from a cost perspective where huge amount of cost will get taken out because even though Citi had really been outsourcing this piece of work to a captive, typically the captive has its own challenges. So we will be able to execute the infrastructure management business on a third party basis which is supposed to be far more productive. Plus all the new business which Citi’s is going to outsource – that is going to be done on a far more productive fashion.
Second is variablising the cost, so today there is a ramp up, ramp down situation, we can obviously help in variablising that entire cost. Third is that we can offer this with perhaps a different set of facilities managed services basis. Fourth is that we recently also acquired from Citi a fairly large amount of BPO business. So we are trying to see how we can bring in synergy between the BPO business as well as the application business. This will give a huge amount of synergistic play because we would be Citi’s strategic partners practically on the infrastructure side, application side as well as on the BPO side.
Here is a verbatim transcript of Soumitro Ghosh’s comments in a press briefing.
From a Citibank perspective, it is important from three-four perspective. It is important from a cost perspective where huge amount of cost will get taken out because even though Citi had really been outsourcing this piece of work to a captive, typically the captive has its own challenges. So we will be able to execute the infrastructure management business on a third party basis which is supposed to be far more productive. Plus all the new business which Citi’s is going to outsource – that is going to be done on a far more productive fashion.
Second is variablising the cost, so today there is a ramp up, ramp down situation, we can obviously help in variablising that entire cost. Third is that we can offer this with perhaps a different set of facilities managed services basis. Fourth is that we recently also acquired from Citi a fairly large amount of BPO business. So we are trying to see how we can bring in synergy between the BPO business as well as the application business. This will give a huge amount of synergistic play because we would be Citi’s strategic partners practically on the infrastructure side, application side as well as on the BPO side.
Source : MoneyControl.com
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