IBM buying Citibank BPO ?
SOURCE: EconomicTimes
DATE: June 27th, 2008
Mohit Soapbox:
Seems like the bid to buy Citibank is back again. Late last year for over six months the citibank proposed sale was in the news off and on with Genpact as the lead contender. Given where genpact stock is ( still no where) seems like other players are in the bid now. Genpact would have been a good potential acquirer for Citibank because of their captive to third party expertise. What I had heard was that the genpact was not able to convince Citibank to agree to a long term ongoing contract, Valuations were here and Citi had a new chief in town.
ARTICLE
Financial services major Citigroup, which is under pressure from mounting credit-related losses in the US, is believed to be re-structuring its India back-office operations, valued at around $1 billion, in a bid to cut costs and monetise some of these assets.
The bank is learnt to have embarked on a larger exercise involving the sale and outsourcing of most of its back-office assets under the new management led by CEO Vikram Pandit.
Sources said the captive BPO, Citigroup Global Services, as well as its technology and infrastructure outsourcing arm, Citos, are on the block and the bank could be close to finalising the deal with multinational technology vendor IBM Global Services, which is the lead contender for the assets.
European consulting and IT services major Capgemini and a large Indian IT services firm, reported to be Tata Consultancy Services (TCS), are the other two contenders.
The deal, if concluded, is expected to be close to $800 million. Citigroup Global Services is believed to have been put on sale last year but no transaction materialised.
Both IBM and Citigroup refused to comment on the development.
“IBM doesn’t comment on speculation. There has been no such announcement by IBM,” a company spokesperson said. A Citigroup spokesperson responded to an email from ET saying, “At Citi, we do not comment on market speculation/rumours. Hence, we will not comment on the following query.”
The contours of the deal structure are still unclear but could include a significant outsourcing contract for the successful bidder. While Citigroup is learnt to have revived talk of the BPO sale sometime ago and was exploring different deal structures, what comes as a surprise is the sale of Citos.
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