Wachovia deal with Citi and will it impact Genpact ?
Wachovia is the next victim of the financial turmoil. The company’s one bad bet on Golden West resulted seems to have resulted in it’s downfall. Wachovia Retail banking, Investment banking and Wealth management will now be owned by Citi. Citibank is not out of the woods on it’s own but the Federal government backstop provided on loan loss will help Citibank digest the deal.
What does this mean for outsourcing and offshoring vendors ? Wachovia has a strategic relationship with Genpact on business process and on the IT side has strategic relationship with IBM, Infosys and Cognizant and supposedly a number of smaller vendors. A number of these vendors are probably going to feel the impact of the Wachovia acquisition. Citibank is going to evaluate the vendor relationship not in the next few months but very soon in the near term. With a saving promised of $ 3 billion for the merger by Citibank CEO. Citi having it’s own huge captive operations in India which it is trying to sell for some time now, there is a high probability that the dynamics of the outsourcing relationship with existing vendors will be re evaluated for the merged entity.
There is a component of Wachovia which stays standalone – the retail brokerage business and evergreen security which stays stand alone and the existing vendors probably will maintain and continue that relationships. The question though also in the market is that will these standalone businesses remain so or will become part of another entity.
Genpact has viewed Wachovia as one of it’s key anchor client in financial services and may not feel the impact in this quarter but does have to work extra hard to continue this relationship now under the Citi umbrella. Interestingly late last year Genpact was in talks to buy the Citi BPO operations in India and reportedly the deal fell through because of valuation and commitment from Citi for ongoing business.
Additional links:
Wachovia signs a seven year deal with Genpact:
http://www.finextra.com/fullstory.asp?id=14596
Wachovia downgrades IT offshore/outsourcing sector
Genpact still waits an exit strategy
BPO markets are underpenetrated – Pramod Bhasin
Related Posts
You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
