Mumbai, India & New York, USA Tata Consultancy Services (TCS) (BSE: TCS.BO, NSE: TCS.NS), a leading IT services, business solutions and outsourcing firm, and Citigroup Inc. (Citi) (NYSE: C), a leading global financial services company, today announced that they have reached an agreement for TCS to acquire all of Citi's interest in Citigroup Global Services Limited (CGSL), the India-based captive business processing outsourcing (BPO) arm of Citi for all cash consideration of approximately $505 million, subject to closing adjustments. In addition to the sale, Citi has signed an agreement for TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates in an aggregate amount of US$2.5 billion over a period of 9.5 years. The agreement builds upon the existing relationship between Citi and TCS whereby TCS provides application development, infrastructure support, help desk and other process outsourcing services to Citi.
The acquisition broadens TCS's portfolio of end-to-end IT and BPO services in the global Banking and Financial Services (BFS) sector. TCS's enhanced scale and expertise will provide service improvements to Citi and Citi's customers.
CGSL is one of the largest providers of business processing outsourcing services within the Banking and Financial Services sector, providing end-to-end process management across the BFS spectrum and a broad array of services to Citi's consumer, corporate and global wealth management businesses world wide. CGSL has more than 12,000 employees located in India and expects to generate revenues of approximately $278 million in 2008.
S. Ramadorai, CEO and MD, TCS said: "This is a landmark acquisition for TCS, helping us not only acquire new capabilities in the banking domain but also underscoring the importance of our long-term, sustainable relationships with our large customers, including Citi." He added: "This transaction will complement our domain expertise and bring new capabilities to TCS that will help drive growth going forward."
Don Callahan, Chief Administrative Officer, Citi said: "This is a great transaction that benefits all parties – Citi, our customers, our employees and TCS. Our customers require access to increasingly complex processing solutions and this relationship will achieve a ‘best in class' technology model that capitalizes on both CGSL's expertise in financial services and TCS's expertise in process optimization. TCS will offer CGSL stronger growth potential and superior continued services to Citi clients around the world. This transaction is expected to help reduce operating expenses related to business processing and will allow us to focus on our core financial services competencies."
N. Chandrasekaran, COO and Executive Director, TCS added: "The acquisition of CGSL has two immediate strategic benefits for TCS. It gives us the ability to offer a comprehensive end-to-end, domain-led solution for business operations of large financial services institutions. It also positions us well to create banking processing platforms by integrating our products and process capabilities." He added: "We welcome CGSL professionals into the TCS family, where they will be able to participate in the company's new growth endeavours."
TCS has provided IT services to Citi since 1992 and is currently one of the largest IT services partners for Citi, delivering IT and business processing outsourcing services to Citi across its operations in North America, Europe, India, Japan, Singapore and the rest of Asia Pacific.
The parties expect to close the transaction in the fourth quarter of 2008. Merrill Lynch acted as advisors to TCS in this transaction. Citi's Institutional Clients Group advised Citi on this transaction.
Citi, the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi's major brand names include Citibank, CitiFinancial, Primerica, Citi Smith Barney, Banamex and Nikko. Additional information may be found at www.citigroup.com or www.citi.com.
Tata Consultancy Services is an IT services, business solutions and outsourcing organization that delivers real results to global businesses, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. A part of the Tata Group, India's largest industrial conglomerate, TCS has over 116,000 of the world's best trained IT consultants in 50 countries. The company generated consolidated revenues of US $5.7 billion for fiscal year ended 31 March 2008 and is listed on the National Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at www.tcs.com.