Tata Consultancy Services and Citigroup have reached an agreement for TCS to acquire all of Citi’s interest in Citigroup Global Services (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 $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 BFSI sector. TCS’s enhanced scale and expertise will provide service improvements to Citi and Citi’s customers.

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 capitalises on both CGSL’s expertise in financial services and TCS’s expertise in process optimisation. TCS will offer CGSL stronger growth potential and 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, said, "The acquisition of CGSL has two immediate strategic benefits for TCS.  It gives us the ability to offer a 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."