Citigroup exploring sale of its internal technology platforms
Bangalore: After having sold its Indian back office business to TCS for around $505 million in October last year, and Citi Technology Services for around $127 million to Wipro in December last year, Citigroup now looks to sell its internal technology platforms. This would be bundled with outsourcing contracts worth about $350 million since the bank exit seeks to exit non-core businesses and outsource more processes.
"These internal technology platforms are being used for delivering equity trading and asset management services. By selling these off, the bank wants to monetise these assets, and also bundle a multi-year outsourcing contract for better rates," a source told the Economic Times. Also, the bank is in discussions with Indian tech firms and other multinationals for an outsourcing contract, which will come with an upfront payment of anywhere between $25 and $50 million each for the bank's internal equity trading and asset management platform.
By selling off these non-core captive operations, Citi was able to get better rates. Outsourcing Expert Siddharth A Pai, MD of TPI India, said that service providers buying platforms from customers is not a new trend, and it makes sense if leveraged well. Indian tech firms were exploring to buy Citi's internal technology systems for gaining better expertise and capability to serve more customers using the same platforms. Also, the bank has been discussing this transaction with HCL, Wipro, TCS and Patni Computer Systems. These companies would not offer any specific comments about a potential deal with Citi. However, a Citi India Spokeswoman declined to comment on this issue.
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