Offshoring promotes new growth

TCS eServe took over the offshore development sentre set up by banking giant Citi. Pic credit: Mark Kobayashi-Hillary

Since its $505m (£305m) buyout by Tata Consultancy Services (TCS) last year, the former Citigroup back-office operation in India says the change of ownership has been a success.

Management at the newly renamed TCS eServe believe the acquisition has improved its skills base and access to technology resources, as well as its ability to attract new business and people.

“We had the business process outsourcing (BPO) skills from Citi and now we have more than 100,000 technology resources from TCS too ­ our clients get the benefit of both,” said TCS eServe chief executive Rahul Singh, formerly a Citi employee.

“We started in 1992, and each time the growth flattened out, we did something that produced new growth, creating a constant evolution for the company,” he said.

“The purchase by TCS allows us to again create a new growth path. If it had not happened, the company might have flattened out at its present level.”

Since the sale in October 2008, integration of staff and management structures has been a priority.

“We are still putting all the building blocks in place to ensure that our existing teams can benefit from the technology expertise of TCS. It is still early as it is only a matter
of months since the purchase,” said Singh.

TCS eServe has 100 internal contracts within Citi, in areas including mortgage, card and banking services, with 400 service-level agreements covering the lifecycle of each product. An example is its credit card operation, where the offshore centre can deliver services from basic processing to highly complex predictive analytics.

The company has developed a number of pricing methods, which include transaction and outcome-based pricing, where the cost of services is related to achieving customer objectives.

“We are mostly involved in transaction-based pricing. We do not do any very basic cost-plus pricing, but we don’t take the risk 100 per cent either by c harging based only on goals,” said Singh.

Though the TCS eServe sale by Citi prompted questions over whether or not companies could be giving up on their own offshore facilities in India, Singh said there will be a co-existence of different models.

“A mix-and-match approach allows you to get the best of both worlds. The captive model is not dead, companies will work with multiple models to achieve what they need,” he said.

“Firms such as Citi or Aviva have sold their operation to a third party to run. They have willingly given the centres to third parties because they feel that the third party can run it better.”

Singh believes that changing technology trends towards service-oriented systems will also alter the way services are delivered.

“The model of working across many regions will not be around cost forever –­ it has become more about the value that can be created in the services. We can create new BPO models that offer pay-as-you-go banking services,” he said.