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Troubled financial services company Citigroup on Thursday said it completed the $512 million sale of its offshore business services unit to India's Tata Consultancy Services.
As a result of selling off Citigroup Global Services, Citi, which is looking to cut costs, will reduce its head count by 12,000 employees. Some of those workers will transfer to TCS. Citigroup Global Services provides offshore customer support and other back-office services for Citi's worldwide operations.
Citigroup, one of the U.S. banks hardest hit by the global credit squeeze, is selling off piece parts in an effort to shift the bulk of its focus onto core banking operations.
Earlier this month, Citi said it had reached an agreement with Indian IT outsourcing company Wipro Technologies under which Wipro would acquire Citi's tech services unit for $127 million. As part of the deal, Wipro will provide a range of IT services to Citi for six years for at least $500 million.
An undisclosed number of employees of India-based Citi Technology Services, as the bank's IT services arm is formally known, will join Wipro.
The deals signal Citi's plan to rely more heavily on offshore services in an effort to reduce operating expenses. Indian programmers and call center workers are generally paid less than half of what their American counterparts earn.
Also in December, Citi announced completion of the sale of Citibank Privatkunden AG & Co. KGaA, its German retail banking operation, and a number of affiliates to French bank Credit Mutuel-CIC, for about $6.6 billion. In its most recent quarter, Citi reported a net loss of $2.8 billion, or 60 cents per share.