Should outsourcers be outsourced?
India Citigroup and General Electric pioneered the use of India's potential for providing cheap services to their global operations years before outsourcing became popular. But if their recent moves are any indication they have divergent views on the way they want to manage their businesses in the future.
Early this year Citigroup decided to take private its Indian business process outsourcing (BPO) subsidiary eServe International, which is listed on the local stock market. General Electric is spinning off its global business process operations, GE Capital International Services (GECIS), into an independent company.
On November 8, GE agreed to sell 60% of GECIS to Oakhill Capital Partners and General Atlantic Partners, two US private-equity firms, for $500 million.
GE says the decision to sell “was driven by the opportunity to realize significant value from GECIS's scale and to broaden its global offerings” to non-GE clients. Set up in 1997 GECIS supports 1,000 business processes across GE's 11 business units, and has more than 17,000 employees.
In April Citigroup offered to acquire the 55% public shareholding in eServe International and delist the company. The bank agreed to pay the Rs975 a share demanded by minority investors who participated in a reverse book-building process in August and it is estimated that the buyout of will cost Citigroup about $150 million.