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TCS to sell stake in BPO venture to HDFC

Our Bureau

Mumbai , July 21

TATA Consultancy Services has reached an agreement with HDFC to sell its stake in the BPO joint venture - Intelenet Global Service Ltd (IGSL) - to HDFC for a consideration of Rs 161 crore.

The decision is in line with TCS's strategy to focus on BPO activities that revolves around transaction and domain processing.

"The voice-based business which was the 50 per cent (stake) in Intelenet was sold to HDFC. Our BPO strategy would revolve around transaction processing and domain processing," Mr S. Ramadorai, CEO, TCS, told the media here.

For HDFC, the continued growth (witnessed) in Intelenet's business has made it necessary to consolidate ownership of the company, according to a HDFC press release.

"While the agreement between HDFC and TCS has been concluded, there will not be any change in the management structure of IGSL as of now. In fact, we will continue to invest and grow our business," Mr Susir Kumar, CEO, IGSL, told Business Line.

Having recorded revenues of Rs 117 crore last year with net profit of Rs 10.8 crore, Intelenet is on an aggressive growth mode to ramp-up its revenues, clients and employee base with estimated revenue of Rs 220 crore and net profit of Rs 20 crore for the coming fiscal.

Towards this end, investments of Rs 200 crore have been planned towards building infrastructure and technology. According to Mr Kumar, investments to the tune of Rs 170 crore (debt\equity) have been made till date with IGSL currently having six delivery centres, including two facilities in Mumbai, Chennai, the US, Canada and the UK.

Intelenet was set up by HDFC and TCS in June 2000 with a 50-50 equity and provides BPO services including voice, back office and accounting processes to 18 clients operating in the banking, insurance, telecom, retail and hospitality industry.

Currently, the company has 4,200 employees and "we will grow this to 5,500 people by the year-end," Mr Kumar added.

"We think it is a great business for us," said Mr Keki Mistry, Managing Director, HDFC, of the acquisition of TCS' 50 per cent stake in Intelenet.

"We have been talking to TCS for some time over this."

"We think it is a great business. Our expertise stems from the fact that we have developed great skills in processing. In fact, due to this ability we have been able to keep our cost-income ratio at HDFC at 13.3 per cent, one of the lowest in the world.

There are lots of plans drawn up for Intelenet, which, during the period March until date, has increased its employee strength from around 3,000 to over 4,200.

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