Firstsource, Barclays in Rs 320 cr outsourcing deal
Mumbai-based Business Process Outsourcing (BPO) company Firstsource Solutions, formerly known as ICICI Onesource, has signed a five-year outsourcing partnership agreement worth Rs 320 crore ($80 million) with British banking giant Barclays. As part of the deal, Firstsource would take on board 300 employees working for the credit card department of Barclays in Colorado Springs to provide credit card-related back-end work for its US customers.
This would involve customer care and payment collection work for Barclay’s US credit card holders in a deal that is expected to generate revenues equally in five years. The contract will be up for renewal after 2013.
Firstsource shares closed at Rs 50.85, marginally lower than its opening of Rs 52.3 on the Bombay Stock Exchange. The UK-based bank had a presence in India through another Mumbai-based BPO Intelenet. It had acquired a 50 per cent stake in Intelenet in 2004 for about £19 million. The other 50 per cent was acquired by HDFC. Both HDFC and Barclays Bank sold their stake in the BPO to private equity major Blackstone for a $200 million (Rs 800 crore).
The deal comes at an interesting time in the backdrop of a slowdown in the US, which accounts for majority of Indian software services and BPO company revenues. Also, a credit crunch in housing mortgages is resulting in banks cutting costs.
Speaking to the Hindustan Times, Rajesh Subramaniam, CFO, Firstsource Solutions said, “The cost of operations that large banks like Barclays have presented us with an opportunity engine for growth, as financial institutions are cutting costs in the wake of the credit crunch.”
Firstsource has 2,500 employees and a dozen operations centres in the United States and provides services to leading US companies in financial services, telecom and healthcare industries.