Hungry for synergies, merging financial companies will look to outsource more back-office work, much of it to India.
That's the
prediction Subramanian Ramadorai, the CEO of Indian outsourcing giant Tata Consultancy Services Ltd., made in an interview with Reuters. He's already made a major bet on the trend: Last month TCS added capacity by
buying Citigroup Inc.'s India-based back-office operation for $505 million.
One deal Ramadorai has his eye on is the combination of Bank of America Corp. with Merrill Lynch & Co., both of which are already TCS clients. He told Reuters the firms could cut technology costs by 20% to 30%, presumably with some help from TCS.
That would probably be bad news for U.S. and European IT workers at a time of rising unemployment.
Whether Ramadorai gets the business or not, his comments highlight some of the global cross-currents generated by the financial crisis. Some investors in India fear that the Obama administration will try to impede off-shoring of work. Meanwhile, on Thursday, the rupee hit an all-time low, prompting the finance minister to consider
further easing of the limits on foreign investment in India. -
Kenneth Klee
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