U.S. banking giant Citigroup is planning to set up its own IT arm in India. It is looking at Chennai and Pune as possible destinations, people familiar with the development said.
Citigroup is one of the biggest outsourcers of IT work to Indian firms, valued at over $1 billion. Indian IT majors Tata Consultancy Services, Wipro and Polaris do outsourcing work for Citi.
In 2008, Citigroup had sold its back office Citigroup Global Services Limited to TCS for $505 million, and its technology arm Citi Technology Services Ltd. to Wipro for $127 million.
Citigroup became the shareholder of Polaris through merger of its BPO arm OrbiTech Solutions with the Indian firm in 2002. Polaris gets 40 per cent of its revenue from Citigroup. Citi stake in Polaris is now 17.5 per cent.
Citi now joins a slew of global firms, which are now moving back IT work in-house or what is called “in-sourcing”. Major global firms such as AstraZeneca, General Motors and Nordea have been in-sourcing their IT operations.
“Citigroup has been strengthening captive units for quite some time in India as a part of its strategy towards building capabilities. Though we have recently seen a lot of organisations setting up captive units in India and the captive headcount has grown manifold, it is too early to call it an IT in-sourcing trend,’’ D. D. Mishra, Research Director, Gartner, said.
“Most in-sourcing we see is primarily happening because of emerging requirements from digital economy where organisations want to build more control to drive innovation,’’ he added. “Moreover, the captive unit wave in India is mostly driven by BPO businesses, and, hence, we need to see the same in right perspective,” said Mr. Mishra.
A spokesperson from Citi said the firm would not comment on market rumours. TCS, Wipro and Polaris, too, declined to comment.
