Barclays Bank has sold its stake in an outsourcing joint venture in India in order to set up its own subsidiary there.
The bank is selling off its stake in Intelenet Global Services, a business process outsourcing (BPO) services provider that it owns jointly with India's Housing Development Finance Corporation (HDFC).
The bank, however, plans to continue to get some of its work done in India, and will set up a wholly owned subsidiary in India. "Our sourcing operations have reached a scale where we would like full control over the operations," said Laura Vergani, a spokeswoman for Barclays.
Barclays acquired a 50% stake in Intelenet from HDFC in 2004, with the balance held by HDFC.
The bank said Monday that it and HDFC were selling their stake to SKR BPO Services, a company jointly owned by the management of Intelenet and by Blackstone Capital Partners Mauritius V-B, a member of private equity investor Blackstone Capital Partners.
The financial details of the transaction were not disclosed. Intelenet has gross assets of £53.98m ($107m) .
Following the conclusion of the transaction, Intelenet will continue to provide services to Barclays in relation to certain processes currently offshored to India, Barclays said. Intelenet has also agreed to assist Barclays in establishing a wholly owned BPO operation in India which will serve Barclays incremental offshoring requirements going forward, it added.
After its BPO subsidiary is set up, Barclays will move work from Intelenet to the new subsidiary, Vergani said. She did not however specify a time frame for setting up the subsidiary operation.
Intelenet, with more than 17,000 staff, services over 60 local and international clients from 18 locations across India.
Barclays did not consider buying out the 50% stake held by HDFC, in its bid to have a whole owned subsidiary in India, as Intelenet services other customers besides Barclays, Vergani said.
Forrester Research said recently that subsidiary operations were less cost-efficient than third-party outsourcing companies. General Electric, for example, sold in 2004 a majority of its holdings in its Indian subsidiary to two equity companies. The subsidiary now does work both for GE and for other customers.
Some companies, including British retailer Tesco, prefer to run their own BPO subsidiaries for better control over the operations. Some of them use staff from local outsourcers, but that is usually to tide over temporary surges in demand for staff.