TCS to rejig BPO arms

Talks on to buy HDFC out of Intelenet.

Tata Consultancy Services (TCS) is planning to consolidate its business process outsourcing (BPO) interests, represented in three arms, Intelenet, Airline Financial Support Services and Aviation Software Development Consultancy India.

While Intelenet is a 50:50 joint venture between TCS and HDFC, the other two companies are fully owned by TCS. The TCS management has indicated its interest in hiking its holding in Intelenet but no deal has yet been struck.

Sources said talks between the Tatas and HDFC on recasting Intelenet's equity structure are on and that no headway had been made on the price. The three outfits as well as TCS's own BPO operations employ over 5,000 people.

TCS is looking at integrating the operations of the three companies and setting up a common front end for sales and marketing and human resource practices.

A senior Tata executive said: "We are looking at binding the three companies with a common cord. Though it won't be a legal merger, the three will share a common marketing front and the same work culture."

The proposed one-stop offerings will leverage the advantages of the Tata group's technological capabilities in the BPO space, built over the last few years.

The model of integration is similar to what has been followed by the group in its telecommunications business, with one difference. The telecommunications ventures have opted only for a common marketing platform while the BPO outfits are proposing to integrate both marketing as well as HR initiatives.

Tata Indicom Enterprise Business Unit (Tiebu) was formed in 2003 as the sales and marketing segment for the group's telecom companies -- VSNL, Tata Teleservices (TTSL), Tata Teleservice (Maharashtra), Tata Internet Services and Tata Net.

On the infotech front, the group is planning to consolidate its various IT companies --Tata Infotech, CMC, Tata Elxsi, Tata Technologies with TCS, currently a part of Tata Sons, the holding company of the Tata group.

In March this year, TCS bought out its joint venture partner Singapore Airlines in Aviation Software Development Consultancy (ASDC) . Last year, it had acquired Swissair's stake of 75.1 per cent in Airline Financial Support Services (AFS) to convert it into a wholly owned subsidiary.

ASDC provides consultancy and solutions to the aviation industry while AFS caters to the airline and hospitality industries.

The group's other BPO outfit, Sitel India, is a 50:50 joint venture with the US based Sitel. The group holds the stake through Tata Infotech (40 per cent) and Tata International (10 per cent). Sitel India offers information technology-enabled services focusing on call centre services.

The group is also planning to set up BPO ventures for the group's telecom (VSNL and Tata Teleservices) and hospitality arms (Indian Hotels Company).

Integration Plan

• TCS is looking at integrating the operations of three companies, Intelenet, Airline Financial Support Services and Aviation Software Development Consultancy India.
• Intelenet is a 50:50 joint venture between TCS and HDFC, the other two companies are fully owned by TCS.