Barclays to snap ties with TCS

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British financial major Barclays Bank is set to terminate a £6 million (about Rs 50 crore) annual outsourcing contract with Tata Consultancy Services Ltd (TCS). This is despite the British firm's plans to triple its quantum of offshoring to India.

The financial services conglomerate, which is planning to consolidate all its outsourcing deals to one company, is planning to offer existing and future contracts in India to Intelenet Global Services "" a 50:50 joint venture between Housing Development Finance Corporation (HDFC) and Barclays.

Barclays has no plans to extend its existing three-year contract with TCS, which is slated to expire on March 31, 2006. About 700 people have been working on the financial services project, sources close to the deal told Business Standard.

Intelenet executives were not available for comments. A TCS spokesperson declined to comment on the issue saying that the company had not been informed of any such development.

The Barclays Bank-HDFC joint venture was originally set up as a 50:50 joint venture between TCS and HDFC in 2000 and it was only natural that the TCS contract would not be renewed after expiry, industry sources said.

Ahead of its initial public offer last year, TCS had sold its stake in Intelenet to HDFC and the housing major, in turn, sold 50 per cent stake to Barclays.

The Intelenet board has three representatives each from Barclays and HDFC.

Intelenet is gearing up to accommodate a higher volume of business. It is setting up a 2,000-seat facility in Mumbai that will exclusively cater for the British bank. The centre is expected to be operational in January 2006.

A top-level team from Barclays, including its chief executive (UK Banking) Roger Davis, had visited Intelenet's Mumbai facility last week to gauge the capabilities of the Indian company.

Present services outsourced by Barclays include data collection and processing, accounts opening and BPO services, including voice-based helplines.

At present, outsourced work is restricted to the bank's UK business. It is planning to outsource other businesses in phases. Barclays wants to hike three-fold the quantum of outsourcing to India in the next two years. India now accounts for about 10 per cent of its total outsourcing business. This may go up to around 30 per cent.