0		TCS, buys, Citigroup’s, BPO, $505, million

Just after HCL has struck a deal to buy Axon, TCS has announced that it is acquiring Citigroup’s BPO Citigroup Global Services Ltd for $505 million dollars. TCS will be paying cash. This deal will provide TCS banking exposure. With 12000+ professionals trained in core banking skills, TCS couldn’t have asked for more. TCS will be placed as the 2nd biggest 3rd party BPO after Genpact.

Citi BPO promises revenue of $2.5 billion dollars over a period of 9.5 years. The revenues for year 2008 are expected to be $280 million. Ironically Citigroup will be one of TCS’s biggest customers following the deal. This news should provide some relief to the TCS stock. Along with this the measures taken by RBI and SEBI should also give boost to the markets on Friday.
HCL and TCS have clinched key deals and gained key expertise in SAP and banking respectively. Smaller IT players have set aside some funds to acquire companies overseas. Infosys, which is sitting on $1.5 billion cash, did not clinch any major deal. They missed out on Axon. Is Infosys missing some tricks here? The market is also not that kind to Infosys.

Many central banks have reduced the interest rates and injected significant amount of money into the markets. This should serve well in the short-term. No body is sure about the long term.

Let us see how market reacts to this deal and many other global factors on Friday.