Switzerland-based bank UBS is believed to have put its business process outsourcing (BPO) and knowledge process outsourcing (KPO) units up for sale. The bank, which has centres in Poland and Hyderabad, is in talks with Indian IT companies such as Infosys and Wipro, said a person familiar with the possible transaction.
The UBS India Service Centre (ISC), along with its Krakow (Poland) centre, is valued at around $200 million, according to another source. The story was first reported by ET NOW.
When contacted, Infosys CFO V Balakrishnan denied that they were in talks with UBS, while Wipro chief strategy officer and head of M&A KR Lakshminarayana declined to comment on the deal. A UBS spokesman in an e-mail response to ET said: “UBS continually seeks to explore commercial opportunities in all jurisdictions in which it operates that have the potential to be of benefit to the the company and its component businesses. However, UBS remains committed to all its activities in India.”
Wipro, which had bought Citi’s captive technology arm in December 2008, is learnt to have started a preliminary due diligence of the UBS unit. Both Infosys and Wipro are IT vendors for the bank and provide software development services along with application and maintenance services.
Incidentally, Wipro had also helped the Swiss bank set up its captive operations in Hyderabad. UBS had invested over $70 million to set up its unit, which employs 2,100 people. The bank also has a 250-seater unit in Poland, which became operational in 2008.
This enables UBS to leverage specific competencies not available in India, such as non-English language skills. Since its inception in June 2006, the ISC has built up capabilities to provide high-value, complex BPO and IT services with specialisation in research, analytics, securities operations, legal process outsourcing (LPO), infrastructure management, presentations & design and finance.
After Citigroup sold two of its captives in 2008, this is the second time a global bank would be hiving off its captive BPO arm, if this transaction materialises. Citi had sold its BPO captive, Citigroup Global Services (CGSL), to TCS in October last year for $505 million and Citi Technology Services (CTS) to Wipro in 2008.
TCS had acquired domain expertise and a large platform BPO in the banking and financial services (BFS) space. If the deal with UBS goes through, Wipro could leverage itself in the BFS space with the domain skill that it would get.
A part of UBS’ analytics KPO unit has recently seen a management buyout, which is unrelated to the possible transaction described in this story. Two months before, the management bought out a 50% in the analytics KPO servicing the investment banking arm of UBS, while the other 50% stake will be owned by UBS. This unit, which has been carved out from the existing ISC in Hyderabad, will be called Verity Knowledge Solutions (VKS).
“As part of the ongoing development of its offshoring strategy, UBS is migrating a part of the analytics service, currently working at the UBS India Service Centre to Verity Knowledge Solutions (VKS). UBS will take an equity stake in VKS. The operation employs around 150 people and is expected to be completed by the end of the third quarter this year. UBS will take an equity stake in VKS,” confirmed the UBS spokesperson Mark Panday.