Insurance group Aviva has sold its offshoring operations to Indian business process outsourcing (BPO) firm WNS in a £115 million cash deal.
WNS has bought all the shares of Aviva Global Services (AGS) and will take over its operations in India and Sri Lanka, absorbing around 5800 staff.
As part of the deal Aviva has also inked an eight years master services agreement with WNS that will cover offshoring services for the insurer's UK, Irish and Canadian businesses.
WNS says the contract, covering policy administration and settlement, finance and accounting, customer care and other support services, could generate up to $1 billion in revenues.
WNS has been providing BPO services to Aviva since 2004 on build-operate-transfer contracts from facilities in Pune, India and Colombo, Sri Lanka. The firm will now assume control of AGS's captive operations in Bangalore and Colombo. The WNS-managed Colombo facility was transferred to AGS in July 2007.
AGS operations in Pune and Chennai, which are currently run by other providers, will be transferred to WNS within 30 days.
Cathryn Riley, chair, AGS, says the insurer remains "firmly committed to offshoring".
"After an extensive review, we've chosen one of our current suppliers to be our long-term partner, allowing us to build on the strength of our existing relationship to increase the flexibility and cost-certainty within our operation," says Riley.
Neeraj Bhargava, CEO, WNS Global Services, says: "Aside from a large BPO contract, this significantly accretive acquisition promotes our strategy of expanding market share in target industries, greatly extends our scale, and bolsters our service offerings - not just in the insurance industry, but across all our businesses."
WNS funded the transaction through a combination of cash and a bank loan facility of approximately $200 million.
The company has now revised its guidance for the year ending 31 March 2009. The firm now expects revenue, less repair payments, of $425 million to $435 million, up from $373 million to $378 million. Net income, excluding one time items, is expected to be between $46 million and $49 million, compared to its previous projection of $44 million to $46 million.
Last year WNS was reported to be one of three shortlisted bidders for Citi's Indian BPO unit. However, local press reports last month suggested that IBM is now the "lead contender" for Citigroup Global Services.