Tata Consultancy Services (TCS) has confirmed that it will acquire Citi's captive Indian back office division for a cash consideration of $505 million.
Mumbai-based Citigroup Global Services employs over 12000 people in India and expects revenues of around $278 million in 2008.
The US bank, which has been badly hit by the credit crunch, has been looking to sell off the unit for over a year.
Last July it was reported that the bank had shortlisted three bidders - Genpact, Firstsource and WNS - but by this August TCS had emerged as favourite for the unit, edging out IBM.
As part of the acquisition agreement - expected to close in the fourth quarter - Citi will award TCS outsourcing business worth $2.5 billion over nine and a half years.
Commenting on the acquisition, N Chandrasekaran, COO, TCS, says: "It gives us the ability to offer a comprehensive end-to-end, domain-led solution for business operations of large financial services institutions. It also positions us well to create banking processing platforms by integrating our products and process capabilities."
Don Callahan, chief administrative officer, Citi, says the sale will help "reduce operating expenses related to business processing and will allow us to focus on our core financial services competencies".