Citibank to absorb Indian outsourcing firm

Citigroup is paying about $126 million to take full control of Indian IT services company e-Serve International.

The banking giant had owned about 44 percent of shares in the Indian company through its Citibank Overseas Investment unit. It is now increasing its stake to 100 percent, Mumbai-based e-Serve on Monday informed the Bombay Stock Exchange, where it is listed.

The Indian company provides call center, transaction processing and data management services and has clients in 25 countries, including the United States, the United Kingdom and Australia. It has a staff of about 4,500.

The acquisition follows a similar move by IBM last week in the outsourcing sector. Big Blue agreed to take over privately held Daksh, India's third largest back-office-services company, in a deal estimated to be worth between $150 million and $200 million. Daksh, which has 6,000 employees, offers call center services to 13 clients including Internet retailer Amazon.com.

Numerous U.S.-based corporations are turning to Indian companies to handle a variety of business activities such as help desks, customer service and claims processing, either through their own subsidiaries or third-party operations. They're doing so to cut costs, but have drawn fire from politicians and trade unions because of job losses in the United States. The Information Technology Association of America trade group, however, has argued that so-called offshoring might actually help the U.S. economy.

Reuters contributed to this report.