PricewaterhouseCoopers (PwC) India, the audit and business advisory firm, has sold its banking business process outsourcing (BPO) business following PwC Global’s decision to sell some blue-chip BPO businesses.
PwC India has sold the Kolkata-based L&L Services Pvt Ltd to iSmart of Mumbai. L&L Services employs around 600 people across 14 cities in the country. It does BPO jobs for the banking segment. Among the Rs 10-crore BPO unit’s clients are multinational banks like Standard Chartered and ABN Amro.
The Indian sale closely followed the sale of PwC Global’s international BPO operations to a human resources services company, Exult, for $17 million in cash.
The deal transferred some of PwC’s blue chip clients like Standard Chartered Bank, Equifax and Safeway to Exult.
According to industry sources, the Rs 4-crore deal was inked a few days back whereby the entire banking BPO operations were handed over to iSmart.
PwC sources in Kolkata confirmed the sale of the BPO unit and admitted that the Indian arm of PwC has decided to quit the banking BPO sector but will continue with its human resource and accounting BPOs.
Said a PwC source: “We have sold the BPO outfit to iSmart, a BPO company which specialises in banking outsourcing business. We have selected iSmart as the best choice to serve our key clients and it will create the right kind of synergy for the banking clients.”
PwC has already separated the HR outsourcing business in L&L Services Pvt Ltd. “We have already created a separate company which will run our BPO business in HR and accounting in the country. Already, we have an excellent customer base including GE Medical and Delphi in this segment,” said the PwC source.
Officials of audit and business advisory services firms believe that what PwC in India decided is a reflection of what PwC Global decided a few months back. In India, it was less of a regulatory pressure and more of a strategic business decision. Perhaps PwC has decided to fight the other big audit and business advisory firms in the HR and accounting space rather than have a widespread BPO involvement, an industry official said. “There is a huge potential and that is the reason we have decided to form a separate company,” said the PwC source.
In India, firms like Ernst & Young are providing tax-filing services for the US market from Bangalore. Since tax and legal services are a part of the audit outfit business, many feel that there is no regulatory issue in carrying out BPO jobs.
Said Ernst & Young eastern region head Sanjay Roy Chowdhury: “HR and accounting services are just the administrative jobs that we do on behalf of a company. I don’t think there is any conflict of interest between the audit practice and the outsourcing jobs we do.”
Industry sources said that as the banks have started managing some of their back-end jobs by creating their own outfit, PwC did not see any logic in continuing with the business.
Said the PwC source, “HSBC used to be one of our BPO clients, now it has its own BPO unit located in Hyderabad. Standard Chartered formed a company called Scope to manage some of the banking operations. The nature of banking BPO is fast changing. We felt that it is better to leave it to BPO companies who specialise in these businesses.”
According to Neel Chatt-erjee, spokesman for Standard Chartered, though the core banking functions like opening an account have to remain within a bank because of regulatory compulsions, there are backend operations like credit card processing and home loan marketing that can be outsourced to a BPO outfit.