[jsfg_cinti] Citibank to absorb Indian outsourcing firm

More news from the offshore outsourcing front.  
One perceived flaw in the outsourcing paradigm was that the offshore employees 
of the outsourcing company would have absolutely no loyalty to the customer 
company and thereby might pose a security risk.  Indeed, there have been 
reports of the employees of offshore outsourcing companies attempting to extort 
money from their customers by threatening to reveal the sensitive or 
confidential information with which they had been entrusted.  

Citigroup and IBM are moving to solve that perceived flaw by buying the 
offshore outsourcing companies.  By doing so they make the offshore employees 
their employees and presumably solve the potential security risk.  What do you 
think of this maneuver?

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Citibank to absorb Indian outsourcing firm
By Dinesh C. Sharma 
CNET News.com
April 12, 2004, 11:19 AM PT
URL: http://zdnet.com.com/2100-1103-5190042.html 
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. 

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