ICICI sets up OneSource, acquires CustomerAsset

MUMBAI: ICICI group, whose flagship is the country's second-largest

commercial bank, said on Monday it had set up a new company dedicated to

executing back-office functions for overseas clients, seizing the country's

hottest new opportunity of business process outsourcing (BPO).

The company, called ICICI OneSource Ltd., has flagged its entry into this

fast-growing sector by acquiring unlisted Bangalore-based CustomerAsset, which

operates a 350-seat customer relations facility, ICICI group officials said.

"We expect to be more or less breaking even in the first year

itself," said K V Kamath, managing director and chief executive officer of

New York Stock Exchange-listed ICICI Bank, which will hold a 30 per cent stake

in the new company.

ICICI Venture Funds Management Company, the group's venture capital arm, will

hold the remaining 70 per cent.

With a skilled, cost-competitive labor force and a recent spurt in high-speed

telecommunications, India is proving to be an attractive destination for global

companies looking to cut costs by outsourcing key back-office functions such as

accounting, financial claims processing and human resource management.

Several multinationals, like GE Capital, American Express and HSBC, run their

own BPO centers in India, while IT services companies like Infosys Technologies,

Wipro, HCL Technologies have recently entered the field. ICICI OneSource will

target business from companies in banking and financial services looking to

outsource credit card transaction, cheque and insurance claims processing,

officials said.

But its customer contact centers, which will involve interacting with

customers by phone, e-mails and Internet, will target all industries, officials

said. ICICI Bank's in-house call center and transaction processing will

gradually be migrated to ICICI OneSource, Kamath said.

Bombay-based ICICI Bank merged on March 30 with its founding parent, ICICI

Ltd., one of India's largest finance services companies.

All-cash deal



ICICI OneSource acquired CustomerAsset for a total enterprise value of $19.3
million in an all-cash deal, said Ananda Mukerji, its managing director and

chief executive officer.

CustomerAsset, which has 10 international customers, including some Fortune

500 companies, plans to add another 600 seats to its 350-seat Bangalore facility

by August, ICICI group officials said. ICICI OneSource is also building a

500-seat BPO center in Bombay that will become operational next month.

Mukerji said that the ICICI group had invested nearly $24.5 million in ICICI

OneSource and had committed to invest another $15.5 million, but didn't specify

over what period. "Other spends... will be through equity dilution,"

ICICI Bank's Kamath said, adding that the stakes of ICICI OneSource's holding

companies could therefore get diluted along the way.