GE sells Indian outsourcing arm

GE sells Indian outsourcing arm

Uttara Choudhary, Agence France-Presse, New Delhi

General Electric Co., a pioneer in business processing in
India, said on Monday it has sold a majority stake in its Indian
outsourcing arm, GE Capital Services, to two U.S. private equity
investment firms for US$500 million.

The buyers are General Atlantic Partners and Oak Hill Capital
Partners, two companies based in the United States.

"Upon closing, GE will retain a 40 percent stake in GECIS (GE
Capital Services) and receive cash proceeds of approximately $500
million which it plans to use to fund growth initiated," GE India
chairman Scott Bayman said at a news conference in New Delhi.

The transaction values GECIS at $800 million in total, he
said, adding the parties aimed to complete the deal "sometime in
the next six months."

Pramod Bhasin, who will remain president and chief executive
officer of GECIS, said the move would "unleash a new
entrepreneurial spirit" at GECIS.

He said the new partners, who are buying equal stakes, would
help realize the company's potential to "become a top global
outsourcing company."

"As a recapitalized standalone company, GECIS will no longer
limit its cost savings, business support services to GE and GE
customers. The new GECIS will offer these same services to
companies all over the world, said Bayman.

At the same time, he said, "GE will continue to use and expand
on the services GECIS provides it."

GE "is not leaving India," Bayman added. He said GE's strategy
continued to be "to capitalize on the intellectual talent in
India and grow the industrial and financial services business
faster than the local markets."

GECIS, a division the parent company launched in 1993 in New
Delhi as part of its GE Capital unit, is the largest outsourcing
operation by a U.S. or European firm in India.

With 2003 revenues of $400 million, GCEIS employs 17,000
people, with 12,000 at four call centers in India and another
5,000 at its operations in Hungary, Mexico and China. The new
standalone company will include all its operations in China,
Hungary, India and Mexico.

GCEIS began handling insurance claims and answering calls from
customers of GE's commercial and consumer lending units, and has
moved into developing sophisticated software for analytics, data
mining and business modelling.

GE was one of several multinational companies in the late
1990s that set up huge captive outsourcing operations to take
advantage of India's vast pool of cheaper educated English-
speaking workers.

"The market for process outsourcing continues to experience
tremendous growth," said Mark S. Dzialga, partner at General
Atlantic, one of the buyers.