UPDATE: Firstsource: In Talks With Barclaycard To Take Over U.K Center

11th Jun 2010 07:15

(Adds more company, analyst comments, stock price, background) By Dhanya Ann Thoppil and Romit Guha Of DOW JONES NEWSWIRES BANGALORE (Dow Jones)--India's Firstsource Solutions Ltd. (532809.BY) Friday said it is in talks with Barclaycard to buy its customer service center at Teesside in the U.K., a move that analysts say can assure long-term revenue for the business process outsourcing company. "We are in discussions with them, but can't comment on the commercial terms of the deal," a company spokeswoman told Dow Jones Newswires. Barclaycard, which is part of Barclays PLC's (BARC.LN) global and retail banking division, also confirmed the talks. In a statement posted on its website, it said the company has entered into discussions with Firstsource Solutions over a potential partnership. "If the talks are successful, Firstsource will take over Barclaycard's customer service center in Teesside and deliver the customer services for the credit card and payments business, which are currently provided there," the UK company said. "Plans for the existing Teesside employees and building will form part of the discussions and Firstsource has given a commitment to establish a long-term presence in Teesside," Barclaycard added. Both companies, however, declined to elaborate on any deadline for the talks to result in a deal. Firstsource's talks with Barclaycard come as Indian technology companies recover from the impact of the global economic slowdown, which led customers to scrap or delay projects and seek lower rates for products and services. The talks also follow an increasing trend of companies in the U.S. and Europe awarding outsourcing deals to Indian firms while asking them to take over their own low-cost centers, either in India or overseas. Recently, Patni Computer Systems Ltd. (532517.BY) said it received its largest-ever order in the form of a five-year deal worth about $250 million from Universal American Corp. (UAM) to offer policy administration services to the U.S. health insurer. As part of the deal, the NYSE-listed Patni also acquired CHCS Services Inc., a wholly owned unit of Universal American. Analysts were upbeat about Firstsource. "These kind of deals usually entail an upfront payment (by Firstsource in this case), but more importantly, Firstsource may get a long-term outsourcing order (from Barclaycard) as part of the deal," said Harit Shah, an analyst at Karvy Stock Broking. The deal can help Firstsource estimate revenue inflows for three or five years--the period of the possible outsourcing services contract from Barclaycard, he added. At 0610 GMT, Firstsource shares were up 1.4% at INR25.45 on the Bombay Stock Exchange, where the benchmark Sensex was up 1.2%. -By Dhanya Ann Thoppil and Romit Guha, Dow Jones Newswires; +91-9967586928; [email protected] (END) Dow Jones Newswires June 11, 2010 02:15 ET (06:15 GMT)