Why Barclays chose Firstsource
By Sandhya

Intelenet Global Services describes itself as a leading global third party BPO Company that delivers Business Process Outsourcing services to Fortune 500 companies in India, USA, UK, Australia, Mauritius, Philippines and Poland. Intelenet is backed by Blackstone, a leading Global Private Equity Player. Sparsh BPO, with 16,000 employees, is Intelenet’s subsidiary in India.

In a strange twist of fate, Barclays, one of the 2nd level investors of Intelenet Global has signed up with Intelenet rival Firstsource BPO for Barclay cards.  Such are the everchanging sands on the surface of the desert reflecting changing human and economic equations.

BPO Firstsource announced on Oct 5, 2010, that it had signed a 5 year outsourcing deal with UK-based Barclaycard which is the credit card and consumer lending business of British bank Barclays PLC.  In early 2008, Firstsource had signed a similar agreement with Barclays USA.

How better than a paradigm shift by investor and client Barclays who has now tied up with Firstsource rather than Intelenet? Firstsource had been in negotiations for taking over the Teeside center in the UK owned and operated by Barclaycard.

Intelenet was originally set up by HDFC and TCS.  Later, TCS decided to set up their own BPO and Barclays (UK) was roped in as an investor. Barclays bought over TCS's stake in Intelenet Global Services. This marriage lasted till 2007 where Barclays provided Intelenet with business as well as investment in Intelenet.

In June, 2007,  when approached by investment house Blackstone to sell their stake in Intelenet, both HDFC and Barclays were happy to offload their stake at a profit to Blackstone. Barclays continued to have processes outsourced to Intelenet and their domestic banking operations were supported by Sparsh BPO and Intelenet in various centers around India.

Both Intelenet and Sparsh are controlled by the same holding company. Sparsh BPO's top management are all Intelenet employees and Sparsh is owned by the same entity which owns Intelenet Global. Susir Kumar who is the CEO of Intelenet is a Director of Sparsh BPO. Sparsh is funded by Intelenet in terms of working capital and bank guarantees (as Sparsh BPO cannot raise funds on its own).

However,  in mid 2008, a scandal broke out where credit cards were fraudulently manipulated with card holders being liable for two cards rather than one they had originally applied for. The fraud resulted in losses of Rs. 1.4 crores which was paid back by Sparsh BPO and publicly mentioned in their balance sheets of 2008-2009.

Stung by the negative publicity, Barclays India decided to set up their captive banking BPO in New Delhi's Gurgaon region.

Barclays India has greatly ramped down their operations at Sparsh BPO's Goregaon, Mumbai and Gurgaon centers.

Nevertheless,  a great win and good decision by Barclays to have continued to back an Indian company rather than to let go of Indian organizations as vendors.

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