Chicago-based financial technology firm Envestnet has outsourced its Indian operations to Tata Consultancy Services (TCS) and shut down its Bengaluru office after offering severance packages to employees. It is currently exploring alternative uses for its property, including sublease options.
Industry executives said that the trend of global capability centres (GCCs) outsourcing their role to domestic IT firms has been on rise since the pandemic. Several GCCs are reducing their costs this way.
“We have entered into an agreement with TCS pursuant to which we have outsourced certain development, engineering and back office functions of the Envestnet Data & Analytics business located in Bengaluru, to increase operations scale and business agility,” Envestnet said in a filing to regulatory authority.
Envestnet entered into the outsourcing agreement in October 2022 for a period of 10 years. “In connection with the outsourcing arrangement with TCS, we incurred severance expenses, write-off of lease-related restructuring costs and other related expenses of approximately $9.1 million,” the filing said.
The firm added that as part of an organisational realignment, it entered into separation agreements with a number of employees. “This realignment will allow Envestnet to operate more efficiently and prioritise activities and services that will benefit its clients and the future of its business,” the company said.
“Employee compensation decreased $8.8 million, or 29%, for the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to decreases in salaries, benefits and related payroll taxes of $6.8 million, which is primarily as a result of the outsourcing arrangement with TCS,” the company said in the filing.
India is home to 45% of global GCCs. There are about 1,500 GCCs in India, contributing about 40% of the total $194 billion of IT services and products exported from the country.