The ripples of the subprime fiasco are being felt in many ways. The business process outsourcing (BPO) arm of Countrywide Financial in India, CFC India Services, is merging with Bank of America’s (BankAm) non-banking subsidiary, Continuum Solutions, as part of BankAm’s $2.5-billion global takeover of the loss-making Countrywide.
While there will be no job cuts in India after the merger, all Countrywide staff will have to switch over to the BankAm salary structure, said a source familiar with the development. Some of the top management of Countrywide led by expatriate director Tom Jones may have to go. While BA Continuum MD Avtar Monga is expected to head the KPO segment of the merged entity, Countrywide’s head of operations in India, Gautam Bahai may be given the charge of mortgages, the source said.
When contacted, a BankAm spokesperson from Singapore refused to comment on the matter.
As in the US, BankAm will drop the Countrywide name in India. CFC India Services, with its 3,500 seats in Mumbai and Hyderabad, till now was operating as a subsidiary of Countrywide Financial Corporation and was providing processing and infotech-related services to Countrywide in the mortgage and related financial services industry. With its merger with BA Continuum Solutions, the BPO unit will now service BankAm’s clients.
On the other hand, in the past three years, Continuum Solutions has set up 3,000-seater outsourcing unit in Mumbai, Hyderabad and Gurgoan under BankAm’s global delivery centre of expertise. The Indian non-banking subsidiary functioned as BankAm’s dedicated banking back office, and is providing back office support to consumers, wholesale and capital market groups.
While Continuum’s Hyderabad and Gurgaon offices offer consumer and wholesale banking services along with infotech services, Mumbai’s knowledge service centre is dedicated to offering global corporate investment banking services. In January, BankAm took over Countrywide Financial for $4.1 billion in a stock deal, but cut the deal size in July to $2.5 billion due to mounting losses of Countrywide, a Fortune 500 company till the subprime crisis made a big hole in its balancesheet.