iGATE to divest professional services biz

IT and BPO services provider iGATE Corporation has decided to divest its professional services business via sale of the business or through a tax-free spin-off.

Sunil Wadhwani and Ashok Trivedi, co-founders of iGATE, said: "This separation is a logical next step for the company. Our board has reviewed the divestiture, and believes it will benefit our shareholders, employees and customers."

They pointed out that the global solutions and professional services businesses operate in different markets with varied business models.

"The divestiture will better position each business to benefit from their growth opportunities.  In addition, the shareholders of iGATE will benefit from the increased clarity of being a focused offshore services company. The demand for offshore IT and BPO services continues to grow at a rapid rate," they added.

In accordance with generally accepted accounting principles (GAAP), the company's historical and future financial results will now reflect the professional services business as discontinued operations effective January 1, 2008.

iGATE has retained Credit Suisse Securities (USA) LLC to assist with the divestiture. 

In a related development, the company has named Phaneesh Murthy as the CEO effective April 1, 2008. Phaneesh will take over the role from Sunil Wadhwani, the CEO of iGATE, since founding in 1987.

Phaneesh has served as the CEO of iGATE Global Solutions, iGATE's offshore services subsidiary which is in the process of delisting from the Indian stock exchanges, since 2003.

Ramachandran Natesan, the current CFO of iGATE Global Solutions, is being appointed CFO of iGATE effective April 1, 2008.  Ramachandran will replace Michael J Zugay who will retire after 13 years with iGATE.