New Delhi - Indian information technology major Tata Consultancy Services (TSC) announced Wednesday it would acquire Citigroup's India-based outsourcing arm in an all-cash deal estimated at 505 million dollars.

TCS signed an agreement with Citigroup Inc to acquire its entire interest in India-based Citigroup Global Services Limited (CGSL), the company said in a press release.

TCS also signed a 2.5-billion-dollar deal with Citigroup under which it would provide business process outsourcing services over the next nine-and-a-half years to Citigroup and its affiliates, the release said.

CGSL has more than 12,000 employees in India and expects to generate revenues of about 278 million dollars in 2008, it said.

"This is a landmark acquisition for TCS, helping us not only acquire new capabilities in the banking domain but also underscoring the importance of our long-term, sustainable relationships with our large customers," TCS chief executive officer S Ramadorai said.

Citigroup chief administrative officer Don Callahan said the transaction would benefit Citigroup, its customers, employees and TCS.

"This transaction is expected to help reduce operating expenses related to business processing and will allow us to focus on our core financial services competencies," he said.

The two companies expect to close the transaction by year-end. (dpa)