U.K. retailer Tesco PLC has set up an IT services and business process support subsidiary in Bangalore and plans to move hundreds of jobs there later this year, according to a company executive.

The subsidiary, called Tesco Hindustan Service Centre, will have a staff of about 770 by the end of this year, with the jobs being moved from the U.K., Philip Clarke, Tesco's director of IT and international operations, told reporters Thursday after the inauguration of the new facility. Tesco already has about 190 people working out of a temporary facility in the city.

About two years ago, Tesco decided to standardize its IT platforms to one suite of applications, which it calls Tesco-in-a-box, Clarke said. "It is a group-wide drive to pull our systems together and to create competitive advantage from technology," he said. Tesco-in-a-box combines off-the-shelf packages with custom built applications, held together by integration services, Clarke added.

Tesco's Bangalore operation will be involved in the development, roll out and support of Tesco-in-a-box, said Meena Ganesh, chief executive officer of Tesco Hindustan Service Center. The center is also working on a data warehousing tool called Teradata, a retail ERP (enterprise resource planning) application and integration services, she said.

The Bangalore center will also offer business process services to Tesco operations, particularly in the financial processing area. Most of the work currently done at the temporary facility is for internal business relating to Tesco's U.K. operations. Although the facility does not yet offer services directly to Tesco customers, there are plans to move some customer-facing processes to the center at a later date, Ganesh said.

A number of U.K. companies have set up operations in India or are outsourcing software development and business processes to Indian companies. Norwich Union Ltd., an insurance group based in Norwich, England, for example, outsources call center and back-office processes to about five companies in India, while Barclays Bank PLC in London acquired a 50 percent stake last year in Intelenet Global Services Ltd., a Mumbai-based business process outsourcing (BPO) firm.

Although outsourcing to India has been criticized by labor unions in the U.K., Tesco does not expect protests from the unions or U.K. workers as the company is in a rapid growth phase and has created 10,000 new jobs a year over the last three years, according to Clarke. Tesco indicated in July last year that it would be moving jobs out of the U.K. to India.

Tesco decided to have a wholly-owned subsidiary rather than outsource to local Indian companies because it wanted Tesco employees to be handling Tesco's critical business processes and software development and support, Clarke said. However, the company will also outsource some work to Indian companies such as Infosys Technologies Ltd., Wipro Ltd. and Tata Consultancy Services Ltd. The Indian companies will offer Tesco business continuity support, as well as do work that requires specific skill sets that may not be economical for Tesco to develop at its own center in Bangalore, Clarke said.

Tesco also has shared service centers like the one in Bangalore in the U.K. and in Prague in the Czech Republic, according to Clarke.

IDG News Service

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