An Indian financial software company whose biggest customer and shareholder is Citigroup Inc. has formed another alliance to crack the U.S. market.
The target market is non-money-center banks with assets of $10 billion and up, as well as insurers and other U.S. financial businesses.
The partnership to be announced today between Polaris Software Lab Ltd. of Chenai, India, and Computer Task Group Inc. of Buffalo is meant, among other things, to reduce the sting of outsourcing abroad.
The Buffalo company would not only provide marketing efforts and on-site project management in this country but would open a testing center for the code that Polaris employees would write.
"Our model is a hybrid model, not just swapping out U.S. jobs for Indian jobs," said Todd Amsley, the director of the financial services practice at Computer Task Group.
He would not put on number on the testing center's work force, but "we expect it will be substantial," he said. Hiring will depend on how much business the two companies attract, he said. His company has been talking with prospects and hopes to announce the partnership's first customers this year, Mr. Amsley said.
The deal offers Computer Task Group deep expertise in the financial services industry, where it hopes to build its role as a systems integrator, he said. Its main business now is writing software for big retailers, health-care companies, and government agencies; its revenue totaled $252 million last year.
Michael Haney, a senior analyst at the research and consulting firm Celent Communications LLC of Boston, said an American partner may provide some comfort to U.S. firms reluctant to send software development tens of thousands of miles away.
The arrangement could also protect clients from accusations that they are exporting jobs, Mr. Haney said.
Polaris, which claims to be among India's 25 largest employers, was founded in 1993 but took its current form in 2002, when it acquired Citigroup Inc.'s Indian software unit OrbiTech Solutions Ltd.
Today, Polaris receives more than half its $125 million of revenue from Citi and has several Citi executives on its board. Its banking clients including ABN Amro NV of the Netherlands, Westpac Bank of Australia, and Shinsei Bank of Japan. It has nonbanking clients in the United States including Hewlett-Packard Co. and American International Group.
K. Srinivasan, Polaris' North American sales director and a senior vice president, said Computer Task Group has "a lot of reach."
"North American firms have gaps; pure Indian players also have gaps," he said Tuesday. "This gives us great critical mass, and a lot of stability for customers."
The companies will jointly develop computer applications to be installed on financial companies' hardware but do not plan to offer a hosting service, he said.
Mr. Haney said that the Indian outsourcing market is due for consolidation. With many software developers fighting for market share, "it's becoming clearer who the winners are and what companies will last," he said. "This is a positive indication that Polaris is one that probably is here to stay."
"The United States remains a difficult market to penetrate," Mr. Haney said. Partnerships like the one with Computer Task Group are "a way to rapidly make a mark."
