iGATE Corporation, an information technology and business process outsourcing services provider, has decided to sell its professional services business.
The divestiture will occur through a sale of the business or through a tax-free spin-off of the business to iGATE shareholders.
Sunil Wadhwani and Ashok Trivedi, co-founders, said: "The separation is a logical 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 and business models.
"The divestiture will better position each business to benefit from their growth opportunities. In addition, the shareholders of iGATE will benefit from being a focussed offshore services company. The demand for offshore IT and BPO services continues to grow at a rapid rate," they added.
In accordance with the 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 hired Credit Suisse Securities (US) to assist with the divestiture. Meanwhile, the company has named Phaneesh Murthy as CEO effective April 1, 2008. Murthy will take over the role from Sunil Wadhwani, who was the CEO since it was founded in 1987.
Murthy has served as the CEO of iGATE Global Solutions (`iGS' - iGATE's offshore services subsidiary, which is in the delisting process from the Indian stock exchanges) since 2003, and was previously head of global sales and marketing for Infosys Technologies.
This appointment is being made in conjunction with the decision to divest the professional services business.
Ramachandran Natesan, the current CFO of iGATE Global Solutions, has also been appointed CFO of iGATE, effective April 1.
He will replace Michael Zugay who will retire after 13 years of service.