BANGALORE – Wipro Technologies Ltd., the global IT-services business of Indian conglomerate Wipro Ltd., has reached an agreement to acquire Citigroup Technology Services Ltd. for $127 million. The latter, which is based in Mumbai and Chennai, provides IT services to Citigroup Inc. entities in more than 32 countries. It expects to generate about $80 million in revenues in 2008.

As part of the agreement, Citi will award the Bangalore-based company a contract worth approximately $500 million over the next six years to provide it technology infrastructure and application-development services. The two companies expect to complete the deal in March.

Wipro Technologies co-chief executive officer Girish S. Paranjpe said the company will absorb the 1,650 employees at Citi Technology Services’ two Indian offices. “Citi has played a pioneering role in leveraging technology for banking. We are pleased that our domain expertise and infrastructure-management capabilities positioned us as their partner of choice,” Paranjpe said. “This position has further strengthened with this strategic transaction. We are delighted to welcome the employees of Citi Technology Services into the Wipro family.”

Citigroup Inc., the New York-based parent of Citi Technology Services, has been hard-hit by the global credit crisis: The company’s market value plunged nearly 80 percent last year and it needed $20 billion in federal bailout funds in November to stay afloat – and prevent the nation’s financial system from collapsing. Citi also received a separate $25 billion infusion of capital earlier in the year.

In an effort to stem the bleeding and raise funds, Citi launched an aggressive cost-cutting plan earlier this year that included mass layoffs and the sale of noncore assets. In October, Citi agreed to sell its India-based back-office unit, Citigroup Global Services Ltd., to Mumbai-based Tata Consultancy Services Ltd. for approximately $505 million. Don Callahan, Citigroup’s chief administrative officer, said the company decided to sell its Indian IT-services division so that it could focus on its banking business.

“This sale was the result of a thorough process to ensure we were partnering with the right company for our businesses and our clients,” he said. “Wipro, with its wide range of services, extensive experience and broad global presence can play a significant role in meeting Citi’s objectives of productivity improvement, while our Citi Technology Services employees will join a larger information technology organization with additional third party growth opportunities. This transaction is consistent with our efforts to improve our operating leverage while we focus on our core banking competencies.”

Wipro Technologies senior vice president of finance solutions Soumitro Ghosh said the deal will position the company to better compete for more technology-infrastructure-management contracts with financial-services firms. “Citi Technology Services team’s expertise in addressing the risk and compliance issues for banking industry positions us well to offer similar scale and complexity of services to other leading banks in U.S. and Europe,” Ghosh said. “We are confident that the skillsets we have acquired will enhance our capabilities to compete for more [technology-infrastructure-management] business in the financial services industry in general and Citi in particular.”