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AIG spots benefits, rolls out back-office plan

Reeba Zachariah & Freny Patel

A host of multinational companies have or are in the process of making India their information technology - or back-office - hub. The latest to join this bandwagon is the US-based American International Group.

AIG has identified India as an important market and proposes to set up its IT-enabled back-office in the country.

Sunil Mehta, country head and chief executive of AIG, said: "We see software outsourcing and information technology-enabled services as growth areas. The long-term potential of this sector provides us with tremendous opportunity."

Explaining the rationale behind AIG setting up an information technology back-office in the country, Mehta said that it provides economies of scale since India is the information technology hub.

Many multinational companies have outsourced their operations locally. These include HSBC, General Electric, British Airways and Swiss Air.

Meanwhile, AIG has been investing considerable funds in Indian information technology companies through its private equity arm.

As of today, AIG's investment of $425 million is widespread, spanning across different industries including infrastructure, manufacturing, telecom, pharma, IT and retail.

Mehta said that AIG sees itself as a serious, long-term in the Indian market, preferring to invest in large chunks of around $25 million upwards.

"While we largely take a 10 to 20 per cent stake in Indian companies, we do not wish to play any management role. However, through our board representation, we like to use AIG's global expertise, network and bring value to these investments," added Mehta. Predominantly AIG invests in closely held companies.

As far as its plans for the IT-enabled back office is concerned, AIG is yet evaluating which model it proposes to adopt.

Sunil stated that the group's investment in IT companies through its private equity arm and its plans to set up a back-office operations are two separate, stand-alone profitable business ventures.

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