Financial services group Citi has sold its India-based business processing outsourcing arm to outsourcing group Tata Consultancy Services (TCS) for around $505m (£287m).

Citi said that its motivation for the sale of Citigroup Global Services Ltd (CGSL) was a prospective reduction in operating expenses related to business processing, as well as the opportunity to free up resources to focus on other core areas.

As part of the deal, TCS will also provide outsourcing services to the bank and its affiliates for $2.5bn (£1.4bn) over a period of nine and a half years, the firm said in a statement.

It is understood that Citi, which has been badly hit by the economic downturn, had been looking to sell Mumbai-based CGSL for over a year.

CGSL provides process management services to banks and financial services clients, as well as a range of services to Citi's consumer, corporate and global wealth management businesses.

The unit employs over 12,000 people in India and expects revenues of around $278m (£158m) in 2008.

"Our customers require access to increasingly complex processing solutions and this relationship will achieve a 'best in class' technology model that capitalises on CGSL's expertise in financial services and TCS' expertise in process optimisation," said Don Callahan, chief administrative officer at Citi.

"TCS will offer CGSL stronger growth potential and superior continued services to Citi clients around the world."