The $45-billion UK retail major Tesco has set up its first captive unit outside the UK, in Bangalore. Called Tesco Hindustan Service Centre, it employs 100 people - 40 on business process outsourcing (BPO) tasks and the rest on IT development. By end 2004, the India team will be expanded to 350. Tesco has 2,318 stores and a workforce of 326,000.

On the BPO front, the back office operations will be focused on payroll, billing and answering technology-related queries. The IT work would include developing new applications, maintaining applications and integrating IT solutions that the company uses. The team will implement and integrate retail solutions like Retek, Terradata and PeopleSoft.

Tesco’s Meena Ganesh: The new retail push

Tesco has flown in an IT expert from its central Europe operations to oversee training of professionals and implementation of the project. Retek (a retail ERP system) skills are not available in India and that's where the European trainer will be helpful.

The India shared service facility is headed by CEO Meena Ganesh. Prior to this, Ganesh was ICICI OneSource's COO. She was also the co-founder of CustomerAsset, later acquired by ICICI OneSource.

Interestingly, this is the first significant case of retail offshoring to India. The retail major plans to make the India facility a premier retail-focused shared services centre. However, it declined to comment on tapping third-party work and also on further expansion plans in the country.

Till Tesco stepped in, retail back office work in India was restricted to collections and telemarketing.

Will other retail chains now log on?