Hexaware Deal: Why is Citi reducing outsourcing to the company?

As follow up to my earlier post on "Why Hexaware sale may not happen" (at least not in a hurry) it seems we must add one more reason. Citi which is probably the biggest client of Hexaware is, rumored to be reducing outsourcing to Hexaware creating further nervousness in the minds of the investors/potential buyers.  As a result the stock has been underperforming the market in the last 3-4 days.

However, it would be interesting if the news is true, as it was earlier rumored that Hexaware (or atleast the PE investors) in Hexaware had awarded the sell mandate to Citi. However, later the contract was given to two other MNC investment banks (CS and MS).  Not sure if there is a link between the two, but this could potentially be the reason why there is sudden talk of Citi consolidating spending away from Hexaware.

Elections Results: Analysis

While analysts have been quick to write off the Congress Party and believe that Congress party has weakened, I believe the election results are positive for the Congress, if you look at the big picture (especially from the view of the central government).  Remember the elections were held in the backdrop of

1. Massively televised scams (read 2G, Commonwealth etc) which generated huge public sentiment against Congress
2. Baba Ramdev movement against black money
3. Anna Hazare movement against corruption

In light of all this, one would have completely written off the Congress party. However, they improved their tally in UP, gained seats in Uttrakhand, in Punjab and retailed Manipur with improved results, versus last elections.  Even more importantly BJP, its sole competitor at the center lost ground every place (except in Goa). The fact that BJP failed to capitalize on worst ever sentiments against the Congress Party is huge plus for the Congress party and its government at the center. Although it also means that coalition politics would continue to take center stage even at national level. Congress would do well to utilize the next two years to push governance especially in education and in healthcare.