Global financial firms, emerging from the worst economic crisis since the Great Depression, are looking to shed India back office operations as they focus on core operations and cost cuts.

AIG and Citigroup Inc, the insurance and banking giants bailed out by the U.S. government, have already sold some of their India units in the past 12 months, and there are increasing expectations of more such deals.

On the block are units of UBS, American Express and BoA-Merrill Lynch, banking sources said, adding Credit Suisse may follow. There is no official word on the prices but bankers estimate deals to be worth between $100 million to $600 million.

It is pretty straightforward. Banks don't want these operations anymore, said a banker who is advising a potential buyer of one of the operations. He asked not to be identified as he was not authorized to speak to the media.

Such captive units are almost passe. Internally they are asking, 'Do we want a few thousand employees working on supportive functions or do we outsource it (on a long-term contract) and pay a few hundred million?'

There are buyers galore right from top software services firms such as Tata Consultancy Services, Infosys, Wipro Cognizant to private equity firms such as KKR and Blackstone, which already own back office firms in India.

A big part of the attraction is that such sales usually come with a fat multi-year contract to run the services for the financial firm. And the time-tested operations can be used to attract other financial clients.

For instance TCS, which bought Citi's back office for $505 million last October, got a nine and a half year contract worth $2.5 billion from Citi. The firm is also now using the facility to attract new clients.

The banks are selling and simultaneously doing a long-term contract with the same company. So, operationally they don't get delays or stoppages, said Tarun Sisodia, an analyst with Anand Rathi Financial Services.

And banks are able to unlock cash. Most of these guys are looking at unlocking value right now.

Last month MphasiS, in which Hewlett-Packard Co (HPQ.N) owns a majority stake, said it would buy AIG's India unit for an undisclosed sum as AIG seeks to repay some of the billions it owes the U.S. government.

Financial firms started the back offices units as small facilities in the early 1990s to tap the low cost, English speaking workforce.

While they gradually scaled it up to large operations employing several thousand people, costs also began to rise as expansion by competitors and independent outsourcers forced annual salary hikes of as much a quarter.

To meet rising costs, the firms moved away from plain call center services to support for broker research, M&A modeling, debt and equity underwriting, human resources and some developed and maintained software.

But banks hit hardest by the global crisis feel they are better off farming out these services.

When you are part of a back office of a big organization, the kind of cost rationalization you want to drive generally doesn't happen, said Tejas Doshi, head of research at Sushil Finance.

Then ideally the best interest would be to turn it to a third party.

(Writing by Narayanan Somasundaram; Editing by Lincoln Feast)

Merrill Lynch Investment Citigroup Credit Suisse