Companies looking to outsource their Information Technology requirements have had two options to choose from, either they work with a third-party service provider or they set up a captive center. Captive centers have been witnessing renewed interest from companies, but the model has some pros and cons, which we will be examining here.
It’s a known fact that India is one of the most preferred destinations for establishing Global In-House Centers (GICs) for multi-national organizations, with 60% of MNCs establishing their GICs in India in the last decade. These Indian GICs employ a workforce of 8 million across the country.
Kearney's 2016 Global Services Location Index (GSLI) rated India as number one out of total 55 countries analyzed in three categories - financial attractiveness, people skills and availability, and business environment.
Global CXOs believe that captive centers in India will be an integral part of their overall strategy for the future. Over the last 5 years, hundreds of captives have been set up in India and more and more organizations continue to explore this option. So, is creating a captive in India a cakewalk?
One of the first and important questions that comes to the mind of the executives of the organization which is planning to set up a captive in India is: Which city should we based out of?
"When it comes to setting up an Offshore Development Center (ODC) in India, ScrumStart has turned out to be the most promising partner, we have ever done business with. It's more of relationship for us, than business."- says the COO of a US based MNC.
Third party outsourcing model has been primarily generating lots of jobs over last two decades in India. The focus for these companies had been traditional to increase their headcount as revenues get tightly linked to headcount numbers.
‘Virtual Captives’ are a very new model of outsourcing and globalisation that brings the best of every existing model in outsourcing. This model is still nascent and yet to be understood by those who only know and practice the only two ways of globalization and outsourcing: Traditional outsourcing and company owned captives.
The world today is witnessing an unprecedented pace of change. This is primarily driven by the exponential growth of technology, which is impacting every single aspect of people’s lives. This technology revolution is also completely redefining the traditional business models.