As the name suggests, captive IT companies are created primarily for cost arbitrage, and they remain a low-cost alternative to vendors and onshore IT staff. ScrumStart survey reveals that 42% of the captives do not see any other benefit from their captive except cost advantage and they have been designed with that in mind. A large chunk of 53% of the captive companies are aspiring and thinking to contribute more than the cost advantage, and some of them openly admit that their onshore partners are not as keen in this thinking as they are. Few among them state that they have been positively acknowledged for attempting things that go beyond cost arbitrage. It is just 5% of the IT Captives that have indeed crossed over to the maturity level that has passed the cost arbitrage barrier. Few of the companies, primarily product and engineering related captives were started not for cost arbitrage, but for attracting talent that matter for their innovation program. One of the senior members of such a company commented ‘One has to understand that an engineer crossing the Pacific Ocean and coming to California cannot become a superstar overnight. They are the same set of people who are highly sought after because of their talent in California and ignored when they are in Bangalore. We came here to hire talent near their home. It does not matter where they are; what matters is that they work for us.’
ScrumStart created a maturity model that maps to the existing and future needs of the industry. With Indian market growing the fastest and advanced economies almost stagnating in growth, IT captives are emerging as an alternative for exploring the local business landscape and attempting a move. More than that, captives are slowly emerging as a crucible of innovation with knowledge of the advanced economies and opportunities of the growing economy.
The five stages of IT Outsourcing maturity:
While most of the outsourcing maturity has been centred around traditional T&M based and outcome-based outsourcing, the remaining three are the way forward for any corporate to fully utilize the available talent pool.
Related Blog – Captives are Not Immune to Trust Deficit
ScrumStart survey revealed a worrying fact that more than sixty percent of employees in Captive IT companies are underemployed or underutilized. Underutilization is still a problem that can be managed through proper work allocation, but underemployment is a serious issue that leads to workforce dissatisfaction and attrition. The next three steps in captive maturity can efficiently handle both the problems of underemployment and underutilization and help companies do more with far lesser money.
About the Author:
Mr. Santosh Panicker, CEO ScrumStart, is a specialist in setting up business processes and has established himself as an inspirational leader in the corporate world. Mr. Panicker has demonstrated his capabilities in setting up end- to -end HR, legal, and business process operations for 9 start-ups through his career years. He has over 22 years of experience working across diverse industries including IT, FMCG, Retail, Automobile and consumer durables with blue chip companies