Captive IT companies have become very popular over last decade in India. Most of the companies who were earlier doing outsourcing through third party IT service providers have been actively setting up, expanding and gaining out of their own captives. The advantages well run captives are able to generate is significantly more than the outsourcing IT providers. Over period of more than two years, we collected data over various IT captive companies and the result was mixed. Large sized companies really benefitted on cost from their own captives over even local IT service providers, significant smaller captives struggled to get the ROI and productivity in absence of good management practices.
Our study have categorised the captives in three brackets on size and three in terms of activities.
Size of captive companies depend on the kind of work they execute and the value they generate. BPO/KPO, being the lowest must have a critical mass to be viable while a small number of headcount is good enough for a product company.
Over last decade, India has seen the largest number of captives emerging globally. More than 1000 captives are operating in India as of 2016. About 65% of them have their parent company located out of North America while About 25% of them belong to Europe. About 10% have APAC, Japan and other investing company location. We checked out with several executives to get their opinion on the subject and tabulated the results. The motivation of lower cost as compared to every other option rules every size & category of captive IT company. The second most popular reason is the availability of talent that is mainly the focus area of ER&D and Product kind of companies while IT services too see talent as a demand. Business operations seems to focus more on process adherence, there talent nurturing is not the key motivation.
ER&D/ Product companies alone show higher motivation of exploiting local markets with their captives while others are not keen on that front.
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