Virtual Captives - Advantages

Setting up a captive (wholly owned local subsidiary) requires a lot of investments in terms of due diligence, infrastructure, and consultancy fees. By leveraging the knowledge and resources of existing provider, you can enter a market without any capex. Furthermore, virtual captive rates are generally a lot lower than 3rd party outsourcing rates because much of the operational delivery responsibility and performance risk still reside largely with the client.

Setting up a captive center in an unknown geography can be very risky. How much do you, for instance, really know about the Philippines and its legal and regulatory systems? By operating under the umbrella of a local partner, you can learn more about the new geography before deciding to operate there independently (Build-Operate-Transfer). Furthermore, since there are no long-term investments, the overall risk of the entire operation is greatly reduced.

Setting up a captive center takes a long time (6 to 9 months on average). A local provider like MicroSourcing already has the infrastructure, management, overhead, and processes in place to be up and running in a matter of weeks.

For many companies, virtual captives can provide the right balance between risk and control. The client would retain full control over the entire operation including its people, infrastructure, and processes. Much of the operational risk, however, will be shared with a 3rd party provider. If you will weigh risk vs control vs costs then the virtual captive model strikes the perfect balance.