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Study Shows Captive Operations Overcoming Challenges

by: Ronald Escanlar

Monday, May 30, 2011 |

Captive Outsourcing for Businesses

A recent benchmarking study using the captive outsourcing model was recently completed among outsourcing service providers in India by outsourcing advisory firm TPI. Aside from including cost factors, the TPI study also added operations and processes into the mix in identifying and evaluating current industry trends. They have identified the following trends occurring among the captive operations of outsourcing service providers:

Increased use of global service delivery centers. Captive operations have crossed geographical boundaries, with outsourcing service providers opening service delivery centers in Tier 1 and Tier 2 cities. Usually, operations are based on the specific human resource offerings of a city. The number of large companies pursuing the multicountry/multiregion captive model is also on the rise.

Increased use of combined delivery models. Outsourcing service providers are also “outsourcing” services themselves by hiring third party service providers for their non-core processes. Captive models have shifted to using third-party service providers in delivery services to clients, maintaining supervisory control and project responsibility.

Meeting cost efficiency issues through innovative solutions. Attrition among entry-level BPO employees has evolved from being a problem to becoming a solution to meet costing challenges. Companies have turned to cloud computing and virtualization technologies to augment manpower, optimize costs, and streamline delivery operations.

Focus of core business on emerging local markets. Clients are leveraging their captive models to gain entry into emerging markets, such as the developing economies of India, the Philippines, and China. Captive operations are also used for domestic markets via localized services.

Talent pool for global operations. Captive operations have become a source of world-class workers for client companies. Personnel and staff are often shifted to other delivery centers to either start up pioneer centers or lead scaling-up operations.

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