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Tips towards a Successful Captive Operation

by: Sarah Joson

Wednesday, May 2, 2012 | Outsourcing News |

A lot of large companies have been depending on their captive operations during the past couple of years. However, planning for strategies across all departments of the company is hard, and is sometimes overlooked because apart from internal operations, executives now have to reorganize so they can maximize what they have invested in on their captive operations.  Also, the sluggish recovery of various business sectors from the downturn adds to the growing list of challenges.  

Atul Dogra, Senior Consultant at Information Services Group (ISG) shares an article at info.isg-one.com which covers five factors that can help companies reinforce their captive plans and operations.

1. Create a plan that will efficiently work across all departments of the company. Even if the captive operation is an external entity, its objectives and processes should still coincide with the main company’s. Processes should be consistent and provide room for adjustments, periodical evaluations, and upgrades if needed to maximize productivity.

2. Develop strong employee retention programs. Hiring the best is one thing, but making him or her stay is a different issue. Captive operations should develop programs such as extensive growth opportunities for employees and niche specialization-based jobs that are widely sought after in various markets, so that attrition rate will be lower, and wage inflation will be easier to handle.

3. Clearly enumerate the roles of the captive and the third party service provider. To clearly define the performance of each side, proper alignment and a standard framework can help identify which areas should be worked on and whether or not the targets are met.  Furthermore, having a fixed scale can help business owners decide which location can provide the number of candidates needed for the captive operation.

4. Parties involved should be transparent with one another.  Even if each team or captive is located in different regions that uphold different cultures, they should be able to simultaneously work and synergize to meet the company’s objectives.

5. Manage the expenses. Analyzing the factors that make up the value of the captive can help business owners see how expenses can be maintained or even reduced. It would also provide margin for variable factors that can help alleviate pay-outs during initial investments. Moreover, an in-depth analysis of the captive’s current economic environment can help achieve proper cost allocations like labor arbitrage and adjustments on infrastructure costs.

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