Effective and Captive

Offshore Captive Centres: An Efficient Model for Outsourcing

With companies from all over the globe have sold their offshore captive centres in recession, such options are making a big return this year.

According to the latest study, captive centres, also known as “business process delivery arms” or “in-house IT services,” have accounted one quarter of the $150 billion global service profits in 2014.

Captives Centres a Huge Benefit

While there’s been a lot of talk of the risks involved with offshore captive centres for the last decade, the approach has actually been beneficial this year.

The global in-house outsourcing model has thrived while diverstiture activities continue to stumble. It’s expected that such model will continue grow. Offshore captive centre sales will be driven by preferences of organizations and new set-ups will outpace diverstiture activities in the future.

A captive centre is ideally suited for work involving sensitive data, intellectual property, and complex business tasks. They’re considered as part of a company and are positioned to serve in locations which may entail any business aspects and knowledge of inside business processes.

Manufacturing, retail, distribution, and technology companies are considered to be the biggest users of captive of captive centres. Newer technologies involving mobile, analytics, social, and cloud computing have led to increased adoption to such in-house centres.

Fortune 500 companies are currently taking a large chunk of the market with 61% of captive centre organizations reporting average revenues of more than $10 billion. A majority of centres are typically large with than 60% employ over 500 professionals. But the model is now being adopted by smaller firms.

Ideal Locations

At present, India remains to be the most preferred offshore captive centre destination. It current accounts for half of worldwide global in-house centres that continue to grow. The reason why it came to be the case is due to the country’s scope of work and ultra-competitive costs. But other countries are becoming viable alternatives. These include China, Philippines, Poland, Romania, and Costa Rica for a number of reasons.

The Philippines has evolved as an attractive location for company-owned contact centres. Poland provides quality financial services and banking expertise. Malaysia is capable of delivering Asian language support. Romania became a European option for Western Europe-based companies. Furthermore, firms with a business footprint in India are capable of lowering concentration risks by varying alternative locations.

With offshore captive centres in the market continuing to grow, they’ve also matured, which went from cost-effective savings to a primary source of enhanced business improvement and value. A majority of established offshore captive centres today are concentrating on improving efficiency and effectivity, going beyond scope of services, and pushing further to cater to complex processes. Very few in-house centres (typically the bigger and established ones) are also concentrating on offering enterprise revenue impact.