Setting up a captive center in India
There is a paradigm shift in the way businesses operate at a global level. Enterprises are exploring possibilities to de-risk their strategy from outsourcing to setting up their own entity or captive centers offshore considering many reasons; Strategic, operational or both. India is one of the most sought-after destinations to set up an extended offshore delivery center, due to its rich tech talent pool, business engineering and R&D infrastructure.
Strategic benefits of setting up a captive center in India
Organizations might consider developing and scaling up their core offerings to wider markets and in parallel might want to tap the advantage of reduced cost and improved business efficiency. It is a feasible target with this offshore delivery center business model and below are its key benefits:
- Access to skilled tech talent pool
- Better cost advantage
- Improved quality of work, productivity due to high performing offshore delivery center
- Retention of control and governance
- Better customer experience with reduced concern on data security threats
- Comparatively economical when compared to outsourced business model
- Seamless transition
- Minimum set up time (Plug & play)
- Innovation through collaboration
- Access to vast technical, R&D capabilities and infrastructure
- Cost leadership through operational efficiency
- The offshore delivery center business model can help gain competitive advantage through differentiation strategies
It is a good option to capitalize on offshore delivery centers by considering the possible drawbacks like,
- Legal compliance and governance related obstacles
- Risk management
- Possibility of increased operational costs due to poor ROI forecasting
- Scalability issues
- Risk of failure of business transformation
How to deal with the challenges to tap the advantage of offshore delivery center model:
Business Process Management (BPM) service providers come to the rescue of such enterprises which have plans to set up captive centers in India. The service providers offer their in-depth experience in implementing the delivery centers and carry along successful stories of process transitions. Their expertise can be leveraged in four broad ways to establish a captive center:
The BPM partner provides expert advice on processes/activities to be migrated to offshore centers and provides solutions pertaining to complex issues involving setting up a captive center, compliance, documentation, and transition support.
The BPM partner assists in setting up the captive center. Also deploys an expert management team consisting of Subject Matter Experts(SMEs), quality and training managers, operational leaders to assist the offshore delivery centers in managing the TATs, SLAs, KPIs and overall governance.
Hybrid center management
The partner company ideally operates the entire infrastructure. The client company deputes its management team and SMEs at the captive center for a specific period and works alongside the BPM Partner to create the extended arm of the company by providing access to best practices and talents. It is in a way outsourcing paired control and transparency for the client team.
The BPM partner builds the center by setting up a captive office, operates it end-to-end successfully for a period of time and then transfers the ownership. The partner provides all the resources, facilities and owns the operations until its transferred to the client company. Risk mitigation and management is the responsibility of the partner.
The partner provides a captive center to the client along with IT and office infrastructure, administrative support and dedicated resources as required and is considered as Virtual Captive incubation model and with associated benefits of continued support with better control.
There is no ‘one size fits all’, the models differ in complexity, usage and output, your BPM partner will be able to prescribe the best based on your requirement.
Choose your right BPM Partner for setting up a captive center:
Selecting the right partner involves a good amount of research and analysis. The following parameters could assist you in choosing the right one:
- Core offerings and customized support
- Industry experience
- Approach and business values
- Quantity and quality of successful projects
- Turn Around Time (TAT)
- Profile of the tech talent pool
- Risk management and mitigation strategies
- Business transition phases & set up process